Question 1

If a perfectly competitive firm sells 50 units of output at a market price of $10 per unit,its marginal revenue is:

Accepted Answer

A) more than $10. 
B) less than $10. 
C) $10. 
D) $5300. 
A) more than $10. 
B) less than $10. 
C) $10. 
D) $5300. C

Question 2

In the long run,firms can:

Accepted Answer

A) not vary any inputs. 
B) vary all inputs and leave the industry if they earn negative profit. 
C) vary only some inputs and enter the industry if they earn negative profit. 
D) manipulate the market price. 
A) not vary any inputs. 
B) vary all inputs and leave the industry if they earn negative profit. 
C) vary only some inputs and enter the industry if they earn negative profit. 
D) manipulate the market price. B

Question 3

Exhibit 7-8
  
-According to Exhibit 7-8,in the short run the firm will be:

Accepted Answer

A) earning an economic profit of $600. 
B) earning zero economic profit. 
C) earning a $220 loss. 
D) earning an $840 loss. 
E) earning some loss. 
A) earning an economic profit of $600. 
B) earning zero economic profit. 
C) earning a $220 loss. 
D) earning an $840 loss. 
E) earning some loss. E

Question 4

The firm in a perfectly competitive market will:

Accepted Answer

A) set the price as high as possible to make maximum profit. 
B) use different rules for loss minimisation and for profit maximisation. 
C) use non-price competition techniques like advertising to sell more. 
D) try to keep the average total cost below the market price. 
A) set the price as high as possible to make maximum profit. 
B) use different rules for loss minimisation and for profit maximisation. 
C) use non-price competition techniques like advertising to sell more. 
D) try to keep the average total cost below the market price.

Question 5

Exhibit 7-9 A typical firm in a perfectly competitive market
  
-As shown in Exhibit 7-9,the perfectly competitive firm is in long-run equilibrium at an output of:

Accepted Answer

A) 0 units per week. 
B) 200 units per week. 
C) 400 units per week. 
D) 600 units per week. 
A) 0 units per week. 
B) 200 units per week. 
C) 400 units per week. 
D) 600 units per week.

Question 6

Assume that the market price is $10 and the minimum AVC is $15.The firm should:

Accepted Answer

A) increase production. 
B) continue to operate at the same level. 
C) decrease production. 
D) shut down. 
A) increase production. 
B) continue to operate at the same level. 
C) decrease production. 
D) shut down.

Question 7

The body charged with increasing or maintaining competition in the Australian economy is:

Accepted Answer

A) the ACCC. 
B) the Treasury. 
C) the Reserve Bank of Australia. 
D) the Australian Prudential Regulation Authority. 
E) the Productivity Commission. 
A) the ACCC. 
B) the Treasury. 
C) the Reserve Bank of Australia. 
D) the Australian Prudential Regulation Authority. 
E) the Productivity Commission.

Question 8

In a perfectly competitive market,firms:

Accepted Answer

A) enter the industry in the long run. 
B) exit the industry in the long run. 
C) earn economic profit in a long run. 
D) earn normal profit in a long run. 
A) enter the industry in the long run. 
B) exit the industry in the long run. 
C) earn economic profit in a long run. 
D) earn normal profit in a long run.

Question 9

If the long-run supply curve in a perfectly competitive industry is downward-sloping,then the market is characterised by:

Accepted Answer

A) decreasing input costs. 
B) increasing input costs. 
C) increasing or decreasing input costs. 
D) constant input costs. 
A) decreasing input costs. 
B) increasing input costs. 
C) increasing or decreasing input costs. 
D) constant input costs.

Question 10

Assume the market equilibrium price is $100.In a perfectly competitive market,some firms can sell a good at the price of $120 and:

Accepted Answer

A) undercut their competitors. 
B) therefore they can influence the price. 
C) force their competitors to reduce output. 
D) receive $20 profit for each unit they sell. 
E) risk selling zero output. 
A) undercut their competitors. 
B) therefore they can influence the price. 
C) force their competitors to reduce output. 
D) receive $20 profit for each unit they sell. 
E) risk selling zero output.

