Question 1

When a firm adopts new technology,generally its

Accepted Answer

A)  cost curves shift upward. 
B)  cost curves shift downward. 
C)  cost curves are unaffected. 
D)  supply curve shifts leftward. 
E)  production permanently decreases. 
A)  cost curves shift upward. 
B)  cost curves shift downward. 
C)  cost curves are unaffected. 
D)  supply curve shifts leftward. 
E)  production permanently decreases.

Question 2

-The above figure shows the cost curves of a profit-maximizing perfectly competitive firm.If the price equals $7,
a.how much will the firm produce?
b.how much is the firm's average total,average variable,and marginal costs?
c.how much is the firm's total,total variable,and total fixed costs?
d.how much is the firm's total revenue and economic profit?
e.what will happen in this market in the long run?

Accepted Answer

a.The firm will produce 40 units of outp

Question 3

In which market structure does one firm sell a good or service with no close substitutes and there is a barrier blocking the entry of new firms?

Accepted Answer

A)  only monopoly 
B)  only oligopoly 
C)  perfect competition 
D)  monopolistic competition 
E)  either monopoly or oligopoly 
A)  only monopoly 
B)  only oligopoly 
C)  perfect competition 
D)  monopolistic competition 
E)  either monopoly or oligopoly

Question 4

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,as it increases its output,its profit ________ and the price it can charge for its product ________.

Accepted Answer

A)  increases; does not change 
B)  decreases; falls 
C)  increases; falls 
D)  decreases; rises 
E)  decreases; does not change 
A)  increases; does not change 
B)  decreases; falls 
C)  increases; falls 
D)  decreases; rises 
E)  decreases; does not change

Question 5

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

Accepted Answer

A)  A; economic profit 
B)  A; normal profit 
C)  B; normal profit 
D)  B; economic loss 
E)  C; normal profit 
A)  A; economic profit 
B)  A; normal profit 
C)  B; normal profit 
D)  B; economic loss 
E)  C; normal profit

Question 6

$\begin{array}{l}
\text { Average }\
\begin{array}{ccc}
\begin{array}{c}
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array}{c}
\text { variable cost } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Marginal cost } \
\text { (dollars) }
\end{array} \
\hline 1 & 8.00 & \
2 & 7.00 & 6.00 \
3 & 6.00 & 4.00 \
4 & 5.00 & 2.00 \
5 & 4.80 & 4.00 \
6 & 5.00 & 6.00 \
7 & 5.40 & 7.80 \
8 & 6.50 & 14.20 \
9 & 8.40 & 23.60 \
10 & 11.20 & 36.40
\end{array}
\end{array}$

-Acme is a perfectly competitive firm.It has the cost schedules given in the above table and has a fixed cost of $12.00.The price of Acme's product is $4.00.What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

Accepted Answer

Acme's most profitable (which means,in t

Question 7

We know that a perfectly competitive firm is a price taker because

Accepted Answer

A)  its MC curve slopes upward. 
B)  its ATC curve is U-shaped. 
C)  its demand curve is horizontal. 
D)  MC and ATC are equal at the profit-maximizing amount of output. 
E)  it has no supply curve. 
A)  its MC curve slopes upward. 
B)  its ATC curve is U-shaped. 
C)  its demand curve is horizontal. 
D)  MC and ATC are equal at the profit-maximizing amount of output. 
E)  it has no supply curve.

Question 8

Jerry's Jellybean Factory produces 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market.The marginal cost is $3 per pound,the average variable cost is $2 per pound,and the beans sell for $4 per pound.Jerry

Accepted Answer

A)  is maximizing profit. 
B)  is incurring an economic loss and should shut down. 
C)  could increase his profit by producing more beans. 
D)  could increase his profit by producing fewer beans. 
E)  could increase his profit by raising the price of his beans. 
A)  is maximizing profit. 
B)  is incurring an economic loss and should shut down. 
C)  could increase his profit by producing more beans. 
D)  could increase his profit by producing fewer beans. 
E)  could increase his profit by raising the price of his beans.

