Question 1

In the long run,a perfectly competitive firm makes zero economic profit.What incentive does the firm have to stay in business if it is making zero economic profit?

Accepted Answer

Zero economic profits do not mean no pro

Question 2

A perfectly competitive firm will shut down when the price is just below the minimum point on the

Accepted Answer

A)  average fixed cost curve. 
B)  average total cost curve. 
C)  marginal cost curve. 
D)  average variable cost curve. 
E)  marginal revenue curve. 
A)  average fixed cost curve. 
B)  average total cost curve. 
C)  marginal cost curve. 
D)  average variable cost curve. 
E)  marginal revenue curve.

Question 3

Because perfectly competitive firms are price takers,each firm faces a demand that is

Accepted Answer

A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  highly inelastic but never is it perfectly inelastic. 
D)  unit elastic. 
E)  highly elastic but never is it perfectly elastic. 
A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  highly inelastic but never is it perfectly inelastic. 
D)  unit elastic. 
E)  highly elastic but never is it perfectly elastic.

Question 4

The U-pick berry market is perfectly competitive.Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit.What happens as time passes? What is the long-run equilibrium outcome?

Accepted Answer

The presence of economic profit attracts

Question 5

Suppose that each of 8,000 firms in a perfectly competitive industry produces 1,000 units of a good and maximizes profits when the price of the good is $10.If there is a permanent increase in demand,in the short run each firm produces ________ 1,000 units and in the long run the number of firms is ________ 8,000.

Accepted Answer

A)  more than; more than 
B)  less than; more than 
C)  less than; less than 
D)  more than; less than 
E)  exactly; more than 
A)  more than; more than 
B)  less than; more than 
C)  less than; less than 
D)  more than; less than 
E)  exactly; more than

Question 6

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.This firm will produce as long as the market price of a wafer is above

Accepted Answer

A)  $1,300. 
B)  $1,400. 
C)  $7,900. 
D)  $2,800. 
E)  $9,800. 
A)  $1,300. 
B)  $1,400. 
C)  $7,900. 
D)  $2,800. 
E)  $9,800.

Question 7

The largest loss a profit-maximizing perfectly competitive firm can incur in the short run equals its

Accepted Answer

A)  average variable cost multiplied by output. 
B)  total fixed cost. 
C)  marginal cost multiplied by the number of units produced. 
D)  average total cost multiplied by the number of units produced. 
E)  total variable cost. 
A)  average variable cost multiplied by output. 
B)  total fixed cost. 
C)  marginal cost multiplied by the number of units produced. 
D)  average total cost multiplied by the number of units produced. 
E)  total variable cost.

Question 8

Cynthia is an Oklahoma wheat farmer.The demand for her wheat is

Accepted Answer

A)  perfectly inelastic. 
B)  inelastic but not perfectly inelastic. 
C)  elastic but not perfectly elastic. 
D)  perfectly elastic. 
E)  unit elastic. 
A)  perfectly inelastic. 
B)  inelastic but not perfectly inelastic. 
C)  elastic but not perfectly elastic. 
D)  perfectly elastic. 
E)  unit elastic.

Question 9

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm.
-Suppose the price of a can was $5.14.In this case,to maximize its profit the firm illustrated in the figure above would

Accepted Answer

A)  increase its production and would make an economic profit. 
B)  not change its production and would make a normal profit. 
C)  not change its production and would make an economic profit. 
D)  increase its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss. 
A)  increase its production and would make an economic profit. 
B)  not change its production and would make a normal profit. 
C)  not change its production and would make an economic profit. 
D)  increase its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss.

Question 10

For a perfectly competitive rancher in Wyoming,if the price does not change,an economic profit could turn into an economic loss if the

Accepted Answer

A)  average total cost curve shifts downward. 
B)  average total cost curve does not change. 
C)  average total cost curve shifts upward. 
D)  marginal cost curve shifts downward. 
E)  average fixed cost decreases. 
A)  average total cost curve shifts downward. 
B)  average total cost curve does not change. 
C)  average total cost curve shifts upward. 
D)  marginal cost curve shifts downward. 
E)  average fixed cost decreases.

Question 11

The table below gives Amy's total cost schedule for producing holiday wreaths.Amy is a perfect competitor and can sell each wreath for $9.
a.Complete the table by calculating Amy's total revenue and her profit or loss schedule.
   
b.When Amy is producing 4 wreaths,what is her total cost? What is her total revenue? What is her economic profit or economic loss?
c.What number of wreaths maximizes Amy's profit?

Accepted Answer

@#IMG-DLM& 
a.The completed table is above.
b.When

Question 12

A firm that is a price taker faces

Accepted Answer

A)  an elastic supply curve. 
B)  an inelastic supply curve. 
C)  a perfectly elastic demand curve. 
D)  a perfectly inelastic demand curve. 
E)  an elastic but not perfectly elastic demand curve. 
A)  an elastic supply curve. 
B)  an inelastic supply curve. 
C)  a perfectly elastic demand curve. 
D)  a perfectly inelastic demand curve. 
E)  an elastic but not perfectly elastic demand curve.

Question 13

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.If the market price of a wafer is $2,400 dollars,the firm is

Accepted Answer

A)  making zero economic profit. 
B)  making an economic profit of $12,000 an hour. 
C)  incurring an economic loss of $2,800 an hour. 
D)  incurring an economic loss of $2,000 an hour. 
E)  making an economic profit of $2,400 an hour. 
A)  making zero economic profit. 
B)  making an economic profit of $12,000 an hour. 
C)  incurring an economic loss of $2,800 an hour. 
D)  incurring an economic loss of $2,000 an hour. 
E)  making an economic profit of $2,400 an hour.

Question 14

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-Suppose the price of a can was $5.10.In this case,to maximize its profit the firm illustrated in the figure above would

Accepted Answer

A)  decrease its production and would make an economic profit. 
B)  not change its production and would make zero economic profit. 
C)  not change its production and would make an economic profit. 
D)  decrease its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss. 
A)  decrease its production and would make an economic profit. 
B)  not change its production and would make zero economic profit. 
C)  not change its production and would make an economic profit. 
D)  decrease its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss.

Question 15

For a perfectly competitive syrup producer whose average total cost curve does not change,an economic profit could turn into an economic loss if the

Accepted Answer

A)  market demand for syrup decreases. 
B)  marginal cost curve shifts downward. 
C)  market demand for syrup does not change. 
D)  market demand for syrup increases. 
E)  price of syrup rises. 
A)  market demand for syrup decreases. 
B)  marginal cost curve shifts downward. 
C)  market demand for syrup does not change. 
D)  market demand for syrup increases. 
E)  price of syrup rises.

Question 16

One part of a perfectly competitive trout farm's supply curve is its

Accepted Answer

A)  marginal cost curve below the shutdown point. 
B)  entire marginal cost curve. 
C)  marginal cost curve above the shutdown point. 
D)  average variable cost curve above the shutdown point. 
E)  marginal revenue curve above the demand curve. 
A)  marginal cost curve below the shutdown point. 
B)  entire marginal cost curve. 
C)  marginal cost curve above the shutdown point. 
D)  average variable cost curve above the shutdown point. 
E)  marginal revenue curve above the demand curve.

Question 17

Keith is a perfectly competitive carnation grower.The market price is $2 per dozen carnations.Keith's average total cost to grow carnations is $2.50 per dozen.In the long run,Keith will

Accepted Answer

A)  raise his price to more than $2.50 per dozen carnations. 
B)  raise his price to $2.50 per dozen carnations. 
C)  exit the industry if the price and his costs do not change. 
D)  incur an economic loss. 
E)  continue to make an economic profit. 
A)  raise his price to more than $2.50 per dozen carnations. 
B)  raise his price to $2.50 per dozen carnations. 
C)  exit the industry if the price and his costs do not change. 
D)  incur an economic loss. 
E)  continue to make an economic profit.

Question 18

-The above figure illustrates a perfectly competitive wheat farmer.
a.What will be the firm's profit-maximizing price and output?
b.When the farmer produces 25,000 bushels of wheat,the difference between the firm's average total cost and the price is at its maximum.Explain why this amount of wheat either is or is not the profit-maximizing quantity.

Accepted Answer

a.The firm will maximize its profits by

Question 19

The U.S.oil industry has only a few firms in it,so an economists is likely to describe the industry as

Accepted Answer

A)  a monopoly. 
B)  an oligopoly. 
C)  perfectly competitive. 
D)  monopolistically competitive. 
E)  Both answers C and D can be correct. 
A)  a monopoly. 
B)  an oligopoly. 
C)  perfectly competitive. 
D)  monopolistically competitive. 
E)  Both answers C and D can be correct.

Question 20

During the middle of the 2000s,the price of gasoline soared and there was a movement to switch to fuels made from a mixture of gasoline and ethanol.Ethanol can be made from corn.The price of corn skyrocketed and then,after a couple of years,the price decreased.What might have led to these price changes in the corn market?

Accepted Answer

There are thousands upon thousands of co

In the long run,a perfectly competitive firm makes zero economic profit.What incentive does the firm have to stay in business if it is making zero economic profit?

A perfectly competitive firm will shut down when the price is just below the minimum point on the

Because perfectly competitive firms are price takers,each firm faces a demand that is

The U-pick berry market is perfectly competitive.Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit.What happens as time passes? What is the long-run equilibrium outcome?

Suppose that each of 8,000 firms in a perfectly competitive industry produces 1,000 units of a good and maximizes profits when the price of the good is $10.If there is a permanent increase in demand,in the short run each firm produces 1,000 units and in the long run the number of firms is 8,000.

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.This firm will produce as long as the market price of a wafer is above

The largest loss a profit-maximizing perfectly competitive firm can incur in the short run equals its

Cynthia is an Oklahoma wheat farmer.The demand for her wheat is

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm. -Suppose the price of a can was $5.14.In this case,to maximize its profit the firm illustrated in the figure above would

For a perfectly competitive rancher in Wyoming,if the price does not change,an economic profit could turn into an economic loss if the

A firm that is a price taker faces

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.If the market price of a wafer is $2,400 dollars,the firm is

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Suppose the price of a can was $5.10.In this case,to maximize its profit the firm illustrated in the figure above would

For a perfectly competitive syrup producer whose average total cost curve does not change,an economic profit could turn into an economic loss if the

One part of a perfectly competitive trout farm's supply curve is its

Keith is a perfectly competitive carnation grower.The market price is $2 per dozen carnations.Keith's average total cost to grow carnations is $2.50 per dozen.In the long run,Keith will

The U.S.oil industry has only a few firms in it,so an economists is likely to describe the industry as

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

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Exam 15: Perfect Competition

In the long run,a perfectly competitive firm makes zero economic profit.What incentive does the firm have to stay in business if it is making zero economic profit?

A perfectly competitive firm will shut down when the price is just below the minimum point on the

Because perfectly competitive firms are price takers,each firm faces a demand that is

The U-pick berry market is perfectly competitive.Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit.What happens as time passes? What is the long-run equilibrium outcome?

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.This firm will produce as long as the market price of a wafer is above

The largest loss a profit-maximizing perfectly competitive firm can incur in the short run equals its

Cynthia is an Oklahoma wheat farmer.The demand for her wheat is

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm. -Suppose the price of a can was $5.14.In this case,to maximize its profit the firm illustrated in the figure above would

For a perfectly competitive rancher in Wyoming,if the price does not change,an economic profit could turn into an economic loss if the

A firm that is a price taker faces

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.If the market price of a wafer is $2,400 dollars,the firm is

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Suppose the price of a can was $5.10.In this case,to maximize its profit the firm illustrated in the figure above would

For a perfectly competitive syrup producer whose average total cost curve does not change,an economic profit could turn into an economic loss if the

One part of a perfectly competitive trout farm's supply curve is its

Keith is a perfectly competitive carnation grower.The market price is $2 per dozen carnations.Keith's average total cost to grow carnations is $2.50 per dozen.In the long run,Keith will

The U.S.oil industry has only a few firms in it,so an economists is likely to describe the industry as

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