Question 1

Which of the following market types has the fewest number of firms?

Accepted Answer

A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly 
E)  perfect competition and monopolistic competition 
A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly 
E)  perfect competition and monopolistic competition

Question 2

-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 produces ________ units and makes a(n)________.

Accepted Answer

A)  A; 100; economic loss 
B)  A; 110; economic loss 
C)  B; 90; economic profit 
D)  C; 100; economic loss 
E)  C; 100; normal profit 
A)  A; 100; economic loss 
B)  A; 110; economic loss 
C)  B; 90; economic profit 
D)  C; 100; economic loss 
E)  C; 100; normal profit

Question 3

In a perfectly competitive market,the market price is $23.At the current level of output,a firm has a marginal cost of $28.What should the firm do?

Accepted Answer

A)  produce a larger output to make more profit 
B)  nothing, it is currently maximizing profit 
C)  produce less output to make more profit 
D)  shut down 
E)  raise the price of its product 
A)  produce a larger output to make more profit 
B)  nothing, it is currently maximizing profit 
C)  produce less output to make more profit 
D)  shut down 
E)  raise the price of its product

Question 4

For a perfectly competitive firm,marginal revenue is

Accepted Answer

A)  less than the price. 
B)  greater than the price. 
C)  equal to the price. 
D)  equal to the change in profit from selling one more unit. 
E)  undefined because the firm's demand curve is horizontal. 
A)  less than the price. 
B)  greater than the price. 
C)  equal to the price. 
D)  equal to the change in profit from selling one more unit. 
E)  undefined because the firm's demand curve is horizontal.

Question 5

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

-The above table has the total revenue and total cost schedule for Omar,a perfectly competitive grower of rutabagas.When Omar produces 2 bushels of rutabagas,his total profit equals

Accepted Answer

A)  $0. 
B)  $20. 
C)  $28. 
D)  -$8. 
E)  $48. 
A)  $0. 
B)  $20. 
C)  $28. 
D)  -$8. 
E)  $48.

Question 6

If the market price is $50 per unit for a good produced in a perfectly competitive market and the firm's average total cost is $52,then the firm

Accepted Answer

A)  incurs an economic loss of $2 per unit. 
B)  makes an economic profit of $2 per unit. 
C)  makes zero economic profit. 
D)  incurs a total economic loss of $52. 
E)  More information is needed to determine the firm's economic profit or loss per unit. 
A)  incurs an economic loss of $2 per unit. 
B)  makes an economic profit of $2 per unit. 
C)  makes zero economic profit. 
D)  incurs a total economic loss of $52. 
E)  More information is needed to determine the firm's economic profit or loss per unit.

Question 7

What is the relationship between the price,P,and the average total cost,ATC,for a firm in perfect competition that makes an economic profit? That makes zero economic profit? That incurs an economic loss?

Accepted Answer

If the price is greater than the average

Question 8

-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 new firms enter the market. 
B)  make zero economic profit and no firms enter or exit the market. 
C)  make zero economic profit and some firms exit the market. 
D)  incur an economic loss and some firms exit the market. 
E)  make an economic profit and new firms enter the market. 
A)  make zero economic profit and new firms enter the market. 
B)  make zero economic profit and no firms enter or exit the market. 
C)  make zero economic profit and some firms exit the market. 
D)  incur an economic loss and some firms exit the market. 
E)  make an economic profit and new firms enter the market.

Question 9

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

Accepted Answer

A)  $5.14 × 7 
B)  $3.00 × 7 
C)  ($5.14 - $3.00) × 7 
D)  ($3.00 - $5.14) × 7 
E)  None of the above answers is correct because more information is needed. 
A)  $5.14 × 7 
B)  $3.00 × 7 
C)  ($5.14 - $3.00) × 7 
D)  ($3.00 - $5.14) × 7 
E)  None of the above answers is correct because more information is needed.

