Question 1

In the short run,a firm should continue operating if its economic loss from operating exceeds its total fixed cost.

Accepted Answer

A) True 
 B)False

Question 2

At an output level of 100 units,TC = $1,000,TVC = $500,MC = $3 and MR = $3,the short-run result/s for the perfectly competitive firm will be:

Accepted Answer

A) making a short-run loss of $500. 
B) breaking even, as MC = MR. 
C) shutting down and incurring a loss of $1000. 
D) making a loss of $1000 but continuing to operate. 
E) unclear, as there is not enough information. 
A) making a short-run loss of $500. 
B) breaking even, as MC = MR. 
C) shutting down and incurring a loss of $1000. 
D) making a loss of $1000 but continuing to operate. 
E) unclear, as there is not enough information.

Question 3

Part of the ACCC's role is to:

Accepted Answer

A) improve efficiency in markets. 
B) encourage adherence to fair trading practices. 
C) inform the public about the Trade Practices Act. 
D) promote competitive pricing. 
E) do all of these listed here. 
A) improve efficiency in markets. 
B) encourage adherence to fair trading practices. 
C) inform the public about the Trade Practices Act. 
D) promote competitive pricing. 
E) do all of these listed here.

Question 4

If there is no level of output at which the firm earns a profit,the firm should:

Accepted Answer

A) shut down. 
B) perform an analysis regarding whether to operate or not. 
C) diversify. 
D) try to push the price up. 
A) shut down. 
B) perform an analysis regarding whether to operate or not. 
C) diversify. 
D) try to push the price up.

Question 5

Under perfect competition,a firm is a price taker because:

Accepted Answer

A) setting a price higher than the going price results in profits. 
B) each firm's product is perceived as different. 
C) each firm has a significant market share. 
D) setting a price higher than the going price results in zero sales. 
A) setting a price higher than the going price results in profits. 
B) each firm's product is perceived as different. 
C) each firm has a significant market share. 
D) setting a price higher than the going price results in zero sales.

Question 6

Assume the short-run average total cost for a perfectly competitive industry decreases as the output of the industry expands.In the long run,the industry supply curve will:

Accepted Answer

A) have a positive slope. 
B) have a negative slope. 
C) be perfectly horizontal. 
D) be perfectly vertical. 
A) have a positive slope. 
B) have a negative slope. 
C) be perfectly horizontal. 
D) be perfectly vertical.

Question 7

Marginal analysis is used to determine:

Accepted Answer

A) the maximum profit by comparing maximum revenue and marginal cost. 
B) the profit maximising output. 
C) the market price resulting from a one unit change in output. 
D) the change in the total cost as the price changes. 
A) the maximum profit by comparing maximum revenue and marginal cost. 
B) the profit maximising output. 
C) the market price resulting from a one unit change in output. 
D) the change in the total cost as the price changes.

Question 8

A perfectly competitive industry's short-run market supply curve is derived from:

Accepted Answer

A) horizontal summation of the short-run supply curves of major firms in the industry. 
B) horizontal summation of the long-run supply curves of all firms in the industry. 
C) vertical summation of the short-run supply curves of all firms in the industry. 
D) horizontal summation of the short-run supply curves of all firms in the industry. 
A) horizontal summation of the short-run supply curves of major firms in the industry. 
B) horizontal summation of the long-run supply curves of all firms in the industry. 
C) vertical summation of the short-run supply curves of all firms in the industry. 
D) horizontal summation of the short-run supply curves of all firms in the industry.

Question 9

A perfectly competitive firm has control over:

Accepted Answer

A) the number of firms in the market. 
B) market conditions. 
C) price at which to sell. 
D) quantity of output to produce. 
A) the number of firms in the market. 
B) market conditions. 
C) price at which to sell. 
D) quantity of output to produce.

Question 10

The long-run supply curve for a competitive constant-cost industry is:

Accepted Answer

A) horizontal. 
B) vertical. 
C) upward-sloping. 
D) downward-sloping. 
A) horizontal. 
B) vertical. 
C) upward-sloping. 
D) downward-sloping.

Question 11

One of the characteristics of perfect competition is that:

Accepted Answer

A) some firms can influence price. 
B) firms depend on each other in setting the output. 
C) firms produce a differentiated product. 
D) consumers do not distinguish between the sellers. 
A) some firms can influence price. 
B) firms depend on each other in setting the output. 
C) firms produce a differentiated product. 
D) consumers do not distinguish between the sellers.

Question 12

Exhibit 7-9 A typical firm in a perfectly competitive market
  
-In Exhibit 7-9,at what price is the perfectly competitive firm in long-run equilibrium?

Accepted Answer

A) $100. 
B) $200. 
C) $300. 
D) $400. 
E) Depends on many factors. 
A) $100. 
B) $200. 
C) $300. 
D) $400. 
E) Depends on many factors.

Question 13

One of the characteristics of the perfectly competitive market is:

Accepted Answer

A) a small number of large firms. 
B) firms that sell a heterogeneous product. 
C) sellers and buyers both can increase the price on the market. 
D) there is a large number of small firms. 
A) a small number of large firms. 
B) firms that sell a heterogeneous product. 
C) sellers and buyers both can increase the price on the market. 
D) there is a large number of small firms.

Question 14

Exhibit 7-3 A firm's cost and marginal revenue curves
  
-In Exhibit 7-3,when the price is $2,the profit-maximising (or loss-minimising)firm:

Accepted Answer

A) should shut down and produce zero. 
B) should produce output equal to 4. 
C) is making an economic profit of $8. 
D) should try to produce more output. 
E) has total revenue equal to $20. 
A) should shut down and produce zero. 
B) should produce output equal to 4. 
C) is making an economic profit of $8. 
D) should try to produce more output. 
E) has total revenue equal to $20.

Question 15

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

Accepted Answer

A) positive economic profits. 
B) a normal profit. 
C) a loss, but the firm will be able to cover its fixed cost. 
D) such a big loss they will shut down. 
E) indeterminate from the information given. 
A) positive economic profits. 
B) a normal profit. 
C) a loss, but the firm will be able to cover its fixed cost. 
D) such a big loss they will shut down. 
E) indeterminate from the information given.

Question 16

If input prices for a perfectly competitive industry remain constant as the output of the industry expands in the long run,the industry supply curve will:

Accepted Answer

A) have a positive slope. 
B) be perfectly horizontal. 
C) have a negative slope. 
D) be perfectly vertical. 
E) be indeterminate. 
A) have a positive slope. 
B) be perfectly horizontal. 
C) have a negative slope. 
D) be perfectly vertical. 
E) be indeterminate.

Question 17

Firms in a perfectly competitive market:

Accepted Answer

A) compete with each other by undercutting the prices. 
B) compete with each other by offering customers slightly different product. 
C) reduce the output so they can increase the price. 
D) do not advertise. 
A) compete with each other by undercutting the prices. 
B) compete with each other by offering customers slightly different product. 
C) reduce the output so they can increase the price. 
D) do not advertise.

Question 18

If a competitive firm suffers loss,it should:

Accepted Answer

A) always shut down. 
B) shut down if its losses are greater than total fixed costs. 
C) shut down if its total fixed costs are greater than losses. 
D) raise its price. 
E) immediately change its fixed inputs. 
A) always shut down. 
B) shut down if its losses are greater than total fixed costs. 
C) shut down if its total fixed costs are greater than losses. 
D) raise its price. 
E) immediately change its fixed inputs.

Question 19

In long-run equilibrium,which of the following is not equal to price for a perfectly competitive firm?

Accepted Answer

A) Short-run average variable cost. 
B) Long-run average total cost. 
C) Short-run marginal cost. 
D) Short-run average total cost. 
A) Short-run average variable cost. 
B) Long-run average total cost. 
C) Short-run marginal cost. 
D) Short-run average total cost.

Question 20

At an output level of 500 units,ATC = $10,AVC = $5,MR = $3 and MC = $3,the result for the perfectly competitive firm will be:

Accepted Answer

A) making a loss of ($5 - $3) ´ 500 = $1000. 
B) a decrease in output, so MC > MR. 
C) making a short-run loss of $2500. 
D) an increased output, so MR > MC. 
E) unclear, as there is not enough information. 
A) making a loss of ($5 - $3) ´ 500 = $1000. 
B) a decrease in output, so MC > MR. 
C) making a short-run loss of $2500. 
D) an increased output, so MR > MC. 
E) unclear, as there is not enough information.

In the short run,a firm should continue operating if its economic loss from operating exceeds its total fixed cost.

At an output level of 100 units,TC = $1,000,TVC = $500,MC = $3 and MR = $3,the short-run result/s for the perfectly competitive firm will be:

Part of the ACCC's role is to:

If there is no level of output at which the firm earns a profit,the firm should:

Under perfect competition,a firm is a price taker because:

Assume the short-run average total cost for a perfectly competitive industry decreases as the output of the industry expands.In the long run,the industry supply curve will:

Marginal analysis is used to determine:

A perfectly competitive industry's short-run market supply curve is derived from:

A perfectly competitive firm has control over:

The long-run supply curve for a competitive constant-cost industry is:

One of the characteristics of perfect competition is that:

Exhibit 7-9 A typical firm in a perfectly competitive market -In Exhibit 7-9,at what price is the perfectly competitive firm in long-run equilibrium?

One of the characteristics of the perfectly competitive market is:

Exhibit 7-3 A firm's cost and marginal revenue curves -In Exhibit 7-3,when the price is $2,the profit-maximising (or loss-minimising)firm:

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

If input prices for a perfectly competitive industry remain constant as the output of the industry expands in the long run,the industry supply curve will:

Firms in a perfectly competitive market:

If a competitive firm suffers loss,it should:

In long-run equilibrium,which of the following is not equal to price for a perfectly competitive firm?

At an output level of 500 units,ATC = $10,AVC = $5,MR = $3 and MC = $3,the result for the perfectly competitive firm will be:

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

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Exam 7: Perfect competition

In the short run,a firm should continue operating if its economic loss from operating exceeds its total fixed cost.

At an output level of 100 units,TC = $1,000,TVC = $500,MC = $3 and MR = $3,the short-run result/s for the perfectly competitive firm will be:

Part of the ACCC's role is to:

If there is no level of output at which the firm earns a profit,the firm should:

Under perfect competition,a firm is a price taker because:

Assume the short-run average total cost for a perfectly competitive industry decreases as the output of the industry expands.In the long run,the industry supply curve will:

Marginal analysis is used to determine:

A perfectly competitive industry's short-run market supply curve is derived from:

A perfectly competitive firm has control over:

The long-run supply curve for a competitive constant-cost industry is:

One of the characteristics of perfect competition is that:

Exhibit 7-9 A typical firm in a perfectly competitive market -In Exhibit 7-9,at what price is the perfectly competitive firm in long-run equilibrium?

One of the characteristics of the perfectly competitive market is:

Exhibit 7-3 A firm's cost and marginal revenue curves -In Exhibit 7-3,when the price is $2,the profit-maximising (or loss-minimising)firm:

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

If input prices for a perfectly competitive industry remain constant as the output of the industry expands in the long run,the industry supply curve will:

Firms in a perfectly competitive market:

If a competitive firm suffers loss,it should:

In long-run equilibrium,which of the following is not equal to price for a perfectly competitive firm?

At an output level of 500 units,ATC = $10,AVC = $5,MR = $3 and MC = $3,the result for the perfectly competitive firm will be:

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