Question 1

The figure above shows a firm's marginal revenue and marginal cost curves.
-The price of a can is $8; if the price increased to $12,then the firm would

Accepted Answer

A)  produce zero cans. 
B)  decrease the amount of cans produces it but not to zero. 
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 produces it but not to zero. 
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 2

If the price received by a perfectly competitive firm is less than its average variable cost,what will the firm do in the short run? Why?

Accepted Answer

If the price is less than the average va

Question 3

Suppose Pat's Paints is a perfectly competitive firm.If Pat's Paints' marginal revenue equals $5 per can,and Pat decides to sell 100 cans of paint,Pat's total revenue equals

Accepted Answer

A)  $5. 
B)  $100. 
C)  $500. 
D)  $20. 
E)  Information on the price of a can of paint is needed to answer the question. 
A)  $5. 
B)  $100. 
C)  $500. 
D)  $20. 
E)  Information on the price of a can of paint is needed to answer the question.

Question 4

-The above figure shows the cost curves of a profit-maximizing perfectly competitive firm.If the price equals $7,
a.how much will the firm produce?
b.how much is the firm's average total,average variable,and marginal costs?
c.how much is the firm's total,total variable,and total fixed costs?
d.how much is the firm's total revenue and economic profit?
e.what will happen in this market in the long run?

Accepted Answer

a.The firm will produce 40 units of outp

Question 5

Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output.If the marginal cost of producing the 10th unit is $14,to maximize its profit the firm should

Accepted Answer

A)  do nothing because it is already maximizing its profit. 
B)  decrease its production. 
C)  increase its production. 
D)  shut down. 
E)  increase the price it charges for its product. 
A)  do nothing because it is already maximizing its profit. 
B)  decrease its production. 
C)  increase its production. 
D)  shut down. 
E)  increase the price it charges for its product.

Question 6

The cranberry market is perfectly competitive.Reports that consuming cranberries can lead to improved health result in a permanent increase in the demand for cranberries and an immediate upward jump in the price of cranberries.As time passes,the price of cranberries ________ and the initial firms' economic ________.

Accepted Answer

A)  falls; profit will be eliminated 
B)  rises still higher; loss will be eliminated 
C)  rises still higher; profit will not change 
D)  falls; loss will be increased 
E)  falls; profit will not change 
A)  falls; profit will be eliminated 
B)  rises still higher; loss will be eliminated 
C)  rises still higher; profit will not change 
D)  falls; loss will be increased 
E)  falls; profit will not change

Question 7

For a perfectly competitive firm,marginal revenue is

Accepted Answer

A)  less than the price. 
B)  greater than the price. 
C)  equal to the price. 
D)  equal to the change in profit from selling one more unit. 
E)  undefined because the firm's demand curve is horizontal. 
A)  less than the price. 
B)  greater than the price. 
C)  equal to the price. 
D)  equal to the change in profit from selling one more unit. 
E)  undefined because the firm's demand curve is horizontal.

Question 8

Consider a short-run equilibrium in a perfectly competitive market.Suppose that the firms' average total cost and marginal cost schedules differ.In the short run,

Accepted Answer

A)  all firms in the market must be able to make an economic profit. 
B)  all firms produce equal amounts of output. 
C)  some firms might incur an economic loss, but still produce output. 
D)  some firms might make an economic profit and, as a result, shut down. 
E)  all firms in the market must be able to make either positive or zero economic profit. 
A)  all firms in the market must be able to make an economic profit. 
B)  all firms produce equal amounts of output. 
C)  some firms might incur an economic loss, but still produce output. 
D)  some firms might make an economic profit and, as a result, shut down. 
E)  all firms in the market must be able to make either positive or zero economic profit.

Question 9

If the market price is less than a perfectly competitive firm's average total cost,what sort of profit or loss is the firm earning?

Accepted Answer

If the price is less

Question 10

In a perfectly competitive industry,when a firm is producing so that its total revenue equals its total cost,the firm is

Accepted Answer

A)  making an economic profit. 
B)  incurring an economic loss. 
C)  making zero economic profit. 
D)  definitely not maximizing its profit. 
E)  None of the above answers is correct because the relationship between total revenue and total cost has nothing to do with the firm's profit or loss. 
A)  making an economic profit. 
B)  incurring an economic loss. 
C)  making zero economic profit. 
D)  definitely not maximizing its profit. 
E)  None of the above answers is correct because the relationship between total revenue and total cost has nothing to do with the firm's profit or loss.

Question 11

What must be the case if a perfectly competitive firm's economic loss is less by shutting down rather than by producing and selling some output?

Accepted Answer

If a firm's economic loss is greater whe

Question 12

In the long run,a firm in a perfectly competitive market will

Accepted Answer

A)  make zero economic profit, so that its owners earn a normal profit. 
B)  make zero normal profit but its owners will make an economic profit. 
C)  remove all competitors and become a monopolistically competitive firm. 
D)  incur an economic normal loss but not earn a positive economic profit. 
E)  remove all competitors and become a monopoly. 
A)  make zero economic profit, so that its owners earn a normal profit. 
B)  make zero normal profit but its owners will make an economic profit. 
C)  remove all competitors and become a monopolistically competitive firm. 
D)  incur an economic normal loss but not earn a positive economic profit. 
E)  remove all competitors and become a monopoly.

Question 13

For a perfectly competitive corn grower in Nebraska,the marginal revenue curve is

Accepted Answer

A)  downward sloping. 
B)  the same as its demand curve. 
C)  upward sloping. 
D)  U-shaped. 
E)  vertical at the profit maximizing quantity of production. 
A)  downward sloping. 
B)  the same as its demand curve. 
C)  upward sloping. 
D)  U-shaped. 
E)  vertical at the profit maximizing quantity of production.

Question 14

In the short run,a perfectly competitive firm can experience which of the following?
i.an economic profit
ii.an economic loss but it continues to stay open
iii.an economic loss equal to its total fixed cost when it shuts down

Accepted Answer

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

Question 15

When firms in a perfectly competitive market are earning an economic profit,in the long run

Accepted Answer

A)  no new firms will enter the market. 
B)  new firms will enter the market. 
C)  firms will exit the market. 
D)  the long-run average cost curve shifts downward. 
E)  the initial firms continue to earn an economic profit. 
A)  no new firms will enter the market. 
B)  new firms will enter the market. 
C)  firms will exit the market. 
D)  the long-run average cost curve shifts downward. 
E)  the initial firms continue to earn an economic profit.

Question 16

-The above table has the total revenue and total cost schedule for Omar,a perfectly competitive grower of rutabagas.When Omar maximizes his profit,Omar's profit equals

Accepted Answer

A)  $80. 
B)  $11. 
C)  $30. 
D)  $16. 
E)  $105. 
A)  $80. 
B)  $11. 
C)  $30. 
D)  $16. 
E)  $105.

Question 17

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry,then

Accepted Answer

A)  consumer surplus decreases. 
B)  the existing firms' economic profit decreases. 
C)  there must be external benefits to consumption of the good. 
D)  the new firms must incur an economic loss. 
E)  Both answers A and B are correct. 
A)  consumer surplus decreases. 
B)  the existing firms' economic profit decreases. 
C)  there must be external benefits to consumption of the good. 
D)  the new firms must incur an economic loss. 
E)  Both answers A and B are correct.

Question 18

Each firm in a perfectly competitive industry

Accepted Answer

A)  produces a good that is slightly different from that of the other firms. 
B)  produces a good that is identical to that of the other firms. 
C)  attains economies of scale so that its efficient size is large compared to the market as a whole. 
D)  has control over at least one unique resource to separate themselves from their competitors. 
E)  has an important influence on the market price of the good or service being produced. 
A)  produces a good that is slightly different from that of the other firms. 
B)  produces a good that is identical to that of the other firms. 
C)  attains economies of scale so that its efficient size is large compared to the market as a whole. 
D)  has control over at least one unique resource to separate themselves from their competitors. 
E)  has an important influence on the market price of the good or service being produced.

Question 19

When firms in a perfectly competitive market incur economic losses,exit by some firms means the market supply will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  become vertical. 
E)  become the same as the individual producers' supplies. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  become vertical. 
E)  become the same as the individual producers' supplies.

Question 20

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

Accepted Answer

A)  greater than the marginal revenue of each rental. 
B)  less than the marginal revenue of each rental. 
C)  equal to the marginal revenue of each rental. 
D)  equal to the price of each rental. 
E)  greater than the average variable cost of each rental. 
A)  greater than the marginal revenue of each rental. 
B)  less than the marginal revenue of each rental. 
C)  equal to the marginal revenue of each rental. 
D)  equal to the price of each rental. 
E)  greater than the average variable cost of each rental.

The figure above shows a firm's marginal revenue and marginal cost curves. -The price of a can is $8; if the price increased to $12,then the firm would

If the price received by a perfectly competitive firm is less than its average variable cost,what will the firm do in the short run? Why?

Suppose Pat's Paints is a perfectly competitive firm.If Pat's Paints' marginal revenue equals $5 per can,and Pat decides to sell 100 cans of paint,Pat's total revenue equals

Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output.If the marginal cost of producing the 10th unit is $14,to maximize its profit the firm should

The cranberry market is perfectly competitive.Reports that consuming cranberries can lead to improved health result in a permanent increase in the demand for cranberries and an immediate upward jump in the price of cranberries.As time passes,the price of cranberries and the initial firms' economic .

For a perfectly competitive firm,marginal revenue is

Consider a short-run equilibrium in a perfectly competitive market.Suppose that the firms' average total cost and marginal cost schedules differ.In the short run,

If the market price is less than a perfectly competitive firm's average total cost,what sort of profit or loss is the firm earning?

In a perfectly competitive industry,when a firm is producing so that its total revenue equals its total cost,the firm is

What must be the case if a perfectly competitive firm's economic loss is less by shutting down rather than by producing and selling some output?

In the long run,a firm in a perfectly competitive market will

For a perfectly competitive corn grower in Nebraska,the marginal revenue curve is

In the short run,a perfectly competitive firm can experience which of the following? i.an economic profit ii.an economic loss but it continues to stay open iii.an economic loss equal to its total fixed cost when it shuts down

When firms in a perfectly competitive market are earning an economic profit,in the long run

-The above table has the total revenue and total cost schedule for Omar,a perfectly competitive grower of rutabagas.When Omar maximizes his profit,Omar's profit equals

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry,then

Each firm in a perfectly competitive industry

When firms in a perfectly competitive market incur economic losses,exit by some firms means the market supply will

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

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

The figure above shows a firm's marginal revenue and marginal cost curves. -The price of a can is $8; if the price increased to $12,then the firm would

If the price received by a perfectly competitive firm is less than its average variable cost,what will the firm do in the short run? Why?

Suppose Pat's Paints is a perfectly competitive firm.If Pat's Paints' marginal revenue equals $5 per can,and Pat decides to sell 100 cans of paint,Pat's total revenue equals

Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output.If the marginal cost of producing the 10th unit is $14,to maximize its profit the firm should

For a perfectly competitive firm,marginal revenue is

Consider a short-run equilibrium in a perfectly competitive market.Suppose that the firms' average total cost and marginal cost schedules differ.In the short run,

If the market price is less than a perfectly competitive firm's average total cost,what sort of profit or loss is the firm earning?

In a perfectly competitive industry,when a firm is producing so that its total revenue equals its total cost,the firm is

What must be the case if a perfectly competitive firm's economic loss is less by shutting down rather than by producing and selling some output?

In the long run,a firm in a perfectly competitive market will

For a perfectly competitive corn grower in Nebraska,the marginal revenue curve is

In the short run,a perfectly competitive firm can experience which of the following? i.an economic profit ii.an economic loss but it continues to stay open iii.an economic loss equal to its total fixed cost when it shuts down

When firms in a perfectly competitive market are earning an economic profit,in the long run

-The above table has the total revenue and total cost schedule for Omar,a perfectly competitive grower of rutabagas.When Omar maximizes his profit,Omar's profit equals

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry,then

Each firm in a perfectly competitive industry

When firms in a perfectly competitive market incur economic losses,exit by some firms means the market supply will

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

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