Question 1

In which market structure does one firm sell a good or service with no close substitutes and there is a barrier blocking the entry of new firms?

Accepted Answer

A)  only monopoly 
B)  only oligopoly 
C)  perfect competition 
D)  monopolistic competition 
E)  either monopoly or oligopoly 
A)  only monopoly 
B)  only oligopoly 
C)  perfect competition 
D)  monopolistic competition 
E)  either monopoly or oligopoly

Question 2

What are the four types of markets? Give a brief description of each type.

Accepted Answer

The four types of markets are perfect co

Question 3

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

Accepted Answer

If a firm produces at a level where marg

Question 4

If the market price faced by a perfectly competitive firm increases,in the short run how does the firm respond?

Accepted Answer

If the market price rises,a pe

Question 5

Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?

Accepted Answer

A)  if the total revenue exceeds the total fixed cost 
B)  if the total revenue exceeds the total variable cost 
C)  if the total revenue is positive 
D)  if the total revenue is increasing 
E)  if the marginal revenue exceeds the price. 
A)  if the total revenue exceeds the total fixed cost 
B)  if the total revenue exceeds the total variable cost 
C)  if the total revenue is positive 
D)  if the total revenue is increasing 
E)  if the marginal revenue exceeds the price.

Question 6

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm.
-Based on the figure above,if the firm produces 7 cans per day,the firm ________ maximizing its profit and is ________.

Accepted Answer

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

Question 7

A large number of sellers all selling an identical product implies which of the following?

Accepted Answer

A)  market chaos 
B)  the inability of any seller to change the price of the product 
C)  large losses incurred by all sellers 
D)  horizontal market supply curves 
E)  vertical market supply curves 
A)  market chaos 
B)  the inability of any seller to change the price of the product 
C)  large losses incurred by all sellers 
D)  horizontal market supply curves 
E)  vertical market supply curves

Question 8

For the perfectly competitive broccoli producers in California,the market demand curve for broccoli is

Accepted Answer

A)  a horizontal line. 
B)  downward sloping. 
C)  nonexistent. 
D)  upward sloping. 
E)  the same as the demand curve each firm faces. 
A)  a horizontal line. 
B)  downward sloping. 
C)  nonexistent. 
D)  upward sloping. 
E)  the same as the demand curve each firm faces.

Question 9

-As a perfectly competitive firm produces more and more of a good,its economic profit

Accepted Answer

A)  constantly increases. 
B)  constantly decreases. 
C)  first decreases, then increases. 
D)  first increases, then decreases. 
E)  does not change. 
A)  constantly increases. 
B)  constantly decreases. 
C)  first decreases, then increases. 
D)  first increases, then decreases. 
E)  does not change.

Question 10

A market is initially in a long-run equilibrium and there is a permanent increase in demand.After the new long-run equilibrium is reached,there

Accepted Answer

A)  are more firms in the market. 
B)  are fewer firms in the market. 
C)  are the same number of firms in the market. 
D)  probably is a different number of firms in the market, but more information is needed to determine if the number of firms rises, falls, or perhaps does not change. 
E)  is no change in the market. 
A)  are more firms in the market. 
B)  are fewer firms in the market. 
C)  are the same number of firms in the market. 
D)  probably is a different number of firms in the market, but more information is needed to determine if the number of firms rises, falls, or perhaps does not change. 
E)  is no change in the market.

Question 11

One requirement for an industry to be perfectly competitive is that in the industry there

Accepted Answer

A)  are a few firms who control the market. 
B)  are many firms for whom the efficient scale of production is small. 
C)  is one firm that sells a product with no close substitutes. 
D)  are many firms selling different products. 
E)  is a barrier to entry that makes the entry of new firms difficult. 
A)  are a few firms who control the market. 
B)  are many firms for whom the efficient scale of production is small. 
C)  is one firm that sells a product with no close substitutes. 
D)  are many firms selling different products. 
E)  is a barrier to entry that makes the entry of new firms difficult.

Question 12

The firm's over-riding objective is to

Accepted Answer

A)  earn a normal profit. 
B)  maximize normal profit. 
C)  maximize economic profit. 
D)  maximize total revenue. 
E)  avoid an economic loss. 
A)  earn a normal profit. 
B)  maximize normal profit. 
C)  maximize economic profit. 
D)  maximize total revenue. 
E)  avoid an economic loss.

Question 13

For a perfectly competitive firm,profit is maximized at the output level where
i.total revenue exceeds total cost by the largest amount.
ii.marginal revenue equals marginal cost.
iii.price equals marginal cost.

Accepted Answer

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

Question 14

Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10.In the long run,definitely

Accepted Answer

A)  each firm increases its production above 1,000 units. 
B)  the number of firms is more than 10,000. 
C)  consumer surplus decreases. 
D)  producer surplus increases. 
E)  the number of firms is less than 10,000. 
A)  each firm increases its production above 1,000 units. 
B)  the number of firms is more than 10,000. 
C)  consumer surplus decreases. 
D)  producer surplus increases. 
E)  the number of firms is less than 10,000.

Question 15

If new firms enter a perfectly competitive industry,the market supply

Accepted Answer

A)  does not change. 
B)  becomes more price elastic. 
C)  becomes more price inelastic. 
D)  increases. 
E)  decreases because each firm produces less than before the entry. 
A)  does not change. 
B)  becomes more price elastic. 
C)  becomes more price inelastic. 
D)  increases. 
E)  decreases because each firm produces less than before the entry.

In which market structure does one firm sell a good or service with no close substitutes and there is a barrier blocking the entry of new firms?

What are the four types of markets? Give a brief description of each type.

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

If the market price faced by a perfectly competitive firm increases,in the short run how does the firm respond?

Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm. -Based on the figure above,if the firm produces 7 cans per day,the firm maximizing its profit and is .

A large number of sellers all selling an identical product implies which of the following?

For the perfectly competitive broccoli producers in California,the market demand curve for broccoli is

-As a perfectly competitive firm produces more and more of a good,its economic profit

A market is initially in a long-run equilibrium and there is a permanent increase in demand.After the new long-run equilibrium is reached,there

One requirement for an industry to be perfectly competitive is that in the industry there

The firm's over-riding objective is to

For a perfectly competitive firm,profit is maximized at the output level where i.total revenue exceeds total cost by the largest amount. ii.marginal revenue equals marginal cost. iii.price equals marginal cost.

Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10.In the long run,definitely

If new firms enter a perfectly competitive industry,the market supply

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

In which market structure does one firm sell a good or service with no close substitutes and there is a barrier blocking the entry of new firms?

What are the four types of markets? Give a brief description of each type.

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

If the market price faced by a perfectly competitive firm increases,in the short run how does the firm respond?

Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm. -Based on the figure above,if the firm produces 7 cans per day,the firm ________ maximizing its profit and is ________.

A large number of sellers all selling an identical product implies which of the following?

For the perfectly competitive broccoli producers in California,the market demand curve for broccoli is

-As a perfectly competitive firm produces more and more of a good,its economic profit

A market is initially in a long-run equilibrium and there is a permanent increase in demand.After the new long-run equilibrium is reached,there

One requirement for an industry to be perfectly competitive is that in the industry there

The firm's over-riding objective is to

For a perfectly competitive firm,profit is maximized at the output level where i.total revenue exceeds total cost by the largest amount. ii.marginal revenue equals marginal cost. iii.price equals marginal cost.

Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10.In the long run,definitely

If new firms enter a perfectly competitive industry,the market supply

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 the cost curves and marginal revenue curve for a perfectly competitive firm. -Based on the figure above,if the firm produces 7 cans per day,the firm maximizing its profit and is .