Question 9

In a perfectly competitive industry,when a firm is producing so that its total revenue equals its total cost,the firm is

Accepted Answer

A)  making an economic profit. 
B)  incurring an economic loss. 
C)  making zero economic profit. 
D)  definitely not maximizing its profit. 
E)  None of the above answers is correct because the relationship between total revenue and total cost has nothing to do with the firm's profit or loss. 
A)  making an economic profit. 
B)  incurring an economic loss. 
C)  making zero economic profit. 
D)  definitely not maximizing its profit. 
E)  None of the above answers is correct because the relationship between total revenue and total cost has nothing to do with the firm's profit or loss.

Question 10

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces ________ units and makes an economic profit that is ________.

Accepted Answer

A)  more than 45; more than $400 
B)  40; more than $400 
C)  40; less than $400 
D)  30; equal to zero 
E)  30; more than $250 
A)  more than 45; more than $400 
B)  40; more than $400 
C)  40; less than $400 
D)  30; equal to zero 
E)  30; more than $250

Question 11

In a perfectly competitive industry,
i.entry by new firms shifts the market supply curve rightward.
ii.exit by existing firms shifts the market supply curve leftward.
iii.at all times existing firms make only zero economic profit.

Accepted Answer

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

Question 12

$$\begin{array}{l}
\text { Quantity } \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \text { Price }\
\begin{array} { c c } 
\text { (dozens of roses a week) } & \text { (dollars per dozen roses) } \
\hline 1 & 12 \
2 & 12 \
3 & 12 \
4 & 12
\end{array}
\end{array}$$
-Pete is a perfectly competitive rose grower.The above table gives quantities and the price for which Pete can sell his roses.
a.What is Pete's total revenue if he sells 1 dozen roses? 2 dozen roses? 3 dozen roses? 4 dozen roses?
b.What is the marginal revenue of the 2nd dozen roses sold? Of the 3rd dozen? Of the 4th dozen?

Accepted Answer

a.The total revenue when 1 dozen roses i

Question 13

One requirement for an industry to be perfectly competitive is that in the industry there

Accepted Answer

A)  are a few firms who control the market. 
B)  are many firms for whom the efficient scale of production is small. 
C)  is one firm that sells a product with no close substitutes. 
D)  are many firms selling different products. 
E)  is a barrier to entry that makes the entry of new firms difficult. 
A)  are a few firms who control the market. 
B)  are many firms for whom the efficient scale of production is small. 
C)  is one firm that sells a product with no close substitutes. 
D)  are many firms selling different products. 
E)  is a barrier to entry that makes the entry of new firms difficult.

Question 14

If it does not shut down,a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

Accepted Answer

A)  only in the short run. 
B)  only in the long run. 
C)  always to maximize its profit. 
D)  only if it is not possible to produce where price equals average variable cost. 
E)  only if it is not possible to produce where price is greater than average total cost. 
A)  only in the short run. 
B)  only in the long run. 
C)  always to maximize its profit. 
D)  only if it is not possible to produce where price equals average variable cost. 
E)  only if it is not possible to produce where price is greater than average total cost.

Question 15

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

Accepted Answer

A)  $0. 
B)  $3.00 per can 
C)  $5.14 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)  $3.00 per can 
C)  $5.14 per can 
D)  None of the above prices is correct. 
E)  More information is needed to determine the price of a can.

Question 16

The above figure shows some 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; $5.14 × 7 
B)  making an economic profit; $3.00 × 7 
C)  incurring an economic loss; $5.14 × 7 
D)  incurring an economic loss; ($5.14 - $3.00) × 7 
E)  making an economic profit; ($5.14 - $3.00) × 7 
A)  making an economic profit; $5.14 × 7 
B)  making an economic profit; $3.00 × 7 
C)  incurring an economic loss; $5.14 × 7 
D)  incurring an economic loss; ($5.14 - $3.00) × 7 
E)  making an economic profit; ($5.14 - $3.00) × 7

Question 17

If a perfectly competitive firm is maximizing its profit and is making an economic profit,which of the following is correct?
i.Price equals marginal revenue.
ii.Marginal revenue equals marginal cost.
iii.Price is greater than average total cost.

