Question 1

For a perfectly competitive sugar producer in Haiti,a short-run economic profit will occur if the price of each ton of sugar sold is

Accepted Answer

A)  greater than the average total cost of producing sugar. 
B)  equal to the average total cost of producing sugar. 
C)  less than the average total cost of producing sugar. 
D)  rising as more sugar is sold. 
E)  greater than the marginal revenue of each ton of sugar. 
A)  greater than the average total cost of producing sugar. 
B)  equal to the average total cost of producing sugar. 
C)  less than the average total cost of producing sugar. 
D)  rising as more sugar is sold. 
E)  greater than the marginal revenue of each ton of sugar.

Question 2

If perfectly firms are making an economic profit,the economic profit

Accepted Answer

A)  attracts entry by more firms, which lowers the price. 
B)  can be earned both in the short run and the long run. 
C)  is less than the normal profit. 
D)  leads to a decrease in market demand. 
E)  generally leads to firms exiting as they seek higher profit in other markets. 
A)  attracts entry by more firms, which lowers the price. 
B)  can be earned both in the short run and the long run. 
C)  is less than the normal profit. 
D)  leads to a decrease in market demand. 
E)  generally leads to firms exiting as they seek higher profit in other markets.

Question 3

A perfectly competitive firm is earning an economic profit when total fixed costs increase.Assuming the firm does not shut down,in the short run the firm will

Accepted Answer

A)  charge a higher price. 
B)  produce more output so the extra revenue will cover the increased costs. 
C)  produce less output to decrease total costs. 
D)  continue producing the same quantity as before but will make less economic profit. 
E)  continue producing the same quantity as before and continue making the same economic profit as before. 
A)  charge a higher price. 
B)  produce more output so the extra revenue will cover the increased costs. 
C)  produce less output to decrease total costs. 
D)  continue producing the same quantity as before but will make less economic profit. 
E)  continue producing the same quantity as before and continue making the same economic profit as before.

Question 4

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies,the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit,Jennifer should

Accepted Answer

A)  not produce this additional batch. 
B)  produce this batch of cookies because they will help lower her average fixed cost. 
C)  charge $120 for this batch. 
D)  shut down. 
E)  produce this batch of cookies because their MR exceeds their MC. 
A)  not produce this additional batch. 
B)  produce this batch of cookies because they will help lower her average fixed cost. 
C)  charge $120 for this batch. 
D)  shut down. 
E)  produce this batch of cookies because their MR exceeds their MC.

Question 5

A market in which many firms sell identical products is

Accepted Answer

A)  a monopoly. 
B)  an oligopoly. 
C)  only perfectly competition. 
D)  only monopolistic competition. 
E)  both perfect competition and monopolistic competition. 
A)  a monopoly. 
B)  an oligopoly. 
C)  only perfectly competition. 
D)  only monopolistic competition. 
E)  both perfect competition and monopolistic competition.

Question 6

-The above figure shows a perfectly competitive firm.If the market price is $20 per unit,the firm

Accepted Answer

A)  will definitely shut down to minimize its losses. 
B)  will stay open to produce and will make zero economic profit. 
C)  will stay open to produce and will incur an economic loss. 
D)  will stay open to produce and will make an economic profit. 
E)  might shut down but more information is needed about the fixed cost. 
A)  will definitely shut down to minimize its losses. 
B)  will stay open to produce and will make zero economic profit. 
C)  will stay open to produce and will incur an economic loss. 
D)  will stay open to produce and will make an economic profit. 
E)  might shut down but more information is needed about the fixed cost.

Question 7

A perfectly competitive firm will continue to operate in the short run when the market price is below its average total cost if the

Accepted Answer

A)  marginal revenue is greater than marginal cost. 
B)  price is at least equal to the minimum average variable cost. 
C)  total fixed costs are less than total revenue. 
D)  marginal cost is minimized. 
E)  price is also less than the minimum average variable cost. 
A)  marginal revenue is greater than marginal cost. 
B)  price is at least equal to the minimum average variable cost. 
C)  total fixed costs are less than total revenue. 
D)  marginal cost is minimized. 
E)  price is also less than the minimum average variable cost.

Question 8

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

Accepted Answer

A)  horizontal at the market price. 
B)  its total cost curve above the AVC. 
C)  its marginal cost curve below the marginal revenue curve. 
D)  its marginal cost curve above the AVC curve. 
E)  its marginal revenue curve below the ATC curve. 
A)  horizontal at the market price. 
B)  its total cost curve above the AVC. 
C)  its marginal cost curve below the marginal revenue curve. 
D)  its marginal cost curve above the AVC curve. 
E)  its marginal revenue curve below the ATC curve.

Question 9

In a perfectly competitive market,the market price is $23.At the current level of output,a firm has a marginal cost of $28.What should the firm do?

Accepted Answer

A)  produce a larger output to make more profit 
B)  nothing, it is currently maximizing profit 
C)  produce less output to make more profit 
D)  shut down 
E)  raise the price of its product 
A)  produce a larger output to make more profit 
B)  nothing, it is currently maximizing profit 
C)  produce less output to make more profit 
D)  shut down 
E)  raise the price of its product

Question 10

A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4.The price of the good is $5.To maximize its profit,this firm should

Accepted Answer

A)  raise its price. 
B)  lower its price. 
C)  increase its output. 
D)  decrease its output. 
E)  increase the price it charges for its product. 
A)  raise its price. 
B)  lower its price. 
C)  increase its output. 
D)  decrease its output. 
E)  increase the price it charges for its product.

Question 11

-The above figure shows a perfectly competitive firm.If the market price is $10,the firm

Accepted Answer

A)  is incurring an economic loss. 
B)  is making an economic profit. 
C)  is making zero economic profit. 
D)  will immediately shut down. 
E)  might shut down but more information is needed about the AVC. 
A)  is incurring an economic loss. 
B)  is making an economic profit. 
C)  is making zero economic profit. 
D)  will immediately shut down. 
E)  might shut down but more information is needed about the AVC.

Question 12

If a perfectly competitive firm raised the price of its product,

Accepted Answer

A)  its profits would increase. 
B)  the quantity of output it sells decreases to zero. 
C)  rival firms will follow suit and raise their prices also. 
D)  the firm will be forced to advertise more. 
E)  its total revenue would rise but its total cost would rise by more. 
A)  its profits would increase. 
B)  the quantity of output it sells decreases to zero. 
C)  rival firms will follow suit and raise their prices also. 
D)  the firm will be forced to advertise more. 
E)  its total revenue would rise but its total cost would rise by more.

Question 13

A perfectly competitive firm

Accepted Answer

A)  sells a product that has perfect substitutes. 
B)  has a perfectly inelastic demand. 
C)  has a perfectly elastic supply. 
D)  Answers A and B are correct. 
E)  Answers A and C are correct. 
A)  sells a product that has perfect substitutes. 
B)  has a perfectly inelastic demand. 
C)  has a perfectly elastic supply. 
D)  Answers A and B are correct. 
E)  Answers A and C are correct.

Question 14

Which of the following is true if a firm shuts down?
i.The price is less than minimum average variable cost.
ii.The firm is able to avoid an economic loss.
iii.The firm incurs a loss equal to its total variable cost.

Accepted Answer

A)  i only 
B)  i and ii 
C)  i and iii 
D)  iii only 
E)  ii only 
A)  i only 
B)  i and ii 
C)  i and iii 
D)  iii only 
E)  ii only

Question 15

If perfectly firms are making an economic profit,then

Accepted Answer

A)  the market is in its long-run equilibrium. 
B)  new firms enter the market and the equilibrium profit of the firms already in the market decreases. 
C)  new firms enter the market and the equilibrium profit of the firms already in the market increases. 
D)  firms exit the market and the economic profit of the surviving firms in the market decreases. 
E)  firms exit the market and the economic profit of the surviving firms in the market increases. 
A)  the market is in its long-run equilibrium. 
B)  new firms enter the market and the equilibrium profit of the firms already in the market decreases. 
C)  new firms enter the market and the equilibrium profit of the firms already in the market increases. 
D)  firms exit the market and the economic profit of the surviving firms in the market decreases. 
E)  firms exit the market and the economic profit of the surviving firms in the market increases.

Question 16

-Farmer Brown produces corn in a perfectly competitive market.Farmer Brown produces and sells 500 bushels of corn.The market supply and demand curves are illustrated in the above figure.
a.What is Farmer Brown's total revenue?
b.What is Farmer Brown's marginal revenue?

Accepted Answer

a.Total revenue = price × quantity.The p

Question 17

The figure above shows a firm's marginal revenue and marginal cost curves.
-Suppose the firm's marginal cost of producing a can increases by $1 per can.Then the firm would

Accepted Answer

A)  produce zero cans. 
B)  decrease the amount of cans it produces but not to zero cans. 
C)  not change the amount of cans it produces. 
D)  increase the amount of cans it produces. 
E)  More information is needed to determine what action the firm will take. 
A)  produce zero cans. 
B)  decrease the amount of cans it produces but not to zero cans. 
C)  not change the amount of cans it produces. 
D)  increase the amount of cans it produces. 
E)  More information is needed to determine what action the firm will take.

Question 18

Technological change brings a ________ to firms that adopt the new technology.

Accepted Answer

A)  permanent economic profit 
B)  temporary economic profit 
C)  permanent economic loss 
D)  temporary economic loss 
E)  temporary normal profit 
A)  permanent economic profit 
B)  temporary economic profit 
C)  permanent economic loss 
D)  temporary economic loss 
E)  temporary normal profit

Question 19

If a perfectly competitive firm finds that the price exceeds its ATC,then the firm

Accepted Answer

A)  will raise its price to increase its economic profit. 
B)  will lower its price to increase its economic profit. 
C)  is making an economic profit. 
D)  is incurring an economic loss. 
E)  is making zero economic profit. 
A)  will raise its price to increase its economic profit. 
B)  will lower its price to increase its economic profit. 
C)  is making an economic profit. 
D)  is incurring an economic loss. 
E)  is making zero economic profit.

Question 20

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₁,each produce 30 units,and the market price of the good is $16 per unit,then the firms

Accepted Answer

A)  make zero economic profit and new firms enter the market. 
B)  make zero economic profit and no firms enter or exit the market. 
C)  make zero economic profit and some firms exit the market. 
D)  incur an economic loss and some firms exit the market. 
E)  make an economic profit and new firms enter the market. 
A)  make zero economic profit and new firms enter the market. 
B)  make zero economic profit and no firms enter or exit the market. 
C)  make zero economic profit and some firms exit the market. 
D)  incur an economic loss and some firms exit the market. 
E)  make an economic profit and new firms enter the market.

For a perfectly competitive sugar producer in Haiti,a short-run economic profit will occur if the price of each ton of sugar sold is

If perfectly firms are making an economic profit,the economic profit

A perfectly competitive firm is earning an economic profit when total fixed costs increase.Assuming the firm does not shut down,in the short run the firm will

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies,the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit,Jennifer should

A market in which many firms sell identical products is

-The above figure shows a perfectly competitive firm.If the market price is $20 per unit,the firm

A perfectly competitive firm will continue to operate in the short run when the market price is below its average total cost if the

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

In a perfectly competitive market,the market price is $23.At the current level of output,a firm has a marginal cost of $28.What should the firm do?

A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4.The price of the good is $5.To maximize its profit,this firm should

-The above figure shows a perfectly competitive firm.If the market price is $10,the firm

If a perfectly competitive firm raised the price of its product,

A perfectly competitive firm

Which of the following is true if a firm shuts down? i.The price is less than minimum average variable cost. ii.The firm is able to avoid an economic loss. iii.The firm incurs a loss equal to its total variable cost.

If perfectly firms are making an economic profit,then

-Farmer Brown produces corn in a perfectly competitive market.Farmer Brown produces and sells 500 bushels of corn.The market supply and demand curves are illustrated in the above figure. a.What is Farmer Brown's total revenue? b.What is Farmer Brown's marginal revenue?

The figure above shows a firm's marginal revenue and marginal cost curves. -Suppose the firm's marginal cost of producing a can increases by $1 per can.Then the firm would

Technological change brings a ________ to firms that adopt the new technology.

If a perfectly competitive firm finds that the price exceeds its ATC,then the firm

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₁,each produce 30 units,and the market price of the good is $16 per unit,then the firms

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 15: Perfect Competition

For a perfectly competitive sugar producer in Haiti,a short-run economic profit will occur if the price of each ton of sugar sold is

If perfectly firms are making an economic profit,the economic profit

A perfectly competitive firm is earning an economic profit when total fixed costs increase.Assuming the firm does not shut down,in the short run the firm will

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies,the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit,Jennifer should

A market in which many firms sell identical products is

-The above figure shows a perfectly competitive firm.If the market price is $20 per unit,the firm

A perfectly competitive firm will continue to operate in the short run when the market price is below its average total cost if the

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

In a perfectly competitive market,the market price is $23.At the current level of output,a firm has a marginal cost of $28.What should the firm do?

A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4.The price of the good is $5.To maximize its profit,this firm should

-The above figure shows a perfectly competitive firm.If the market price is $10,the firm

If a perfectly competitive firm raised the price of its product,

A perfectly competitive firm

Which of the following is true if a firm shuts down? i.The price is less than minimum average variable cost. ii.The firm is able to avoid an economic loss. iii.The firm incurs a loss equal to its total variable cost.

If perfectly firms are making an economic profit,then

-Farmer Brown produces corn in a perfectly competitive market.Farmer Brown produces and sells 500 bushels of corn.The market supply and demand curves are illustrated in the above figure. a.What is Farmer Brown's total revenue? b.What is Farmer Brown's marginal revenue?

The figure above shows a firm's marginal revenue and marginal cost curves. -Suppose the firm's marginal cost of producing a can increases by $1 per can.Then the firm would

Technological change brings a ________ to firms that adopt the new technology.

If a perfectly competitive firm finds that the price exceeds its ATC,then the firm

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₁,each produce 30 units,and the market price of the good is $16 per unit,then the firms

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters