Question 1

Suppose the market demand for second-hand books has decreased to the level less than the average total cost.The firm will:

Accepted Answer

A) reduce its losses to zero. 
B) produce at the output level where ATC = MC. 
C) produce at the level of output that keeps its losses to a minimum. 
D) increase its output to make up for losses. 
A) reduce its losses to zero. 
B) produce at the output level where ATC = MC. 
C) produce at the level of output that keeps its losses to a minimum. 
D) increase its output to make up for losses.

Question 2

Suppose that in a perfectly competitive market,firms are making economic profits.In the long run,we can expect to see:

Accepted Answer

A) some firms leave. 
B) the market price rise. 
C) market supply shift to the left. 
D) economic profits become zero. 
A) some firms leave. 
B) the market price rise. 
C) market supply shift to the left. 
D) economic profits become zero.

Question 3

A sandwich shop owner has the following information: P = $4,ATC = $2,AVC = $1,MC = 4 and Q = 500.From this,she can determine:

Accepted Answer

A) her profits are not being maximised. 
B) she has earned zero economic profits. 
C) she has earned economic profits of $1000. 
D) she has earned economic profits of $1500. 
E) she should sell fewer sandwiches. 
A) her profits are not being maximised. 
B) she has earned zero economic profits. 
C) she has earned economic profits of $1000. 
D) she has earned economic profits of $1500. 
E) she should sell fewer sandwiches.

Question 4

For a perfectly competitive firm,short-run equilibrium is determined by:

Accepted Answer

A) the point where P = MC. 
B) the point where P = ATC. 
C) the point where P = AVC. 
D) the point where MC = ATC. 
A) the point where P = MC. 
B) the point where P = ATC. 
C) the point where P = AVC. 
D) the point where MC = ATC.

Question 5

All three types of long-run supply curves can be observed in real life: increasing-cost supply curve,upward-sloping supply curve and constant supply curve.

Accepted Answer

A) True 
 B)False

Question 6

The perfectly competitive industry's short-run market supply curve is the sum of:

Accepted Answer

A) the outputs that each of the firms will supply at the highest price. 
B) the outputs that each of the firms will supply at the lowest price. 
C) the outputs that each of the firms will supply at price below average variable cost. 
D) the outputs that each of the firms will supply at each possible price. 
A) the outputs that each of the firms will supply at the highest price. 
B) the outputs that each of the firms will supply at the lowest price. 
C) the outputs that each of the firms will supply at price below average variable cost. 
D) the outputs that each of the firms will supply at each possible price.

Question 7

Assume that a firm's marginal revenue just barely exceeds marginal cost.What should the firm do under these conditions?

Accepted Answer

A) Expand output. 
B) Contract output. 
C) Maintain output. 
D) There is insufficient information to answer the question. 
A) Expand output. 
B) Contract output. 
C) Maintain output. 
D) There is insufficient information to answer the question.

Question 8

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

Question 9

If ATC = $25,AVC = $20,TFC = $600,MR = $15 and MC = $15,then the result for the perfectly competitive firm will be:

Accepted Answer

A) a loss of $10 per unit. 
B) a loss of $600. 
C) continuing to operate because it covers its variable costs. 
D) breaking even because MR = MC. 
E) unclear as there is not enough information. 
A) a loss of $10 per unit. 
B) a loss of $600. 
C) continuing to operate because it covers its variable costs. 
D) breaking even because MR = MC. 
E) unclear as there is not enough information.

Question 10

Exhibit 7-9 A typical firm in a perfectly competitive market
  
-Refer to Exhibit 7-9 and assume the perfectly competitive firm is in long-run equilibrium and there is an increase in demand.Along which cost curve,in the short run,will the firm increase output?

Accepted Answer

A) Short-run average total cost curve B 
B) Short-run marginal cost curve B 
C) Long-run average cost curve. 
D)  No as the firm shuts down. 
A) Short-run average total cost curve B 
B) Short-run marginal cost curve B 
C) Long-run average cost curve. 
D)  No as the firm shuts down.

Question 11

The market curve derived for the perfectly competitive market is based on the following assumptions:

Accepted Answer

A) input prices remain unchanged as output expands. 
B) output prices remain unchanged as output expands. 
C) input prices reduce as output expands. 
D) input prices increase as output expands. 
A) input prices remain unchanged as output expands. 
B) output prices remain unchanged as output expands. 
C) input prices reduce as output expands. 
D) input prices increase as output expands.

Question 12

A perfectly competitive firm in the short run maximises its profit by producing the output where:

Accepted Answer

A) average cost equals price. 
B) marginal product equals marginal revenue. 
C) total profit is at maximum. 
D) total profit is at minimum. 
A) average cost equals price. 
B) marginal product equals marginal revenue. 
C) total profit is at maximum. 
D) total profit is at minimum.

Question 13

Under perfect competition,which of the following determine the market equilibrium?

Accepted Answer

A) Price and marginal cost. 
B) Both demand and supply. 
C) Marginal cost and average revenue. 
D) Total cost and a number of suppliers. 
A) Price and marginal cost. 
B) Both demand and supply. 
C) Marginal cost and average revenue. 
D) Total cost and a number of suppliers.

Question 14

As the electronic components industry expands,the salaries paid to electrical engineers rise in response to higher demand.We can conclude that the electronic components industry is a/an:

Accepted Answer

A) constant-cost industry. 
B) marginal-cost industry. 
C) decreasing-cost industry. 
D) increasing-cost industry. 
E) regulated industry. 
A) constant-cost industry. 
B) marginal-cost industry. 
C) decreasing-cost industry. 
D) increasing-cost industry. 
E) regulated industry.

Question 15

A perfectly competitive firm minimises losses in the short run by producing at the output level at which:

Accepted Answer

A) total loss is a minimum. 
B) total revenue equals marginal cost. 
C) total revenue is at a minimum. 
D) marginal cost is less than marginal revenue. 
A) total loss is a minimum. 
B) total revenue equals marginal cost. 
C) total revenue is at a minimum. 
D) marginal cost is less than marginal revenue.

Question 16

Exhibit 7-3 A firm's cost and marginal revenue curves
  
-In Exhibit 7-3,when the price is $5,the firm:

Accepted Answer

A) is making an economic profit of $21. 
B) should produce output equal to 10. 
C) is breaking even. 
D) should shut down. 
E) should produce output equal to 7. 
A) is making an economic profit of $21. 
B) should produce output equal to 10. 
C) is breaking even. 
D) should shut down. 
E) should produce output equal to 7.

Question 17

Exhibit 7-4 Marginal revenue and cost per unit curves
  
-As shown in Exhibit 7-4,the firm will produce in the short run if the price per unit is at least equal to:

Accepted Answer

A) $10. 
B) $15. 
C) $20. 
D) $30. 
E) $40. 
A) $10. 
B) $15. 
C) $20. 
D) $30. 
E) $40.

Question 18

Exhibit 7-1 Total revenue and total cost graph
  
-In Exhibit 7-1,economic profit for the firm is at a maximum when output per week equals:

Accepted Answer

A) 0 units. 
B) 100 units. 
C) 200 units. 
D) 250 units. 
E) 300 units. 
A) 0 units. 
B) 100 units. 
C) 200 units. 
D) 250 units. 
E) 300 units.

Question 19

If the computer market experiences a surge in demand,then the long-run supply curve for the industry is likely to be:

Accepted Answer

A) downward-sloping if it causes the price of computer chips to rise. 
B) upward-sloping if it causes the price of computer chips to fall. 
C) downward-sloping if it causes the price of computer chips to fall. 
D) horizontal if it causes the price of computer chips to stay the same. 
A) downward-sloping if it causes the price of computer chips to rise. 
B) upward-sloping if it causes the price of computer chips to fall. 
C) downward-sloping if it causes the price of computer chips to fall. 
D) horizontal if it causes the price of computer chips to stay the same.

Question 20

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

Accepted Answer

A) average total cost curve. 
B) demand curve above the marginal revenue curve. 
C) same as the market supply curve. 
D) marginal cost curve above the average variable cost curve. 
A) average total cost curve. 
B) demand curve above the marginal revenue curve. 
C) same as the market supply curve. 
D) marginal cost curve above the average variable cost curve.

Suppose the market demand for second-hand books has decreased to the level less than the average total cost.The firm will:

Suppose that in a perfectly competitive market,firms are making economic profits.In the long run,we can expect to see:

A sandwich shop owner has the following information: P = $4,ATC = $2,AVC = $1,MC = 4 and Q = 500.From this,she can determine:

For a perfectly competitive firm,short-run equilibrium is determined by:

All three types of long-run supply curves can be observed in real life: increasing-cost supply curve,upward-sloping supply curve and constant supply curve.

The perfectly competitive industry's short-run market supply curve is the sum of:

Assume that a firm's marginal revenue just barely exceeds marginal cost.What should the firm do under these conditions?

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

If ATC = $25,AVC = $20,TFC = $600,MR = $15 and MC = $15,then the result for the perfectly competitive firm will be:

Exhibit 7-9 A typical firm in a perfectly competitive market -Refer to Exhibit 7-9 and assume the perfectly competitive firm is in long-run equilibrium and there is an increase in demand.Along which cost curve,in the short run,will the firm increase output?

The market curve derived for the perfectly competitive market is based on the following assumptions:

A perfectly competitive firm in the short run maximises its profit by producing the output where:

Under perfect competition,which of the following determine the market equilibrium?

As the electronic components industry expands,the salaries paid to electrical engineers rise in response to higher demand.We can conclude that the electronic components industry is a/an:

A perfectly competitive firm minimises losses in the short run by producing at the output level at which:

Exhibit 7-3 A firm's cost and marginal revenue curves -In Exhibit 7-3,when the price is $5,the firm:

Exhibit 7-4 Marginal revenue and cost per unit curves -As shown in Exhibit 7-4,the firm will produce in the short run if the price per unit is at least equal to:

Exhibit 7-1 Total revenue and total cost graph -In Exhibit 7-1,economic profit for the firm is at a maximum when output per week equals:

If the computer market experiences a surge in demand,then the long-run supply curve for the industry is likely to be:

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

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

Suppose the market demand for second-hand books has decreased to the level less than the average total cost.The firm will:

Suppose that in a perfectly competitive market,firms are making economic profits.In the long run,we can expect to see:

A sandwich shop owner has the following information: P = $4,ATC = $2,AVC = $1,MC = 4 and Q = 500.From this,she can determine:

For a perfectly competitive firm,short-run equilibrium is determined by:

All three types of long-run supply curves can be observed in real life: increasing-cost supply curve,upward-sloping supply curve and constant supply curve.

The perfectly competitive industry's short-run market supply curve is the sum of:

Assume that a firm's marginal revenue just barely exceeds marginal cost.What should the firm do under these conditions?

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

If ATC = $25,AVC = $20,TFC = $600,MR = $15 and MC = $15,then the result for the perfectly competitive firm will be:

Exhibit 7-9 A typical firm in a perfectly competitive market -Refer to Exhibit 7-9 and assume the perfectly competitive firm is in long-run equilibrium and there is an increase in demand.Along which cost curve,in the short run,will the firm increase output?

The market curve derived for the perfectly competitive market is based on the following assumptions:

A perfectly competitive firm in the short run maximises its profit by producing the output where:

Under perfect competition,which of the following determine the market equilibrium?

As the electronic components industry expands,the salaries paid to electrical engineers rise in response to higher demand.We can conclude that the electronic components industry is a/an:

A perfectly competitive firm minimises losses in the short run by producing at the output level at which:

Exhibit 7-3 A firm's cost and marginal revenue curves -In Exhibit 7-3,when the price is $5,the firm:

Exhibit 7-4 Marginal revenue and cost per unit curves -As shown in Exhibit 7-4,the firm will produce in the short run if the price per unit is at least equal to:

Exhibit 7-1 Total revenue and total cost graph -In Exhibit 7-1,economic profit for the firm is at a maximum when output per week equals:

If the computer market experiences a surge in demand,then the long-run supply curve for the industry is likely to be:

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

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