Question 1

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-Based on the figure above,what is the price of a can?

Accepted Answer

A)  $0 
B)  $8.00 per can 
C)  $5.10 per can 
D)  None of the above prices is correct. 
E)  More information is needed to determine the price of a can. 
A)  $0 
B)  $8.00 per can 
C)  $5.10 per can 
D)  None of the above prices is correct. 
E)  More information is needed to determine the price of a can.

Question 2

The above figure shows some a firm's cost curves and its marginal revenue curve.
-Suppose the price of a can was $5.14.In this case,to maximize its profit the firm illustrated in the figure above would

Accepted Answer

A)  increase its production and would make an economic profit. 
B)  not change its production and would make zero economic profit. 
C)  not change its production and would make an economic profit. 
D)  increase its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss. 
A)  increase its production and would make an economic profit. 
B)  not change its production and would make zero economic profit. 
C)  not change its production and would make an economic profit. 
D)  increase its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss.

Question 3

One requirement for an industry to be perfectly competitive is that

Accepted Answer

A)  sellers and buyers have imperfect information about prices. 
B)  established firms have no advantage over new firms. 
C)  established firms have a significant advantage over new firms. 
D)  different firms produce widely different products. 
E)  many firms produce slightly different products. 
A)  sellers and buyers have imperfect information about prices. 
B)  established firms have no advantage over new firms. 
C)  established firms have a significant advantage over new firms. 
D)  different firms produce widely different products. 
E)  many firms produce slightly different products.

Question 4

Keith is a perfectly competitive carnation grower.The market price is $2 per dozen carnations.Keith's average total cost to grow carnations is $2.50 per dozen.In the long run,Keith will

Accepted Answer

A)  raise his price to more than $2.50 per dozen carnations. 
B)  raise his price to $2.50 per dozen carnations. 
C)  exit the industry if the price and his costs do not change. 
D)  incur an economic loss. 
E)  continue to make an economic profit. 
A)  raise his price to more than $2.50 per dozen carnations. 
B)  raise his price to $2.50 per dozen carnations. 
C)  exit the industry if the price and his costs do not change. 
D)  incur an economic loss. 
E)  continue to make an economic profit.

Question 5

If perfectly competitive firms are making an economic profit,then

Accepted Answer

A)  the market is in its long-run equilibrium. 
B)  new firms enter the market and the equilibrium profit of the firms already in the market decreases. 
C)  new firms enter the market and the equilibrium profit of the firms already in the market increases. 
D)  firms exit the market and the economic profit of the surviving firms in the market decreases. 
E)  firms exit the market and the economic profit of the surviving firms in the market increases. 
A)  the market is in its long-run equilibrium. 
B)  new firms enter the market and the equilibrium profit of the firms already in the market decreases. 
C)  new firms enter the market and the equilibrium profit of the firms already in the market increases. 
D)  firms exit the market and the economic profit of the surviving firms in the market decreases. 
E)  firms exit the market and the economic profit of the surviving firms in the market increases.

Question 6

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

Accepted Answer

A)  greater than the marginal revenue of each rental. 
B)  less than the marginal revenue of each rental. 
C)  equal to the marginal revenue of each rental. 
D)  equal to the price of each rental. 
E)  greater than the average variable cost of each rental. 
A)  greater than the marginal revenue of each rental. 
B)  less than the marginal revenue of each rental. 
C)  equal to the marginal revenue of each rental. 
D)  equal to the price of each rental. 
E)  greater than the average variable cost of each rental.

Question 7

For a perfectly competitive firm,profit maximization occurs when output is such that

Accepted Answer

A)  total revenue (TR) is maximized. 
B)  total cost (T
C)  is minimized. 
C)  marginal revenue (MR) = marginal cost (M
C) . 
D)  average total cost (AT
C)  is minimized. 
E)  total revenue (TR) equals total cost (T
C) . 
A)  total revenue (TR) is maximized. 
B)  total cost (T
C)  is minimized. 
C)  marginal revenue (MR) = marginal cost (M
C) . 
D)  average total cost (AT
C)  is minimized. 
E)  total revenue (TR) equals total cost (T
C) .

Question 8

Will a perfectly competitive firm ever produce in the short run even though it is suffering an economic loss?

Accepted Answer

Yes,a perfectly competitive firm will co

Question 9

Alice,Bud,and Celia can produce rubber bands in a perfectly competitive market.If they enter the market,the minimum average total cost for a bundle of rubber bands,for the three of them is $2,$3,and $4,respectively.If the market price is $2.10 per bundle,then

Accepted Answer

A)  all three of them will enter the market. 
B)  only Alice will enter the market. 
C)  Alice and Bud will enter the market. 
D)  Bud and Celia will enter the market. 
E)  Alice and Celia will enter the market. 
A)  all three of them will enter the market. 
B)  only Alice will enter the market. 
C)  Alice and Bud will enter the market. 
D)  Bud and Celia will enter the market. 
E)  Alice and Celia will enter the market.

Question 10

Perfect competition ________ an efficient outcome because ________.

Accepted Answer

A)  achieves; total surplus is maximized 
B)  achieves; marginal benefit equals marginal cost 
C)  does not achieve; firms do not get to choose their price 
D)  does not achieve; firms produce goods with perfect substitutes 
E)  Both A and B are correct. 
A)  achieves; total surplus is maximized 
B)  achieves; marginal benefit equals marginal cost 
C)  does not achieve; firms do not get to choose their price 
D)  does not achieve; firms produce goods with perfect substitutes 
E)  Both A and B are correct.

Question 11

A perfectly competitive firm's short-run supply curve is

Accepted Answer

A)  horizontal at the market price. 
B)  its total cost curve above the AVC. 
C)  its marginal cost curve below the marginal revenue curve. 
D)  its marginal cost curve above the AVC curve. 
E)  its marginal revenue curve below the ATC curve. 
A)  horizontal at the market price. 
B)  its total cost curve above the AVC. 
C)  its marginal cost curve below the marginal revenue curve. 
D)  its marginal cost curve above the AVC curve. 
E)  its marginal revenue curve below the ATC curve.

Question 12

If a perfectly competitive firm finds that price is less than its ATC,then the firm

Accepted Answer

A)  will raise its price to increase its economic profit. 
B)  will lower its price to increase its economic profit. 
C)  is making an economic profit. 
D)  is incurring an economic loss. 
E)  is making zero economic profit. 
A)  will raise its price to increase its economic profit. 
B)  will lower its price to increase its economic profit. 
C)  is making an economic profit. 
D)  is incurring an economic loss. 
E)  is making zero economic profit.

Question 13

Technological change brings a ________ to firms that adopt the new technology.

Accepted Answer

A)  permanent economic profit 
B)  temporary economic profit 
C)  permanent economic loss 
D)  temporary economic loss 
E)  temporary normal profit 
A)  permanent economic profit 
B)  temporary economic profit 
C)  permanent economic loss 
D)  temporary economic loss 
E)  temporary normal profit

Question 14

-Farmer Brown produces corn in a perfectly competitive market.Farmer Brown produces and sells 500 bushels of corn.The market supply and demand curves are illustrated in the above figure.
a.What is Farmer Brown's total revenue?
b.What is Farmer Brown's marginal revenue?

Accepted Answer

a.Total revenue = price × quantity.The p

Question 15

-American restaurants receive their supply of baby back-ribs from American farms and from farms in Denmark.In the figures above,the left diagram shows the perfectly competitive market for baby back ribs in the United States.The right figure shows the situation at Premium Standard Farm in Kansas,one of the many U.S.farms supplying these ribs.
Now assume that the United States imposes a ban on European meat in response to the foot-and-mouth disease that has infected livestock in Europe.(Which the United States did a few years ago.)In particular,suppose that the U.S.ban decreases the supply by 40 tons a year.Using the figure on the left,show the impact of this ban on the baby back rib market.Using the figure on the right,show the impact on Premium Standard Farm in Kansas.

Accepted Answer

@#IMG-DLM& 
 @#IMG-DLM& The ban on European meat decreases t

Question 16

-Use the figure above to answer this question.Consider a perfectly competitive firm in a short run equilibrium.Figure ________ shows a firm in bad times because the firm makes a(n)________.

Accepted Answer

A)  A; economic loss of $4 per unit if the firm decides to operate 
B)  A; economic loss of $4 so it must close 
C)  B; economic loss of $3 per unit 
D)  B; economic profit because the price exceeds average variable cost 
E)  C; normal profit and can stay open in the long run 
A)  A; economic loss of $4 per unit if the firm decides to operate 
B)  A; economic loss of $4 so it must close 
C)  B; economic loss of $3 per unit 
D)  B; economic profit because the price exceeds average variable cost 
E)  C; normal profit and can stay open in the long run

Question 17

If the price is less than a perfectly competitive firm's minimum average variable cost,the firm

Accepted Answer

A)  makes an economic profit. 
B)  operates and incurs an economic loss equal to total fixed cost. 
C)  operates and incurs an economic loss equal to average variable cost. 
D)  shuts down and incurs an economic loss equal to total fixed cost. 
E)  shuts down and incurs an economic loss equal to average variable cost. 
A)  makes an economic profit. 
B)  operates and incurs an economic loss equal to total fixed cost. 
C)  operates and incurs an economic loss equal to average variable cost. 
D)  shuts down and incurs an economic loss equal to total fixed cost. 
E)  shuts down and incurs an economic loss equal to average variable cost.

Question 18

Technological change allows perfectly competitive firms to ________ and leads to ________.

Accepted Answer

A)  lower their costs; lower prices for consumers 
B)  raise their prices; higher prices for consumers 
C)  lower their costs; higher prices so the firms can earn economic profits in the long run 
D)  raise their costs; higher prices and maximum profits in the long run 
E)  lower their costs; deadweight loss 
A)  lower their costs; lower prices for consumers 
B)  raise their prices; higher prices for consumers 
C)  lower their costs; higher prices so the firms can earn economic profits in the long run 
D)  raise their costs; higher prices and maximum profits in the long run 
E)  lower their costs; deadweight loss

Question 19

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit,to maximize its profit (or minimize its loss)the firm should

Accepted Answer

A)  shut down. 
B)  produce between 10 and less than 30 units. 
C)  produce 30 units. 
D)  produce more than 30 units and less than 40 units. 
E)  produce 40 units. 
A)  shut down. 
B)  produce between 10 and less than 30 units. 
C)  produce 30 units. 
D)  produce more than 30 units and less than 40 units. 
E)  produce 40 units.

Question 20

Technology reduces the average cost of production,so in the long run
i.perfectly competitive firms produce at a lower average cost.
ii.the market price of the good falls.
iii.firms with older plants either exit the market or adopt the new technology.

Accepted Answer

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

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,what is the price of a can?

The above figure shows some a firm's cost curves and its marginal revenue curve. -Suppose the price of a can was $5.14.In this case,to maximize its profit the firm illustrated in the figure above would

One requirement for an industry to be perfectly competitive is that

Keith is a perfectly competitive carnation grower.The market price is $2 per dozen carnations.Keith's average total cost to grow carnations is $2.50 per dozen.In the long run,Keith will

If perfectly competitive firms are making an economic profit,then

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

For a perfectly competitive firm,profit maximization occurs when output is such that

Will a perfectly competitive firm ever produce in the short run even though it is suffering an economic loss?

Alice,Bud,and Celia can produce rubber bands in a perfectly competitive market.If they enter the market,the minimum average total cost for a bundle of rubber bands,for the three of them is $2,$3,and $4,respectively.If the market price is $2.10 per bundle,then

Perfect competition an efficient outcome because .

A perfectly competitive firm's short-run supply curve is

If a perfectly competitive firm finds that price is less than its ATC,then the firm

Technological change brings a ________ to firms that adopt the new technology.

-Farmer Brown produces corn in a perfectly competitive market.Farmer Brown produces and sells 500 bushels of corn.The market supply and demand curves are illustrated in the above figure. a.What is Farmer Brown's total revenue? b.What is Farmer Brown's marginal revenue?

-Use the figure above to answer this question.Consider a perfectly competitive firm in a short run equilibrium.Figure shows a firm in bad times because the firm makes a(n).

If the price is less than a perfectly competitive firm's minimum average variable cost,the firm

Technological change allows perfectly competitive firms to and leads to .

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit,to maximize its profit (or minimize its loss)the firm should

Technology reduces the average cost of production,so in the long run i.perfectly competitive firms produce at a lower average cost. ii.the market price of the good falls. iii.firms with older plants either exit the market or adopt the new technology.

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

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,what is the price of a can?

The above figure shows some a firm's cost curves and its marginal revenue curve. -Suppose the price of a can was $5.14.In this case,to maximize its profit the firm illustrated in the figure above would

One requirement for an industry to be perfectly competitive is that

Keith is a perfectly competitive carnation grower.The market price is $2 per dozen carnations.Keith's average total cost to grow carnations is $2.50 per dozen.In the long run,Keith will

If perfectly competitive firms are making an economic profit,then

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

For a perfectly competitive firm,profit maximization occurs when output is such that

Will a perfectly competitive firm ever produce in the short run even though it is suffering an economic loss?

Alice,Bud,and Celia can produce rubber bands in a perfectly competitive market.If they enter the market,the minimum average total cost for a bundle of rubber bands,for the three of them is $2,$3,and $4,respectively.If the market price is $2.10 per bundle,then

Perfect competition ________ an efficient outcome because ________.

A perfectly competitive firm's short-run supply curve is

If a perfectly competitive firm finds that price is less than its ATC,then the firm

Technological change brings a ________ to firms that adopt the new technology.

-Farmer Brown produces corn in a perfectly competitive market.Farmer Brown produces and sells 500 bushels of corn.The market supply and demand curves are illustrated in the above figure. a.What is Farmer Brown's total revenue? b.What is Farmer Brown's marginal revenue?

-Use the figure above to answer this question.Consider a perfectly competitive firm in a short run equilibrium.Figure ________ shows a firm in bad times because the firm makes a(n)________.

If the price is less than a perfectly competitive firm's minimum average variable cost,the firm

Technological change allows perfectly competitive firms to ________ and leads to ________.

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit,to maximize its profit (or minimize its loss)the firm should

Technology reduces the average cost of production,so in the long run i.perfectly competitive firms produce at a lower average cost. ii.the market price of the good falls. iii.firms with older plants either exit the market or adopt the new technology.

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

Perfect competition an efficient outcome because .

-Use the figure above to answer this question.Consider a perfectly competitive firm in a short run equilibrium.Figure shows a firm in bad times because the firm makes a(n).

Technological change allows perfectly competitive firms to and leads to .