Question 10

For a perfectly competitive firm,the price of its good is equal to the firm's marginal revenue because

Accepted Answer

A)  information about price changes is hard to come by for small sellers. 
B)  price and marginal revenue are the same economic concepts. 
C)  individual perfectly competitive firms cannot influence the market price by changing their output. 
D)  the firm's total revenue cannot be changed by anything the firms can do. 
E)  there are only a small number of firms in the market. 
A)  information about price changes is hard to come by for small sellers. 
B)  price and marginal revenue are the same economic concepts. 
C)  individual perfectly competitive firms cannot influence the market price by changing their output. 
D)  the firm's total revenue cannot be changed by anything the firms can do. 
E)  there are only a small number of firms in the market.

Question 11

For a perfectly competitive sugar producer in Haiti,a short-run economic profit will occur if the price of each ton of sugar sold is

Accepted Answer

A)  greater than the average total cost of producing sugar. 
B)  equal to the average total cost of producing sugar. 
C)  less than the average total cost of producing sugar. 
D)  rising as more sugar is sold. 
E)  greater than the marginal revenue of each ton of sugar. 
A)  greater than the average total cost of producing sugar. 
B)  equal to the average total cost of producing sugar. 
C)  less than the average total cost of producing sugar. 
D)  rising as more sugar is sold. 
E)  greater than the marginal revenue of each ton of sugar.

Question 12

Entry by competitive firms decreases the market price,while exit by competitive firms increases the market price.Explain why firms enter or exit an industry and why these price changes occur.

Accepted Answer

Competitive firms will enter an industry

Question 13

How does the demand for any one seller's product in perfect competition compare to the market demand for that product?

Accepted Answer

A)  They are identical. 
B)  The demand for any one seller is proportionally smaller but otherwise identical to the market demand. 
C)  The demand for any one seller's product is perfectly elastic while the market demand curve is downward sloping. 
D)  There is no demand for any one seller's competitively sold product. 
E)  The demand for any one seller's product is not perfectly elastic while the market demand is perfectly elastic. 
A)  They are identical. 
B)  The demand for any one seller is proportionally smaller but otherwise identical to the market demand. 
C)  The demand for any one seller's product is perfectly elastic while the market demand curve is downward sloping. 
D)  There is no demand for any one seller's competitively sold product. 
E)  The demand for any one seller's product is not perfectly elastic while the market demand is perfectly elastic.

Question 14

A monopoly occurs when

Accepted Answer

A)  each of many firms produces a product that is slightly different from that of the other firms. 
B)  one firm sells a good that has no close substitutes and a barrier blocks entry for other firms. 
C)  there are many firms producing the same product. 
D)  a few firms control the market. 
E)  one firm is larger than the many other firms that make an identical product. 
A)  each of many firms produces a product that is slightly different from that of the other firms. 
B)  one firm sells a good that has no close substitutes and a barrier blocks entry for other firms. 
C)  there are many firms producing the same product. 
D)  a few firms control the market. 
E)  one firm is larger than the many other firms that make an identical product.

Question 15

-The figure above shows a perfectly competitive firm.If the market price is $20 per unit,then the firm produces ________ units and makes an economic profit that is ________.

Accepted Answer

A)  more than 30; more than $100 
B)  30; more than $100 
C)  20; less than $400 
D)  0; zero 
E)  30; zero 
A)  more than 30; more than $100 
B)  30; more than $100 
C)  20; less than $400 
D)  0; zero 
E)  30; zero

Question 16

In which market structure is there a large number of firms producing slightly differentiated products?

Accepted Answer

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

Question 17

What are the four types of markets? Give a brief description of each type.

Accepted Answer

The four types of markets are perfect co

Question 18

Perfect competition ________ a fair outcome ________.

Accepted Answer

A)  achieves; because both the fair rules and fair results conditions are met 
B)  achieves; because total surplus is maximized 
C)  does not achieve; because entrepreneurs only earn a normal profit 
D)  does not achieve; because firms must be price takers 
E)  may achieve; if average total costs are minimized 
A)  achieves; because both the fair rules and fair results conditions are met 
B)  achieves; because total surplus is maximized 
C)  does not achieve; because entrepreneurs only earn a normal profit 
D)  does not achieve; because firms must be price takers 
E)  may achieve; if average total costs are minimized

Question 19

-The above figure shows a perfectly competitive firm.If the market price is $5 per unit,the firm

Accepted Answer

A)  will definitely shut down to minimize its losses. 
B)  will stay open to produce and will make zero economic profit. 
C)  will stay open to produce and will incur an economic loss. 
D)  will stay open to produce and will make an economic profit. 
E)  might shut down but more information is needed about the fixed cost. 
A)  will definitely shut down to minimize its losses. 
B)  will stay open to produce and will make zero economic profit. 
C)  will stay open to produce and will incur an economic loss. 
D)  will stay open to produce and will make an economic profit. 
E)  might shut down but more information is needed about the fixed cost.

Question 20

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies,the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit,Jennifer should

Accepted Answer

A)  not produce this additional batch. 
B)  produce this batch of cookies because they will help lower her average fixed cost. 
C)  charge $120 for this batch. 
D)  shut down. 
E)  produce this batch of cookies because their MR exceeds their MC. 
A)  not produce this additional batch. 
B)  produce this batch of cookies because they will help lower her average fixed cost. 
C)  charge $120 for this batch. 
D)  shut down. 
E)  produce this batch of cookies because their MR exceeds their MC.

Which of the following market types has the fewest number of firms?

-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 produces units and makes a(n).

In a perfectly competitive market,the market price is $23.At the current level of output,a firm has a marginal cost of $28.What should the firm do?

For a perfectly competitive firm,marginal revenue is

If the market price is $50 per unit for a good produced in a perfectly competitive market and the firm's average total cost is $52,then the firm

What is the relationship between the price,P,and the average total cost,ATC,for a firm in perfect competition that makes an economic profit? That makes zero economic profit? That incurs an economic loss?

-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

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

For a perfectly competitive firm,the price of its good is equal to the firm's marginal revenue because

For a perfectly competitive sugar producer in Haiti,a short-run economic profit will occur if the price of each ton of sugar sold is

Entry by competitive firms decreases the market price,while exit by competitive firms increases the market price.Explain why firms enter or exit an industry and why these price changes occur.

How does the demand for any one seller's product in perfect competition compare to the market demand for that product?

A monopoly occurs when

-The figure above shows a perfectly competitive firm.If the market price is $20 per unit,then the firm produces units and makes an economic profit that is .

In which market structure is there a large number of firms producing slightly differentiated products?

What are the four types of markets? Give a brief description of each type.

Perfect competition a fair outcome .

-The above figure shows a perfectly competitive firm.If the market price is $5 per unit,the firm

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies,the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit,Jennifer should

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

Which of the following market types has the fewest number of firms?

-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 produces ________ units and makes a(n)________.

In a perfectly competitive market,the market price is $23.At the current level of output,a firm has a marginal cost of $28.What should the firm do?

For a perfectly competitive firm,marginal revenue is

If the market price is $50 per unit for a good produced in a perfectly competitive market and the firm's average total cost is $52,then the firm

What is the relationship between the price,P,and the average total cost,ATC,for a firm in perfect competition that makes an economic profit? That makes zero economic profit? That incurs an economic loss?

-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

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

For a perfectly competitive firm,the price of its good is equal to the firm's marginal revenue because

For a perfectly competitive sugar producer in Haiti,a short-run economic profit will occur if the price of each ton of sugar sold is

Entry by competitive firms decreases the market price,while exit by competitive firms increases the market price.Explain why firms enter or exit an industry and why these price changes occur.

How does the demand for any one seller's product in perfect competition compare to the market demand for that product?

A monopoly occurs when

-The figure above shows a perfectly competitive firm.If the market price is $20 per unit,then the firm produces ________ units and makes an economic profit that is ________.

In which market structure is there a large number of firms producing slightly differentiated products?

What are the four types of markets? Give a brief description of each type.

Perfect competition ________ a fair outcome ________.

-The above figure shows a perfectly competitive firm.If the market price is $5 per unit,the firm

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies,the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit,Jennifer should

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

-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 produces units and makes a(n).

-The figure above shows a perfectly competitive firm.If the market price is $20 per unit,then the firm produces units and makes an economic profit that is .

Perfect competition a fair outcome .