Question 11

If a firm is operating at a loss in the short run and finds that its price is greater than average variable cost,then in the short run:

Accepted Answer

A) it should produce where MR = MC. 
B) it should produce zero output. 
C) it should go out of business. 
D) total revenue is less than total variable costs. 
E) total revenue is greater than total costs. 
A) it should produce where MR = MC. 
B) it should produce zero output. 
C) it should go out of business. 
D) total revenue is less than total variable costs. 
E) total revenue is greater than total costs.

Question 12

Exhibit 7-5 Short-run profit and loss
  
-According to Exhibit 7-5,if the price of the good is $17,then the result for the perfectly competitive firm will be:

Accepted Answer

A) making a long-run profit. 
B) making a long-run loss and so it will shut down. 
C) making a short-run loss but it will continue to produce. 
D) making a normal profit. 
E) indeterminate. 
A) making a long-run profit. 
B) making a long-run loss and so it will shut down. 
C) making a short-run loss but it will continue to produce. 
D) making a normal profit. 
E) indeterminate.

Question 13

Consider a firm operating where P = 10,MR = 10,MC = 10 and ATC = 10.This firm is:

Accepted Answer

A) making an economic profit of 10. 
B) an example of monopolistic competition. 
C) going to go out of business in the long run. 
D) a monopolist for a product with a relatively inelastic demand. 
E) perfectly competitive in long-run equilibrium. 
A) making an economic profit of 10. 
B) an example of monopolistic competition. 
C) going to go out of business in the long run. 
D) a monopolist for a product with a relatively inelastic demand. 
E) perfectly competitive in long-run equilibrium.

Question 14

Exhibit 7-7
  
-According to Exhibit 7-7,the firm's short-run economic profit will be:

Accepted Answer

A) zero. 
B) $260. 
C) $520. 
D) $600. 
E) indeterminate from the information given. 
A) zero. 
B) $260. 
C) $520. 
D) $600. 
E) indeterminate from the information given.

Question 15

Under perfect competition,no matter how much output is produced,the total revenue curve is a:

Accepted Answer

A) positively sloped line. 
B) negatively sloped line. 
C) horizontal straight line. 
D) U-shaped curve. 
E) hill-shaped curve. 
A) positively sloped line. 
B) negatively sloped line. 
C) horizontal straight line. 
D) U-shaped curve. 
E) hill-shaped curve.

Question 16

Above the shutdown point,a competitive firm's supply curve coincides with its:

Accepted Answer

A) marginal revenue curve. 
B) marginal cost curve. 
C) average variable cost curve. 
D) average total cost curve. 
A) marginal revenue curve. 
B) marginal cost curve. 
C) average variable cost curve. 
D) average total cost curve.

Question 17

As the marginal revenue curve moves upward the perfectly competitive firm will:

Accepted Answer

A) change the selection of products it offers to the customers. 
B) change its output and will be able to charge a higher price. 
C) change its output but will not be able to change the price. 
D) change its price and will not change its output. 
A) change the selection of products it offers to the customers. 
B) change its output and will be able to charge a higher price. 
C) change its output but will not be able to change the price. 
D) change its price and will not change its output.

Question 18

In a perfectly competitive market firms:

Accepted Answer

A) produce a differentiated product. 
B) can enter free but exit is costly. 
C) extensively advertise to attract more buyers. 
D) produce a homogeneous product. 
A) produce a differentiated product. 
B) can enter free but exit is costly. 
C) extensively advertise to attract more buyers. 
D) produce a homogeneous product.

Question 19

Total revenue is computed as:

Accepted Answer

A) the product price times the quantity. 
B) the product cost times the quantity. 
C) the product price minus the product cost. 
D) the product marginal cost times the price. 
A) the product price times the quantity. 
B) the product cost times the quantity. 
C) the product price minus the product cost. 
D) the product marginal cost times the price.

