Question 1

The firm maximises profit by producing the output where the marginal revenue is higher than marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

If ATC = $10,AVC = $8,market price = $25 and MC = $25,then the result for a perfectly competitive firm will:

Accepted Answer

A) be making a short-run loss. 
B) be making a short-run profit. 
C) be breaking even. 
D) shutting down. 
E) indeterminate as there is not enough information. 
A) be making a short-run loss. 
B) be making a short-run profit. 
C) be breaking even. 
D) shutting down. 
E) indeterminate as there is not enough information.

Question 3

Exhibit 7-1 Total revenue and total cost graph
  
-In Exhibit 7-1,if output is 200 units per week,economic profit for the firm is:

Accepted Answer

A) zero. 
B) at its minimum. 
C) at its maximum. 
D) average. 
A) zero. 
B) at its minimum. 
C) at its maximum. 
D) average.

Question 4

Exhibit 7-5 Short-run profit and loss
  
-According to Exhibit 7-5,this firm will be making a short-run loss,but will continue to produce when the price is:

Accepted Answer

A) between $15 and $20. 
B) between $25 and $13. 
C) between $20 and $25. 
D) between $15 and $13. 
E) between $20 and $13. 
A) between $15 and $20. 
B) between $25 and $13. 
C) between $20 and $25. 
D) between $15 and $13. 
E) between $20 and $13.

Question 5

Exhibit 7-7
  
-According to Exhibit 7-7,the short-run equilibrium output level for this perfectly competitive firm is:

Accepted Answer

A) 1000. 
B) 100. 
C) 120. 
D) 130. 
E) Indeterminate from the information given. 
A) 1000. 
B) 100. 
C) 120. 
D) 130. 
E) Indeterminate from the information given.

Question 6

A perfectly competitive firm's supply curve follows the upward-sloping segment of its marginal cost curve above the:

Accepted Answer

A) average total cost curve. 
B) average variable cost curve. 
C) average fixed curve. 
D) average price curve. 
A) average total cost curve. 
B) average variable cost curve. 
C) average fixed curve. 
D) average price curve.

Question 7

Exhibit 7-8
  
-According to Exhibit 7-8,the output level of the short-run equilibrium for this firm is:

Accepted Answer

A) 1200. 
B) 100. 
C) 110. 
D) 120. 
E) indeterminate from the information given. 
A) 1200. 
B) 100. 
C) 110. 
D) 120. 
E) indeterminate from the information given.

Question 8

If a competitive firm charges more than the market price,then it makes a profit and gains more customers.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 7-2 Cost per unit curves
  
-As shown in Exhibit 7-2,the firm will produce in the short run if the price is at least equal to:

Accepted Answer

A) $1 per unit. 
B) $1.50 per unit. 
C) $2 per unit. 
D) $3 per unit. 
E) $4 per unit. 
A) $1 per unit. 
B) $1.50 per unit. 
C) $2 per unit. 
D) $3 per unit. 
E) $4 per unit.

Question 10

Exhibit 7-8
  
-According to Exhibit 7-8,given the short-run equilibrium of this firm,we would expect:

Accepted Answer

A) firms to increase the output. 
B) firms to cover its fixed cost. 
C) the firm's output to decline. 
D) the market supply curve to shift to the right. 
A) firms to increase the output. 
B) firms to cover its fixed cost. 
C) the firm's output to decline. 
D) the market supply curve to shift to the right.

Question 11

A perfectly competitive firm's short-run supply curve is the part of its marginal cost curve that is:

Accepted Answer

A) upward-sloping. 
B) above its average variable cost. 
C) above average fixed cost. 
D) below the average fixed cost. 
A) upward-sloping. 
B) above its average variable cost. 
C) above average fixed cost. 
D) below the average fixed cost.

Question 12

Exhibit 7-4 Marginal revenue and cost per unit curves
  
-As shown in Exhibit 7-4,the short-run supply curve for the firm corresponds to which segment of its marginal cost curve?

