Question 1

Producer surplus is defined as:

Accepted Answer

A)  the difference between the price the consumer actually pays for a product and the consumer's reservation price. 
B)  the profit that the firm earns on each unit of a product sold. 
C)  the profit that the firm earns after taxes. 
D)  the difference between the price received by the producer and the producer's reservation price. 
E)  the difference between the price paid by the consumer and the price received by the consumer. 
A)  the difference between the price the consumer actually pays for a product and the consumer's reservation price. 
B)  the profit that the firm earns on each unit of a product sold. 
C)  the profit that the firm earns after taxes. 
D)  the difference between the price received by the producer and the producer's reservation price. 
E)  the difference between the price paid by the consumer and the price received by the consumer.

Question 2

If a representative firm with long-run total cost given by TC = 2,000 + 20q + 5q2 operates in a competitive industry where the market demand is given by QD = 10,000 - 40P,the long-run equilibrium output of the individual firm's will be:

Accepted Answer

A)  10 units. 
B)  20 units. 
C)  30 units. 
D)  35 units. 
E)  40 units. 
A)  10 units. 
B)  20 units. 
C)  30 units. 
D)  35 units. 
E)  40 units.

Question 3

The following diagram represents the market for paperback books.In the market for paperback books,producer surplus is:

Accepted Answer

A)  $15.00. 
B)  $30.00. 
C)  $112.50. 
D)  $225.00. 
E)  None of the above. 
A)  $15.00. 
B)  $30.00. 
C)  $112.50. 
D)  $225.00. 
E)  None of the above.

Question 4

If price is above the average variable cost but below the average total cost of a representative firm in a competitive industry:

Accepted Answer

A)  there will be entry to the industry over time. 
B)  there will be exit from the industry over time. 
C)  the firms in the industry are just earning a normal rate of return. 
D)  the firms in the industry are earning a supranormal rate of return. 
E)  the industry is in long-run equilibrium. 
A)  there will be entry to the industry over time. 
B)  there will be exit from the industry over time. 
C)  the firms in the industry are just earning a normal rate of return. 
D)  the firms in the industry are earning a supranormal rate of return. 
E)  the industry is in long-run equilibrium.

Question 5

The following diagram represents the market for paperback books.Which area represents producer surplus?

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  None of the above. 
A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  None of the above.

Question 6

Total surplus in a market is a measure of:

Accepted Answer

A)  social welfare created by the market. 
B)  profits that accrue to the owners of firms in a particular market. 
C)  the rebates that consumers receive when they purchase certain goods or services. 
D)  excess inventory that remains at the end of a season. 
E)  planned inventory that a firm carries from one year to the next. 
A)  social welfare created by the market. 
B)  profits that accrue to the owners of firms in a particular market. 
C)  the rebates that consumers receive when they purchase certain goods or services. 
D)  excess inventory that remains at the end of a season. 
E)  planned inventory that a firm carries from one year to the next.

Question 7

If the perfectly competitive market demand for cholesterol-free cookies shifts from QD,93 = 1,150 - 5P to QD,94 = 1,640 - 5P,and the market supply is given by QS = -100 + 2P,then the change in equilibrium price will be:

Accepted Answer

A)  $70. 
B)  $80. 
C)  $90. 
D)  $100. 
E)  $110. 
A)  $70. 
B)  $80. 
C)  $90. 
D)  $100. 
E)  $110.

Question 8

If the perfectly competitive market demand for gym shoes is given by QD = 100 - P and the market supply is given by QS = 10 + 2P,then the equilibrium price and quantity will be:

Accepted Answer

A)  P = 50 and Q = 50. 
B)  P = 40 and Q = 90. 
C)  P = 40 and Q = 60. 
D)  P = 30 and Q = 70. 
E)  P = 25 and Q = 75. 
A)  P = 50 and Q = 50. 
B)  P = 40 and Q = 90. 
C)  P = 40 and Q = 60. 
D)  P = 30 and Q = 70. 
E)  P = 25 and Q = 75.