Question 20

Exhibit 7-3 A firm's cost and marginal revenue curves
  
-In Exhibit 7-3,when the output is 8 units,the firm:

Accepted Answer

A) has profit. 
B) should not operate. 
C) should ask for a higher price. 
D) should produce more. 
E) is operating at the minimum ATC. 
A) has profit. 
B) should not operate. 
C) should ask for a higher price. 
D) should produce more. 
E) is operating at the minimum ATC.

If a perfectly competitive firm sells 50 units of output at a market price of $10 per unit,its marginal revenue is:

In the long run,firms can:

Exhibit 7-8 -According to Exhibit 7-8,in the short run the firm will be:

The firm in a perfectly competitive market will:

Exhibit 7-9 A typical firm in a perfectly competitive market -As shown in Exhibit 7-9,the perfectly competitive firm is in long-run equilibrium at an output of:

Assume that the market price is $10 and the minimum AVC is $15.The firm should:

The body charged with increasing or maintaining competition in the Australian economy is:

In a perfectly competitive market,firms:

If the long-run supply curve in a perfectly competitive industry is downward-sloping,then the market is characterised by:

Assume the market equilibrium price is $100.In a perfectly competitive market,some firms can sell a good at the price of $120 and:

If a firm is operating at a loss in the short run and finds that its price is greater than average variable cost,then in the short run:

Exhibit 7-5 Short-run profit and loss -According to Exhibit 7-5,if the price of the good is $17,then the result for the perfectly competitive firm will be:

Consider a firm operating where P = 10,MR = 10,MC = 10 and ATC = 10.This firm is:

Exhibit 7-7 -According to Exhibit 7-7,the firm's short-run economic profit will be:

Under perfect competition,no matter how much output is produced,the total revenue curve is a:

Above the shutdown point,a competitive firm's supply curve coincides with its:

As the marginal revenue curve moves upward the perfectly competitive firm will:

In a perfectly competitive market firms:

Total revenue is computed as:

Exhibit 7-3 A firm's cost and marginal revenue curves -In Exhibit 7-3,when the output is 8 units,the firm:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

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Exam 7: Perfect competition

If a perfectly competitive firm sells 50 units of output at a market price of $10 per unit,its marginal revenue is:

In the long run,firms can:

Exhibit 7-8 -According to Exhibit 7-8,in the short run the firm will be:

The firm in a perfectly competitive market will:

Exhibit 7-9 A typical firm in a perfectly competitive market -As shown in Exhibit 7-9,the perfectly competitive firm is in long-run equilibrium at an output of:

Assume that the market price is $10 and the minimum AVC is $15.The firm should:

The body charged with increasing or maintaining competition in the Australian economy is:

In a perfectly competitive market,firms:

If the long-run supply curve in a perfectly competitive industry is downward-sloping,then the market is characterised by:

Assume the market equilibrium price is $100.In a perfectly competitive market,some firms can sell a good at the price of $120 and:

If a firm is operating at a loss in the short run and finds that its price is greater than average variable cost,then in the short run:

Exhibit 7-5 Short-run profit and loss -According to Exhibit 7-5,if the price of the good is $17,then the result for the perfectly competitive firm will be:

Consider a firm operating where P = 10,MR = 10,MC = 10 and ATC = 10.This firm is:

Exhibit 7-7 -According to Exhibit 7-7,the firm's short-run economic profit will be:

Under perfect competition,no matter how much output is produced,the total revenue curve is a:

Above the shutdown point,a competitive firm's supply curve coincides with its:

As the marginal revenue curve moves upward the perfectly competitive firm will:

In a perfectly competitive market firms:

Total revenue is computed as:

Exhibit 7-3 A firm's cost and marginal revenue curves -In Exhibit 7-3,when the output is 8 units,the firm:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters