Question 1

The above figure shows some a firm's cost curves and its marginal revenue curve.
-The firm in the figure above has a total revenue equal to ________.

Accepted Answer

A)  $5.14 × 7 
B)  $3.00 × 7 
C)  ($5.14 - $3.00) × 7 
D)  ($3.00 - $5.14) × 7 
E)  None of the above answers are correct because more information is needed. 
A)  $5.14 × 7 
B)  $3.00 × 7 
C)  ($5.14 - $3.00) × 7 
D)  ($3.00 - $5.14) × 7 
E)  None of the above answers are correct because more information is needed.

Question 2

Peter's Pencils is a perfectly competitive company producing pencils.Suppose Peter is producing 1,000 pencils an hour.If the total cost of 1,000 pencils is $500,the market price per pencil is $2,and the marginal cost is $2,then Peter

Accepted Answer

A)  makes an economic profit because marginal revenue is equal to marginal cost at this output level. 
B)  should decrease his output to increase his profit. 
C)  is maximizing his profit and is making an economic profit. 
D)  should increase his output to increase his profit. 
E)  is not maximizing his profit but is making zero economic profit anyway. 
A)  makes an economic profit because marginal revenue is equal to marginal cost at this output level. 
B)  should decrease his output to increase his profit. 
C)  is maximizing his profit and is making an economic profit. 
D)  should increase his output to increase his profit. 
E)  is not maximizing his profit but is making zero economic profit anyway.

Question 3

Henry,a perfectly competitive lime grower in Southern California,notices that the market price of limes is greater than his marginal cost.What should Henry do?

Accepted Answer

A)  expand his output to increase profits 
B)  shut down and incur a loss equal to his total fixed cost 
C)  advertise his limes to be able to sell more output 
D)  look for the output level where marginal revenue minus marginal cost is maximized 
E)  shut down and earn no profit but also incur no loss 
A)  expand his output to increase profits 
B)  shut down and incur a loss equal to his total fixed cost 
C)  advertise his limes to be able to sell more output 
D)  look for the output level where marginal revenue minus marginal cost is maximized 
E)  shut down and earn no profit but also incur no loss

Question 4

With regard to its profits and losses,how is the short run different from the long run for a perfectly competitive firm?

Accepted Answer

The firm can make an economic profit,inc

Question 5

Pineapple growing is a perfectly competitive industry.How does the market demand curve for pineapples compare to the demand curve for an individual pineapple grower?

Accepted Answer

The market demand curve for pineapples i

Question 6

-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 ATC₂,each produces 40 units,and the market price of the good is $20 per unit,then

Accepted Answer

A)  the firms incur an economic loss of $12 per unit. 
B)  firms will enter the industry and the number of firms increases. 
C)  the firms' ATC curves will eventually shift to become the same as ATC₁. 
D)  firms will exit the industry and the number of firms decreases. 
E)  Both answers A and D are correct. 
A)  the firms incur an economic loss of $12 per unit. 
B)  firms will enter the industry and the number of firms increases. 
C)  the firms' ATC curves will eventually shift to become the same as ATC₁. 
D)  firms will exit the industry and the number of firms decreases. 
E)  Both answers A and D are correct.

Question 7

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-Based on the figure above,if the firm produces 10 cans per day,the firm ________ maximizing its profit and is ________.

Accepted Answer

A)  is; incurring an economic loss 
B)  is; making zero economic profit 
C)  is; making an economic profit 
D)  is not; incurring an economic loss 
E)  is not; making zero economic profit 
A)  is; incurring an economic loss 
B)  is; making zero economic profit 
C)  is; making an economic profit 
D)  is not; incurring an economic loss 
E)  is not; making zero economic profit

Question 8

The rutabaga market is perfectly competitive.Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases.The permanent decrease in demand results in a

Accepted Answer

A)  lower price, economic losses by rutabaga farmers, and entry into the market. 
B)  lower price, economic losses by rutabaga farmers, and exit from the market. 
C)  higher price, economic profits for rutabaga farmers, and entry into the market. 
D)  higher price, economic losses by rutabaga farmers, and exit from the market. 
E)  lower price, economic profits for rutabaga farmers, and entry into the market. 
A)  lower price, economic losses by rutabaga farmers, and entry into the market. 
B)  lower price, economic losses by rutabaga farmers, and exit from the market. 
C)  higher price, economic profits for rutabaga farmers, and entry into the market. 
D)  higher price, economic losses by rutabaga farmers, and exit from the market. 
E)  lower price, economic profits for rutabaga farmers, and entry into the market.

Question 9

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-Based on the figure above,what is the price of a can?

Accepted Answer

A)  $0 
B)  $8.00 per can 
C)  $5.10 per can 
D)  None of the above prices is correct. 
E)  More information is needed to determine the price of a can. 
A)  $0 
B)  $8.00 per can 
C)  $5.10 per can 
D)  None of the above prices is correct. 
E)  More information is needed to determine the price of a can.

Question 10

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12.Then there is a permanent increase in demand.As a result,in the short run the market price ________ and in the long run the number of firms ________ and the price is ________ the price was in the short run.

Accepted Answer

A)  rises; does not change; is equal to 
B)  rises; increases; higher than 
C)  rises; does not change; lower than 
D)  falls; decreases; is equal to 
E)  rises; increases; lower than 
A)  rises; does not change; is equal to 
B)  rises; increases; higher than 
C)  rises; does not change; lower than 
D)  falls; decreases; is equal to 
E)  rises; increases; lower than

Question 11

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces ________ units and makes an economic profit that is ________.

Accepted Answer

A)  more than 45; more than $400 
B)  40; more than $400 
C)  40; less than $400 
D)  30; equal to zero 
E)  30; more than $250 
A)  more than 45; more than $400 
B)  40; more than $400 
C)  40; less than $400 
D)  30; equal to zero 
E)  30; more than $250

Question 12

-Pete is a perfectly competitive rose grower.The above table gives quantities and the price for which Pete can sell his roses.
a.What is Pete's total revenue if he sells 1 dozen roses? 2 dozen roses? 3 dozen roses? 4 dozen roses?
b.What is the marginal revenue of the 2nd dozen roses sold? Of the 3rd dozen? Of the 4th dozen?

Accepted Answer

a.The total revenue when 1 dozen roses i

Question 13

What is the shape of the demand curve faced by the perfectly competitive firm,and why?

Accepted Answer

The demand curve faced by a perfectly co

Question 14

In a perfectly competitive industry,
i.entry by new firms shifts the market supply curve rightward.
ii.exit by existing firms shifts the market supply curve leftward.
iii.at all times existing firms make only zero economic profit.

Accepted Answer

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

Question 15

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit,to maximize its profit (or minimize its loss)the firm should

Accepted Answer

A)  shut down. 
B)  produce between 10 and less than 30 units. 
C)  produce 30 units. 
D)  produce more than 30 units and less than 40 units. 
E)  produce 40 units. 
A)  shut down. 
B)  produce between 10 and less than 30 units. 
C)  produce 30 units. 
D)  produce more than 30 units and less than 40 units. 
E)  produce 40 units.

Question 16

-As a perfectly competitive firm's output increases,its total revenue ________ and its total cost ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
E)  does not change; increases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
E)  does not change; increases

Question 17

Suppose a farmer raising beef is making a normal profit.Then,because of a scare about mad cow disease,the demand for beef decreases drastically.What happens to the profits of the beef farmer in the short run and in the long run?

Accepted Answer

In the short run,the fall in beef prices

Question 18

-The above diagram shows the cost curves for a perfectly competitive wheat farmer.At what price(s)does the wheat farmer earn an economic profit? Earn a normal profit? Incur an economic loss? How many bushels of wheat does the farmer produce if the price is $3 per bushel? If the price is $0.50 per bushel?

Accepted Answer

At any price that exceeds the minimum of

Question 19

-Acme is a perfectly competitive firm.It has the cost schedules given in the above table and has a fixed cost of $12.00.The price of Acme's product is $14.20.What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

Accepted Answer

The profit maximizing level of output is

Question 20

A monopoly occurs when

Accepted Answer

A)  each of many firms produces a product that is slightly different from that of the other firms. 
B)  one firm sells a good that has no close substitutes and a barrier blocks entry for other firms. 
C)  there are many firms producing the same product. 
D)  a few firms control the market. 
E)  one firm is larger than the many other firms that make an identical product. 
A)  each of many firms produces a product that is slightly different from that of the other firms. 
B)  one firm sells a good that has no close substitutes and a barrier blocks entry for other firms. 
C)  there are many firms producing the same product. 
D)  a few firms control the market. 
E)  one firm is larger than the many other firms that make an identical product.

The above figure shows some a firm's cost curves and its marginal revenue curve. -The firm in the figure above has a total revenue equal to ________.

Peter's Pencils is a perfectly competitive company producing pencils.Suppose Peter is producing 1,000 pencils an hour.If the total cost of 1,000 pencils is $500,the market price per pencil is $2,and the marginal cost is $2,then Peter

Henry,a perfectly competitive lime grower in Southern California,notices that the market price of limes is greater than his marginal cost.What should Henry do?

With regard to its profits and losses,how is the short run different from the long run for a perfectly competitive firm?

Pineapple growing is a perfectly competitive industry.How does the market demand curve for pineapples compare to the demand curve for an individual pineapple grower?

-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 ATC₂,each produces 40 units,and the market price of the good is $20 per unit,then

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,if the firm produces 10 cans per day,the firm maximizing its profit and is .

The rutabaga market is perfectly competitive.Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases.The permanent decrease in demand results in a

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,what is the price of a can?

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12.Then there is a permanent increase in demand.As a result,in the short run the market price and in the long run the number of firms and the price is the price was in the short run.

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces units and makes an economic profit that is .

What is the shape of the demand curve faced by the perfectly competitive firm,and why?

In a perfectly competitive industry, i.entry by new firms shifts the market supply curve rightward. ii.exit by existing firms shifts the market supply curve leftward. iii.at all times existing firms make only zero economic profit.

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit,to maximize its profit (or minimize its loss)the firm should

-As a perfectly competitive firm's output increases,its total revenue and its total cost .

Suppose a farmer raising beef is making a normal profit.Then,because of a scare about mad cow disease,the demand for beef decreases drastically.What happens to the profits of the beef farmer in the short run and in the long run?

-Acme is a perfectly competitive firm.It has the cost schedules given in the above table and has a fixed cost of $12.00.The price of Acme's product is $14.20.What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

A monopoly occurs when

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

The above figure shows some a firm's cost curves and its marginal revenue curve. -The firm in the figure above has a total revenue equal to ________.

Peter's Pencils is a perfectly competitive company producing pencils.Suppose Peter is producing 1,000 pencils an hour.If the total cost of 1,000 pencils is $500,the market price per pencil is $2,and the marginal cost is $2,then Peter

Henry,a perfectly competitive lime grower in Southern California,notices that the market price of limes is greater than his marginal cost.What should Henry do?

With regard to its profits and losses,how is the short run different from the long run for a perfectly competitive firm?

Pineapple growing is a perfectly competitive industry.How does the market demand curve for pineapples compare to the demand curve for an individual pineapple grower?

-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 ATC₂,each produces 40 units,and the market price of the good is $20 per unit,then

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,if the firm produces 10 cans per day,the firm ________ maximizing its profit and is ________.

The rutabaga market is perfectly competitive.Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases.The permanent decrease in demand results in a

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,what is the price of a can?

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12.Then there is a permanent increase in demand.As a result,in the short run the market price ________ and in the long run the number of firms ________ and the price is ________ the price was in the short run.

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces ________ units and makes an economic profit that is ________.

What is the shape of the demand curve faced by the perfectly competitive firm,and why?

In a perfectly competitive industry, i.entry by new firms shifts the market supply curve rightward. ii.exit by existing firms shifts the market supply curve leftward. iii.at all times existing firms make only zero economic profit.

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit,to maximize its profit (or minimize its loss)the firm should

-As a perfectly competitive firm's output increases,its total revenue ________ and its total cost ________.

Suppose a farmer raising beef is making a normal profit.Then,because of a scare about mad cow disease,the demand for beef decreases drastically.What happens to the profits of the beef farmer in the short run and in the long run?

-Acme is a perfectly competitive firm.It has the cost schedules given in the above table and has a fixed cost of $12.00.The price of Acme's product is $14.20.What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

A monopoly occurs when

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

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,if the firm produces 10 cans per day,the firm maximizing its profit and is .

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12.Then there is a permanent increase in demand.As a result,in the short run the market price and in the long run the number of firms and the price is the price was in the short run.

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces units and makes an economic profit that is .

-As a perfectly competitive firm's output increases,its total revenue and its total cost .