Accepted Answer

A) C and all points above. 
B) B and all points above. 
C) A and all points above. 
D) A to C only. 
E) B to D only. 
A) C and all points above. 
B) B and all points above. 
C) A and all points above. 
D) A to C only. 
E) B to D only.

Question 13

Exhibit 7-6
  
-According to Exhibit 7-6,if MR = $20,the result for a perfectly competitive firm will be:

Accepted Answer

A) making a short-run profit. 
B) making a short-run loss of $10 per unit. 
C) making a short-run loss. 
D) making a short-run loss of $5 
E) unclear as there is not enough information. 
A) making a short-run profit. 
B) making a short-run loss of $10 per unit. 
C) making a short-run loss. 
D) making a short-run loss of $5 
E) unclear as there is not enough information.

Question 14

What are the possible long-run equilibrium situations for a firm in a perfectly competitive market?

Accepted Answer

A) Normal profit. 
B) Economic profit. 
C) Loss. 
D) Product diversification. 
A) Normal profit. 
B) Economic profit. 
C) Loss. 
D) Product diversification.

Question 15

In the short run,the profit maximising (or minimising)quantity of output for any firm to produce exists at that output level at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 16

Consider a firm with the following cost and revenue information: ATC = $8,AVC = $6,MR = $6,and MC = $6.If the firm produces Q = 60 units in the short run,it:

Accepted Answer

A) is minimising losses. 
B) makes a total loss of $60. 
C) should produce more output. 
D) is making a mistake and should shut down. 
E) is indifferent concerning whether to keep operating or shut down. 
A) is minimising losses. 
B) makes a total loss of $60. 
C) should produce more output. 
D) is making a mistake and should shut down. 
E) is indifferent concerning whether to keep operating or shut down.

Question 17

Under long-run perfect competition,which of the following are the same (equal)at all levels of output?

Accepted Answer

A) Market price and marginal cost. 
B) Market price and marginal revenue. 
C) Marginal cost and marginal revenue. 
D) Market cost and marginal cost. 
A) Market price and marginal cost. 
B) Market price and marginal revenue. 
C) Marginal cost and marginal revenue. 
D) Market cost and marginal cost.

Question 18

In the long run,the perfectly competitive firm:

Accepted Answer

A) always increases the output. 
B) never increases the price. 
C) never changes its fixed inputs. 
D) can exit or enter the industry. 
A) always increases the output. 
B) never increases the price. 
C) never changes its fixed inputs. 
D) can exit or enter the industry.

Question 19

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A) There is a large number of small firms. 
B) Firms sell a homogeneous product. 
C) Firms can easily enter or exit the market. 
D) Firms are price makers, not price takers. 
A) There is a large number of small firms. 
B) Firms sell a homogeneous product. 
C) Firms can easily enter or exit the market. 
D) Firms are price makers, not price takers.

Question 20

Exhibit 7-10 Long-run perfectly competitive industry
  
-Refer to Exhibit 7-10 and assume that a perfectly competitive industry is in long-run equilibrium at point A and the demand curve shifts from D₁ to D₂.The result is a long-run supply curve drawn from point:

Accepted Answer

A)  A to point B. 
B)  B to point A. 
C)  A to point D. 
D)  A to point C. 
A)  A to point B. 
B)  B to point A. 
C)  A to point D. 
D)  A to point C.

The firm maximises profit by producing the output where the marginal revenue is higher than marginal cost.

If ATC = $10,AVC = $8,market price = $25 and MC = $25,then the result for a perfectly competitive firm will:

Exhibit 7-1 Total revenue and total cost graph -In Exhibit 7-1,if output is 200 units per week,economic profit for the firm is:

Exhibit 7-5 Short-run profit and loss -According to Exhibit 7-5,this firm will be making a short-run loss,but will continue to produce when the price is:

Exhibit 7-7 -According to Exhibit 7-7,the short-run equilibrium output level for this perfectly competitive firm is:

A perfectly competitive firm's supply curve follows the upward-sloping segment of its marginal cost curve above the:

Exhibit 7-8 -According to Exhibit 7-8,the output level of the short-run equilibrium for this firm is:

If a competitive firm charges more than the market price,then it makes a profit and gains more customers.

Exhibit 7-2 Cost per unit curves -As shown in Exhibit 7-2,the firm will produce in the short run if the price is at least equal to:

Exhibit 7-8 -According to Exhibit 7-8,given the short-run equilibrium of this firm,we would expect:

A perfectly competitive firm's short-run supply curve is the part of its marginal cost curve that is:

Exhibit 7-4 Marginal revenue and cost per unit curves -As shown in Exhibit 7-4,the short-run supply curve for the firm corresponds to which segment of its marginal cost curve?

Exhibit 7-6 -According to Exhibit 7-6,if MR = $20,the result for a perfectly competitive firm will be:

What are the possible long-run equilibrium situations for a firm in a perfectly competitive market?

In the short run,the profit maximising (or minimising)quantity of output for any firm to produce exists at that output level at which marginal revenue equals marginal cost.

Consider a firm with the following cost and revenue information: ATC = $8,AVC = $6,MR = $6,and MC = $6.If the firm produces Q = 60 units in the short run,it:

Under long-run perfect competition,which of the following are the same (equal)at all levels of output?

In the long run,the perfectly competitive firm:

Which of the following is not a characteristic of a perfectly competitive market?

Exhibit 7-10 Long-run perfectly competitive industry -Refer to Exhibit 7-10 and assume that a perfectly competitive industry is in long-run equilibrium at point A and the demand curve shifts from D₁ to D₂.The result is a long-run supply curve drawn from point:

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

The firm maximises profit by producing the output where the marginal revenue is higher than marginal cost.

If ATC = $10,AVC = $8,market price = $25 and MC = $25,then the result for a perfectly competitive firm will:

Exhibit 7-1 Total revenue and total cost graph -In Exhibit 7-1,if output is 200 units per week,economic profit for the firm is:

Exhibit 7-5 Short-run profit and loss -According to Exhibit 7-5,this firm will be making a short-run loss,but will continue to produce when the price is:

Exhibit 7-7 -According to Exhibit 7-7,the short-run equilibrium output level for this perfectly competitive firm is:

A perfectly competitive firm's supply curve follows the upward-sloping segment of its marginal cost curve above the:

Exhibit 7-8 -According to Exhibit 7-8,the output level of the short-run equilibrium for this firm is:

If a competitive firm charges more than the market price,then it makes a profit and gains more customers.

Exhibit 7-2 Cost per unit curves -As shown in Exhibit 7-2,the firm will produce in the short run if the price is at least equal to:

Exhibit 7-8 -According to Exhibit 7-8,given the short-run equilibrium of this firm,we would expect:

A perfectly competitive firm's short-run supply curve is the part of its marginal cost curve that is:

Exhibit 7-4 Marginal revenue and cost per unit curves -As shown in Exhibit 7-4,the short-run supply curve for the firm corresponds to which segment of its marginal cost curve?

Exhibit 7-6 -According to Exhibit 7-6,if MR = $20,the result for a perfectly competitive firm will be:

What are the possible long-run equilibrium situations for a firm in a perfectly competitive market?

In the short run,the profit maximising (or minimising)quantity of output for any firm to produce exists at that output level at which marginal revenue equals marginal cost.

Consider a firm with the following cost and revenue information: ATC = $8,AVC = $6,MR = $6,and MC = $6.If the firm produces Q = 60 units in the short run,it:

Under long-run perfect competition,which of the following are the same (equal)at all levels of output?

In the long run,the perfectly competitive firm:

Which of the following is not a characteristic of a perfectly competitive market?

Exhibit 7-10 Long-run perfectly competitive industry -Refer to Exhibit 7-10 and assume that a perfectly competitive industry is in long-run equilibrium at point A and the demand curve shifts from D₁ to D₂.The result is a long-run supply curve drawn from point:

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