Question 9

A decreasing-cost industry is one in which:

Accepted Answer

A)  input prices fall over time. 
B)  technology deteriorates over time. 
C)  input prices and technology do not change over time. 
D)  firms are in the growth phase of the industry's life cycle. 
E)  input prices fall or technology improves as firms enter the industry. 
A)  input prices fall over time. 
B)  technology deteriorates over time. 
C)  input prices and technology do not change over time. 
D)  firms are in the growth phase of the industry's life cycle. 
E)  input prices fall or technology improves as firms enter the industry.

Question 10

A representative firm with short-run total cost given by TC = 50 + 2q + 2q2 operates in a competitive industry where the short-run market demand and supply curves are given by QD = 1,410 - 40P and QS = -390 + 20P.Its short-run profit-maximizing level of output is:

Accepted Answer

A)  0 units. 
B)  1 unit. 
C)  2 units. 
D)  5 units. 
E)  7 units. 
A)  0 units. 
B)  1 unit. 
C)  2 units. 
D)  5 units. 
E)  7 units.

Question 11

In a competitive market the equilibrium price is determined:

Accepted Answer

A)  at the intersection of the firm's demand and the market supply curves. 
B)  at the intersection of the market demand and supply curves. 
C)  at the intersection of the firm's demand and marginal cost curves. 
D)  so as to cover the costs of the potential firms. 
E)  so as to cover the costs of the firms currently in the industry. 
A)  at the intersection of the firm's demand and the market supply curves. 
B)  at the intersection of the market demand and supply curves. 
C)  at the intersection of the firm's demand and marginal cost curves. 
D)  so as to cover the costs of the potential firms. 
E)  so as to cover the costs of the firms currently in the industry.

Question 12

If a representative firm with long-run total cost given by TC = 50 + 2q + 2q2 operates in a competitive industry where the market demand is given by QD = 1,410 - 40P,the long-run equilibrium output of the industry will be:

Accepted Answer

A)  490 units. 
B)  530 units. 
C)  570 units. 
D)  610 units. 
E)  650 units. 
A)  490 units. 
B)  530 units. 
C)  570 units. 
D)  610 units. 
E)  650 units.

Question 13

The following diagram represents the market for paperback books.In the market for paperback books,total surplus is:

Accepted Answer

A)  $15.00. 
B)  $30.00. 
C)  $112.50. 
D)  $225.00. 
E)  None of the above. 
A)  $15.00. 
B)  $30.00. 
C)  $112.50. 
D)  $225.00. 
E)  None of the above.

Question 14

Camel Records produces records according to Q = 4L - 0.15L2.If labor costs $5 and records sell for $2,the optimal quantity of labor is:

Accepted Answer

A)  0. 
B)  2. 
C)  10. 
D)  5. 
E)  17. 
A)  0. 
B)  2. 
C)  10. 
D)  5. 
E)  17.

Question 15

If the perfectly competitive market supply of pork bellies shifts from QS,93 = 250 + 50P to QS,94 = 400 + 40P,and the market demand is given by QD = +10,000 - 200P,then the change in equilibrium quantity will be:

Accepted Answer

A)  200 units. 
B)  100 units. 
C)  0 units. 
D)  -100 units. 
E)  -200 units. 
A)  200 units. 
B)  100 units. 
C)  0 units. 
D)  -100 units. 
E)  -200 units.

Question 16

In the model of perfect competition,firms maximize profits by producing where:

Accepted Answer

A)  the difference between marginal revenue and marginal cost is maximized. 
B)  marginal revenue equals price. 
C)  the difference between price and marginal cost is maximized. 
D)  price equals marginal cost. 
E)  the difference between price and marginal revenue is maximized. 
A)  the difference between marginal revenue and marginal cost is maximized. 
B)  marginal revenue equals price. 
C)  the difference between price and marginal cost is maximized. 
D)  price equals marginal cost. 
E)  the difference between price and marginal revenue is maximized.

Question 17

In the model of perfect competition,firms produce a:

Accepted Answer

A)  standardized product with considerable control over price. 
B)  differentiated product with considerable control over price. 
C)  standardized product with no control over price. 
D)  differentiated product with no control over price. 
E)  standardized or differentiated product with some control over price. 
A)  standardized product with considerable control over price. 
B)  differentiated product with considerable control over price. 
C)  standardized product with no control over price. 
D)  differentiated product with no control over price. 
E)  standardized or differentiated product with some control over price.

Question 18

Meteor Tie Company produces ties from fabric according to Q = 10 + 4F - (1/3)F3.If fabric is free and ties sell for $20,what is Meteor's optimal usage of fabric?

Accepted Answer

A)  0. 
B)  2. 
C)  4. 
D)  6. 
E)  8. 
A)  0. 
B)  2. 
C)  4. 
D)  6. 
E)  8.

Question 19

In the model of perfect competition,there are:

Accepted Answer

A)  high barriers to entry and no nonprice competition. 
B)  low barriers to entry and some advertising and product differentiation. 
C)  very high barriers to entry and some advertising and product differentiation. 
D)  high barriers to entry and some advertising and product differentiation. 
E)  low barriers to entry and no nonprice competition. 
A)  high barriers to entry and no nonprice competition. 
B)  low barriers to entry and some advertising and product differentiation. 
C)  very high barriers to entry and some advertising and product differentiation. 
D)  high barriers to entry and some advertising and product differentiation. 
E)  low barriers to entry and no nonprice competition.

Producer surplus is defined as:

If a representative firm with long-run total cost given by TC = 2,000 + 20q + 5q² operates in a competitive industry where the market demand is given by Q_D = 10,000 - 40P,the long-run equilibrium output of the individual firm's will be:

The following diagram represents the market for paperback books.In the market for paperback books,producer surplus is:

If price is above the average variable cost but below the average total cost of a representative firm in a competitive industry:

The following diagram represents the market for paperback books.Which area represents producer surplus?

Total surplus in a market is a measure of:

If the perfectly competitive market demand for cholesterol-free cookies shifts from Q_D_,93 = 1,150 - 5P to Q_D_,94 = 1,640 - 5P,and the market supply is given by Q_S = -100 + 2P,then the change in equilibrium price will be:

If the perfectly competitive market demand for gym shoes is given by Q_D = 100 - P and the market supply is given by Q_S = 10 + 2P,then the equilibrium price and quantity will be:

A decreasing-cost industry is one in which:

A representative firm with short-run total cost given by TC = 50 + 2q + 2q² operates in a competitive industry where the short-run market demand and supply curves are given by Q_D = 1,410 - 40P and Q_S = -390 + 20P.Its short-run profit-maximizing level of output is:

In a competitive market the equilibrium price is determined:

If a representative firm with long-run total cost given by TC = 50 + 2q + 2q² operates in a competitive industry where the market demand is given by Q_D = 1,410 - 40P,the long-run equilibrium output of the industry will be:

The following diagram represents the market for paperback books.In the market for paperback books,total surplus is:

Camel Records produces records according to Q = 4L - 0.15L².If labor costs $5 and records sell for $2,the optimal quantity of labor is:

If the perfectly competitive market supply of pork bellies shifts from Q_S_,93 = 250 + 50P to Q_S_,94 = 400 + 40P,and the market demand is given by Q_D = +10,000 - 200P,then the change in equilibrium quantity will be:

In the model of perfect competition,firms maximize profits by producing where:

In the model of perfect competition,firms produce a:

Meteor Tie Company produces ties from fabric according to Q = 10 + 4F - (1/3)F³.If fabric is free and ties sell for $20,what is Meteor's optimal usage of fabric?

In the model of perfect competition,there are:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

Production Theory

The Analysis of Costs

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Auctions

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Optimization Techniques

Appendix Problems

Filters

Exam 7: Perfect Competition

Producer surplus is defined as:

If a representative firm with long-run total cost given by TC = 2,000 + 20q + 5q2 operates in a competitive industry where the market demand is given by QD = 10,000 - 40P,the long-run equilibrium output of the individual firm's will be:

The following diagram represents the market for paperback books.In the market for paperback books,producer surplus is:

If price is above the average variable cost but below the average total cost of a representative firm in a competitive industry:

The following diagram represents the market for paperback books.Which area represents producer surplus?

Total surplus in a market is a measure of:

If the perfectly competitive market demand for cholesterol-free cookies shifts from QD,93 = 1,150 - 5P to QD,94 = 1,640 - 5P,and the market supply is given by QS = -100 + 2P,then the change in equilibrium price will be:

If the perfectly competitive market demand for gym shoes is given by QD = 100 - P and the market supply is given by QS = 10 + 2P,then the equilibrium price and quantity will be:

A decreasing-cost industry is one in which:

A representative firm with short-run total cost given by TC = 50 + 2q + 2q2 operates in a competitive industry where the short-run market demand and supply curves are given by QD = 1,410 - 40P and QS = -390 + 20P.Its short-run profit-maximizing level of output is:

In a competitive market the equilibrium price is determined:

If a representative firm with long-run total cost given by TC = 50 + 2q + 2q2 operates in a competitive industry where the market demand is given by QD = 1,410 - 40P,the long-run equilibrium output of the industry will be:

The following diagram represents the market for paperback books.In the market for paperback books,total surplus is:

Camel Records produces records according to Q = 4L - 0.15L2.If labor costs $5 and records sell for $2,the optimal quantity of labor is:

If the perfectly competitive market supply of pork bellies shifts from QS,93 = 250 + 50P to QS,94 = 400 + 40P,and the market demand is given by QD = +10,000 - 200P,then the change in equilibrium quantity will be:

In the model of perfect competition,firms maximize profits by producing where:

In the model of perfect competition,firms produce a:

Meteor Tie Company produces ties from fabric according to Q = 10 + 4F - (1/3)F3.If fabric is free and ties sell for $20,what is Meteor's optimal usage of fabric?

In the model of perfect competition,there are:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

Production Theory

The Analysis of Costs

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Auctions

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Optimization Techniques

Appendix Problems

Filters

If a representative firm with long-run total cost given by TC = 2,000 + 20q + 5q² operates in a competitive industry where the market demand is given by Q_D = 10,000 - 40P,the long-run equilibrium output of the individual firm's will be:

If the perfectly competitive market demand for cholesterol-free cookies shifts from Q_D_,93 = 1,150 - 5P to Q_D_,94 = 1,640 - 5P,and the market supply is given by Q_S = -100 + 2P,then the change in equilibrium price will be:

If the perfectly competitive market demand for gym shoes is given by Q_D = 100 - P and the market supply is given by Q_S = 10 + 2P,then the equilibrium price and quantity will be:

A representative firm with short-run total cost given by TC = 50 + 2q + 2q² operates in a competitive industry where the short-run market demand and supply curves are given by Q_D = 1,410 - 40P and Q_S = -390 + 20P.Its short-run profit-maximizing level of output is:

If a representative firm with long-run total cost given by TC = 50 + 2q + 2q² operates in a competitive industry where the market demand is given by Q_D = 1,410 - 40P,the long-run equilibrium output of the industry will be:

Camel Records produces records according to Q = 4L - 0.15L².If labor costs $5 and records sell for $2,the optimal quantity of labor is:

If the perfectly competitive market supply of pork bellies shifts from Q_S_,93 = 250 + 50P to Q_S_,94 = 400 + 40P,and the market demand is given by Q_D = +10,000 - 200P,then the change in equilibrium quantity will be:

Meteor Tie Company produces ties from fabric according to Q = 10 + 4F - (1/3)F³.If fabric is free and ties sell for $20,what is Meteor's optimal usage of fabric?