Question 1

In the short run,a perfectly competitive firm

Accepted Answer

A)  can make only zero economic profit. 
B)  can possibly make an economic profit or possibly incur an economic loss. 
C)  produces the level of output that sets the average total cost equal to the market price. 
D)  can vary all its inputs. 
E)  can change only its fixed inputs. 
A)  can make only zero economic profit. 
B)  can possibly make an economic profit or possibly incur an economic loss. 
C)  produces the level of output that sets the average total cost equal to the market price. 
D)  can vary all its inputs. 
E)  can change only its fixed inputs.

Question 2

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-Based on the figure above,if the firm produces 10 cans per day,the firm ________ maximizing its profit and is ________.

Accepted Answer

A)  is; incurring an economic loss 
B)  is; making zero economic profit 
C)  is; making an economic profit 
D)  is not; incurring an economic loss 
E)  is not; making zero economic profit 
A)  is; incurring an economic loss 
B)  is; making zero economic profit 
C)  is; making an economic profit 
D)  is not; incurring an economic loss 
E)  is not; making zero economic profit

Question 3

The rutabaga market is perfectly competitive and the price of a ton of rutabagas rises.As a result,Rudy,a rutabaga farmer,will

Accepted Answer

A)  decrease his output of rutabagas. 
B)  not change his output of rutabagas because Rudy's firm is a price taker. 
C)  increase his output of rutabagas. 
D)  at first decrease and then increase his output of rutabagas. 
E)  probably change his output of rutabagas, but more information is needed about the change in the marginal revenue of a ton of rutabagas. 
A)  decrease his output of rutabagas. 
B)  not change his output of rutabagas because Rudy's firm is a price taker. 
C)  increase his output of rutabagas. 
D)  at first decrease and then increase his output of rutabagas. 
E)  probably change his output of rutabagas, but more information is needed about the change in the marginal revenue of a ton of rutabagas.

Question 4

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (thousands of bushels } \
\text { of corn a week) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (thousands of } \
\text { dollars per week) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (thousands of } \
\text { dollars per week) }
\end{array} \
\hline 0 & 0 & 50 \
10 & 30 & 70 \
20 & 60 & 80 \
30 & 90 & 90 \
40 & 120 & 110 \
50 & 150 & 140 \
60 & 180 & 200 \
70 & 210 & 280 \
80 & 240 & 400
\end{array}$$
-Jimmy grows corn.His total revenue and total cost are in the above table.What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?

Accepted Answer

Jimmy's profit is greatest if he grows e

Question 5

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 12.00 \
1 & 20.00 \
2 & 26.00 \
3 & 30.00 \
4 & 32.00 \
5 & 36.00 \
6 & 42.00 \
7 & 49.80 \
8 & 64.00 \
9 & 87.60 \
10 & 124.00
\end{array}$$
-Acme is a perfectly competitive firm.It has the total cost schedule given in the above table.Acme's product sells for $8.00 per unit.What amount of output is the most profitable and what is Acme's economic profit or economic loss?

Accepted Answer

Acme's profit-maximizing level of output

Question 6

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₁,each produce 30 units,and the market price of the good is $16 per unit,then the firms

Accepted Answer

A)  make zero economic profit and firms neither enter nor exit the industry. 
B)  make zero economic profit and so some firms exit the industry. 
C)  incur an economic loss and so some firms exit the industry. 
D)  incur an economic loss and so new firms enter the industry. 
E)  make an economic profit and new firms enter the industry. 
A)  make zero economic profit and firms neither enter nor exit the industry. 
B)  make zero economic profit and so some firms exit the industry. 
C)  incur an economic loss and so some firms exit the industry. 
D)  incur an economic loss and so new firms enter the industry. 
E)  make an economic profit and new firms enter the industry.

Question 7

For a perfectly competitive firm,profit is maximized at the output level where
i.total revenue exceeds total cost by the largest amount.
ii.marginal revenue equals marginal cost.
iii.price equals marginal cost.

Accepted Answer

A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and ii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and ii 
E)  i, ii, and iii

Question 8

The U-pick berry market is perfectly competitive.Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit.What happens as time passes? What is the long-run equilibrium outcome?

Accepted Answer

The presence of economic profit attracts

Question 9

A firm's marginal revenue is

Accepted Answer

A)  the change in total revenue that results from a one-unit increase in the quantity sold. 
B)  total revenue minus total cost. 
C)  the change in total revenue minus the change in total cost. 
D)  the change in total revenue that results from an increase in the demand for the good or service. 
E)  less than the market price for a perfectly competitive firm. 
A)  the change in total revenue that results from a one-unit increase in the quantity sold. 
B)  total revenue minus total cost. 
C)  the change in total revenue minus the change in total cost. 
D)  the change in total revenue that results from an increase in the demand for the good or service. 
E)  less than the market price for a perfectly competitive firm.

Question 10

$\begin{array}{l}
\text { Quantity }\
\begin{array}{ccc}
\text { (bushels of } \
\text { rutabagas) } & \begin{array}{c}
\text { Total revenue } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 0 & 12 \
1 & 10 & 22 \
2 & 20 & 28 \
3 & 30 & 30 \
4 & 40 & 31 \
5 & 50 & 34 \
6 & 60 & 45 \
7 & 70 & 59 \
8 & 80 & 80
\end{array}
\end{array}$

-The above table has the total revenue and total cost schedule for Omar,a perfectly competitive grower of rutabagas.Omar's total profit is maximized when he produces ________ bushels of rutabagas.

Accepted Answer

A)  3 
B)  5 
C)  6 
D)  8 
E)  7 
A)  3 
B)  5 
C)  6 
D)  8 
E)  7

Question 11

In the long run,perfectly competitive firms cannot make an economic profit.Why?

Accepted Answer

An economic profit attracts entry by new

Question 12

If perfectly competitive firms are making an economic profit,the economic profit

Accepted Answer

A)  attracts entry by more firms, which lowers the price. 
B)  can be earned both in the short run and the long run. 
C)  is less than the normal profit. 
D)  leads to a decrease in market demand. 
E)  generally leads to firms exiting as they seek higher profit in other markets. 
A)  attracts entry by more firms, which lowers the price. 
B)  can be earned both in the short run and the long run. 
C)  is less than the normal profit. 
D)  leads to a decrease in market demand. 
E)  generally leads to firms exiting as they seek higher profit in other markets.

Question 13

Suppose the cost of a CD is $20.As online retailers enter the market with new technology,the price of CDs ________,and traditional music stores find that ________.

Accepted Answer

A)  decreases; their AVC exceeds the new lower price and they exit the industry 
B)  decreases; their ATC curve shifts lower and their profit increases 
C)  increases; they compete with online retailers at the new higher price 
D)  increases; their costs have risen due to the new technology 
E)  decreases; they compete with online retailers with higher profits 
A)  decreases; their AVC exceeds the new lower price and they exit the industry 
B)  decreases; their ATC curve shifts lower and their profit increases 
C)  increases; they compete with online retailers at the new higher price 
D)  increases; their costs have risen due to the new technology 
E)  decreases; they compete with online retailers with higher profits

Question 14

If a perfectly competitive firm raised the price of its product,

Accepted Answer

A)  its profits would increase. 
B)  the quantity of output it sells decreases to zero. 
C)  rival firms will follow suit and raise their prices also. 
D)  the firm will be forced to advertise more. 
E)  its total revenue would rise but its total cost would rise by more. 
A)  its profits would increase. 
B)  the quantity of output it sells decreases to zero. 
C)  rival firms will follow suit and raise their prices also. 
D)  the firm will be forced to advertise more. 
E)  its total revenue would rise but its total cost would rise by more.

Question 15

In the long run,existing firms exit a perfectly competitive market

Accepted Answer

A)  only if economic profits are zero. 
B)  if they make a positive economic profit. 
C)  if normal profits are greater than zero. 
D)  only if they incur an economic loss. 
E)  if they either make a normal profit or if they incur an economic loss. 
A)  only if economic profits are zero. 
B)  if they make a positive economic profit. 
C)  if normal profits are greater than zero. 
D)  only if they incur an economic loss. 
E)  if they either make a normal profit or if they incur an economic loss.

Question 16

If a firm in a perfectly competitive market faces an equilibrium price of $5,its marginal revenue

Accepted Answer

A)  will be greater than $5. 
B)  will be less than $5. 
C)  maybe either greater or less than $5. 
D)  will also be $5. 
E)  will be any amount but $5. 
A)  will be greater than $5. 
B)  will be less than $5. 
C)  maybe either greater or less than $5. 
D)  will also be $5. 
E)  will be any amount but $5.

Question 17

The table below shows the total cost schedule for a perfectly competitive firm.The market price is $250 per unit.Complete the table.
 $$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Profit or loss } \
\text { (dollars) }
\end{array} \
\hline 0 & 400 & & \
1 & 550 & & \
2 & 600 & & \
3 & 650 & & \
4 & 740 & & \
5 & 850 & & \
6 & 990 & & \
7 & 1,140 & & \
8 & 1,400 & & \
9 & 1,690 & & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { c c c c } 
\begin{arra

Question 18

If demand for a seller's product is perfectly elastic,which of the following is true?
i.The firm will sell no output if it sets the price its product above the market price.
ii.There are many perfect substitutes for the seller's product.
iii.The firm will sell no output if it sets the price its product below the market price.

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and ii 
E)  ii and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and ii 
E)  ii and iii

Question 19

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-The firm in the figure above is ________ that is equal to ________.

Accepted Answer

A)  making an economic profit; $8.00 × 10 
B)  making an economic profit; $5.10 × 10 
C)  incurring an economic loss; $5.10 × 10 
D)  incurring an economic loss; ($8.00 - $5.10) × 10 
E)  making an economic profit; ($8.00 - $5.10) × 10 
A)  making an economic profit; $8.00 × 10 
B)  making an economic profit; $5.10 × 10 
C)  incurring an economic loss; $5.10 × 10 
D)  incurring an economic loss; ($8.00 - $5.10) × 10 
E)  making an economic profit; ($8.00 - $5.10) × 10

Question 20

$$\begin{array}{l}
\text { Quantity } \quad \text { Average variable cost Average total cost }\
\begin{array} { c c c } 
\text { (wafers per hour) } & \text { (dollars) } & \text { (dollars) } \
\hline 0 & 0 & \
1 & 1900 & 7900 \
2 & 1400 & 4400 \
3 & 1300 & 3300 \
4 & 1400 & 2900 \
5 & 1600 & 2800 \
6 & 2000 & 3000
\end{array}
\end{array}$$
-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.If the market price of a wafer is $2,400 dollars,how many wafers will the firm produce?

Accepted Answer

A)  0 
B)  4 or 5 
C)  3 or 4 
D)  1 or 2 
E)  6 
A)  0 
B)  4 or 5 
C)  3 or 4 
D)  1 or 2 
E)  6

In the short run,a perfectly competitive firm

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,if the firm produces 10 cans per day,the firm maximizing its profit and is .

The rutabaga market is perfectly competitive and the price of a ton of rutabagas rises.As a result,Rudy,a rutabaga farmer,will

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₁,each produce 30 units,and the market price of the good is $16 per unit,then the firms

For a perfectly competitive firm,profit is maximized at the output level where i.total revenue exceeds total cost by the largest amount. ii.marginal revenue equals marginal cost. iii.price equals marginal cost.

The U-pick berry market is perfectly competitive.Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit.What happens as time passes? What is the long-run equilibrium outcome?

A firm's marginal revenue is

In the long run,perfectly competitive firms cannot make an economic profit.Why?

If perfectly competitive firms are making an economic profit,the economic profit

Suppose the cost of a CD is $20.As online retailers enter the market with new technology,the price of CDs ,and traditional music stores find that .

If a perfectly competitive firm raised the price of its product,

In the long run,existing firms exit a perfectly competitive market

If a firm in a perfectly competitive market faces an equilibrium price of $5,its marginal revenue

The table below shows the total cost schedule for a perfectly competitive firm.The market price is $250 per unit.Complete the table. Quantity (units) Total cost (dollars) Total revenue (dollars) Profit or loss (dollars) 0 400 1 550 2 600 3 650 4 740 5 850 6 990 7 1,140 8 1,400 9 1,690

The figure above shows some of a firm's cost curves and its marginal revenue curve. -The firm in the figure above is that is equal to .

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 15: Perfect Competition

In the short run,a perfectly competitive firm

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,if the firm produces 10 cans per day,the firm ________ maximizing its profit and is ________.

The rutabaga market is perfectly competitive and the price of a ton of rutabagas rises.As a result,Rudy,a rutabaga farmer,will

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₁,each produce 30 units,and the market price of the good is $16 per unit,then the firms

For a perfectly competitive firm,profit is maximized at the output level where i.total revenue exceeds total cost by the largest amount. ii.marginal revenue equals marginal cost. iii.price equals marginal cost.

The U-pick berry market is perfectly competitive.Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit.What happens as time passes? What is the long-run equilibrium outcome?

A firm's marginal revenue is

In the long run,perfectly competitive firms cannot make an economic profit.Why?

If perfectly competitive firms are making an economic profit,the economic profit

Suppose the cost of a CD is $20.As online retailers enter the market with new technology,the price of CDs ________,and traditional music stores find that ________.

If a perfectly competitive firm raised the price of its product,

In the long run,existing firms exit a perfectly competitive market

If a firm in a perfectly competitive market faces an equilibrium price of $5,its marginal revenue

The table below shows the total cost schedule for a perfectly competitive firm.The market price is $250 per unit.Complete the table. Quantity (units) Total cost (dollars) Total revenue (dollars) Profit or loss (dollars) 0 400 1 550 2 600 3 650 4 740 5 850 6 990 7 1,140 8 1,400 9 1,690

The figure above shows some of a firm's cost curves and its marginal revenue curve. -The firm in the figure above is ________ that is equal to ________.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,if the firm produces 10 cans per day,the firm maximizing its profit and is .

Suppose the cost of a CD is $20.As online retailers enter the market with new technology,the price of CDs ,and traditional music stores find that .

The figure above shows some of a firm's cost curves and its marginal revenue curve. -The firm in the figure above is that is equal to .