Accepted Answer

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

Question 18

A perfectly competitive firm is producing 50 units of output,which it sells at the market price of $23 per unit.The firm's average total cost is $20.What is the firm's total revenue?

Accepted Answer

A)  $23 
B)  $150 
C)  $1,000 
D)  $1,150 
E)  $20 
A)  $23 
B)  $150 
C)  $1,000 
D)  $1,150 
E)  $20

Question 19

-The above figure illustrates a perfectly competitive firm.Curve B represents the

Accepted Answer

A)  MR curve. 
B)  ATC curve. 
C)  MC curve. 
D)  AVC curve. 
E)  AFC curve. 
A)  MR curve. 
B)  ATC curve. 
C)  MC curve. 
D)  AVC curve. 
E)  AFC curve.

Question 20

If a struggling perfectly competitive furniture store in Detroit shuts down,it incurs an economic loss equal to its

Accepted Answer

A)  marginal cost. 
B)  total fixed cost. 
C)  total variable cost. 
D)  average variable cost. 
E)  average total cost. 
A)  marginal cost. 
B)  total fixed cost. 
C)  total variable cost. 
D)  average variable cost. 
E)  average total cost.

When a firm adopts new technology,generally its

In which market structure does one firm sell a good or service with no close substitutes and there is a barrier blocking the entry of new firms?

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,as it increases its output,its profit and the price it can charge for its product .

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

We know that a perfectly competitive firm is a price taker because

Jerry's Jellybean Factory produces 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market.The marginal cost is $3 per pound,the average variable cost is $2 per pound,and the beans sell for $4 per pound.Jerry

In a perfectly competitive industry,when a firm is producing so that its total revenue equals its total cost,the firm is

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces units and makes an economic profit that is .

In a perfectly competitive industry, i.entry by new firms shifts the market supply curve rightward. ii.exit by existing firms shifts the market supply curve leftward. iii.at all times existing firms make only zero economic profit.

One requirement for an industry to be perfectly competitive is that in the industry there

If it does not shut down,a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

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

If a perfectly competitive firm is maximizing its profit and is making an economic profit,which of the following is correct? i.Price equals marginal revenue. ii.Marginal revenue equals marginal cost. iii.Price is greater than average total cost.

A perfectly competitive firm is producing 50 units of output,which it sells at the market price of $23 per unit.The firm's average total cost is $20.What is the firm's total revenue?

-The above figure illustrates a perfectly competitive firm.Curve B represents the

If a struggling perfectly competitive furniture store in Detroit shuts down,it incurs an economic loss equal to its

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

When a firm adopts new technology,generally its

In which market structure does one firm sell a good or service with no close substitutes and there is a barrier blocking the entry of new firms?

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,as it increases its output,its profit ________ and the price it can charge for its product ________.

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

We know that a perfectly competitive firm is a price taker because

Jerry's Jellybean Factory produces 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market.The marginal cost is $3 per pound,the average variable cost is $2 per pound,and the beans sell for $4 per pound.Jerry

In a perfectly competitive industry,when a firm is producing so that its total revenue equals its total cost,the firm is

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces ________ units and makes an economic profit that is ________.

In a perfectly competitive industry, i.entry by new firms shifts the market supply curve rightward. ii.exit by existing firms shifts the market supply curve leftward. iii.at all times existing firms make only zero economic profit.

One requirement for an industry to be perfectly competitive is that in the industry there

If it does not shut down,a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

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

If a perfectly competitive firm is maximizing its profit and is making an economic profit,which of the following is correct? i.Price equals marginal revenue. ii.Marginal revenue equals marginal cost. iii.Price is greater than average total cost.

A perfectly competitive firm is producing 50 units of output,which it sells at the market price of $23 per unit.The firm's average total cost is $20.What is the firm's total revenue?

-The above figure illustrates a perfectly competitive firm.Curve B represents the

If a struggling perfectly competitive furniture store in Detroit shuts down,it incurs an economic loss equal to its

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

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,as it increases its output,its profit and the price it can charge for its product .

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

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces units and makes an economic profit that is .

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