Question 1

If a firm is a price taker,then the demand curve it faces is perfectly

Accepted Answer

A) elastic and above its marginal revenue curve 
B) elastic and lies on top of its marginal revenue curve 
C) elastic and below its marginal revenue curve 
D) inelastic and above its marginal revenue curve 
E) inelastic and the same as its marginal revenue curve 
A) elastic and above its marginal revenue curve 
B) elastic and lies on top of its marginal revenue curve 
C) elastic and below its marginal revenue curve 
D) inelastic and above its marginal revenue curve 
E) inelastic and the same as its marginal revenue curve

Question 2

Suppose the market price exceeds the typical perfectly competitive firm's short-run average total cost.What will happen to this market in the long run?

Accepted Answer

A) The market demand curve will shift to the left as firms exit. 
B) The market supply curve will shift to the left as firms exit. 
C) The market demand curve will shift to the right as firms enter. 
D) Both the market demand and supply curves will shift to the left as firms exit. 
E) The market supply curve will shift to the right as firms enter. 
A) The market demand curve will shift to the left as firms exit. 
B) The market supply curve will shift to the left as firms exit. 
C) The market demand curve will shift to the right as firms enter. 
D) Both the market demand and supply curves will shift to the left as firms exit. 
E) The market supply curve will shift to the right as firms enter.

Question 3

In an increasing-cost industry,the long-run market supply curve is

Accepted Answer

A) horizontal 
B) vertical 
C) upward sloping 
D) downward sloping 
E) nonexistent 
A) horizontal 
B) vertical 
C) upward sloping 
D) downward sloping 
E) nonexistent

Question 4

In a perfectly competitive market,the number of sellers must be large enough that

Accepted Answer

A) none of them ever earns positive economic profits. 
B) none of them can significantly alter the price of the product. 
C) they each end up selling a slightly different product. 
D) it is easy for a particular firm to leave the market. 
A) none of them ever earns positive economic profits. 
B) none of them can significantly alter the price of the product. 
C) they each end up selling a slightly different product. 
D) it is easy for a particular firm to leave the market.

Question 5

In the short run under perfect competition,an individual firm should increase output as long as

Accepted Answer

A) marginal revenue exceeds marginal cost 
B) total revenue exceeds total cost 
C) price exceeds marginal revenue 
D) total revenue is rising 
E) marginal revenue is rising 
A) marginal revenue exceeds marginal cost 
B) total revenue exceeds total cost 
C) price exceeds marginal revenue 
D) total revenue is rising 
E) marginal revenue is rising

Question 6

The number of sellers in a market is considered to be large when

Accepted Answer

A) the total exceeds 100 
B) no single buyer can affect the price through his or her demand for the product 
C) they cannot be easily counted 
D) no single seller can affect the price by changing its level of output 
E) no seller controls more than 20 percent of the total market supply 
A) the total exceeds 100 
B) no single buyer can affect the price through his or her demand for the product 
C) they cannot be easily counted 
D) no single seller can affect the price by changing its level of output 
E) no seller controls more than 20 percent of the total market supply

Question 7

In the long run,the entry of new firms into a competitive market is typically caused by

Accepted Answer

A) government regulation 
B) technological innovation 
C) inflation 
D) economic losses 
E) economic profit 
A) government regulation 
B) technological innovation 
C) inflation 
D) economic losses 
E) economic profit

Question 8

A firm in a perfectly competitive market faces a demand curve that is

Accepted Answer

A) perfectly elastic. 
B) relatively elastic. 
C) perfectly inelastic. 
D) relatively inelastic. 
A) perfectly elastic. 
B) relatively elastic. 
C) perfectly inelastic. 
D) relatively inelastic.

Question 9

-In short-run if this firm produced 275 units of output,the perfectly competitive firm of Figure 9-8 will earn a total economic profit of

Accepted Answer

A) zero 
B) $950 
C) $825 
D) $1,425 
E) $575 
A) zero 
B) $950 
C) $825 
D) $1,425 
E) $575

Question 10

Consider a perfectly competitive market in which the firms are earning above-normal profit in the short run.In the long run,forces will come into play to

Accepted Answer

A) decrease market supply 
B) shift the horizontal demand curve facing each firm downward 
C) increase the market price 
D) encourage existing firms to increase output 
E) decrease the number of sellers in the market 
A) decrease market supply 
B) shift the horizontal demand curve facing each firm downward 
C) increase the market price 
D) encourage existing firms to increase output 
E) decrease the number of sellers in the market

Question 11

Suppose that a firm chose an output level where the total cost and total revenue curves intersect.At this level of output,

Accepted Answer

A) the firm is maximizing profits 
B) the firm is minimizing losses 
C) profit is zero 
D) total revenue is maximized 
E) total cost is minimized 
A) the firm is maximizing profits 
B) the firm is minimizing losses 
C) profit is zero 
D) total revenue is maximized 
E) total cost is minimized

Question 12

In the short run,a perfectly competitive firm will shut down if

Accepted Answer

A) its total costs exceed its revenues. 
B) its total variable costs exceed its revenues. 
C) its total fixed costs exceed its revenues. 
D) it can't earn a positive economic profit. 
A) its total costs exceed its revenues. 
B) its total variable costs exceed its revenues. 
C) its total fixed costs exceed its revenues. 
D) it can't earn a positive economic profit.

Question 13

The automobile market is an example of a perfectly competitive market.

Accepted Answer

A) True 
 B)False

Question 14

-In Figure 9-13,assume the initial equilibrium at point A is disturbed by an increase in demand.If long-run equilibrium is established at point C,this is a(n)

Accepted Answer

A) constant cost industry 
B) increasing-cost industry 
C) decreasing-cost industry 
A) constant cost industry 
B) increasing-cost industry 
C) decreasing-cost industry

Question 15

If P > ATC for a perfectly competitive firm,then

Accepted Answer

A) the firm could increase profit by lowering its price 
B) the firm could increase profit by raising its price 
C) the firm is producing too much output 
D) the firm is making a profit 
E) profits are zero in the short run 
A) the firm could increase profit by lowering its price 
B) the firm could increase profit by raising its price 
C) the firm is producing too much output 
D) the firm is making a profit 
E) profits are zero in the short run

Question 16

-Figure 9-1 shows the marginal cost and average total cost curves for a perfectly competitive firm.If the market price is $10,then

Accepted Answer

A) the firm earns $10 profit on each unit sold 
B) the firm earns $8 profit on each unit sold 
C) marginal revenue equals $10 
D) the firm is losing money in the short run 
E) marginal cost always equals marginal revenue 
A) the firm earns $10 profit on each unit sold 
B) the firm earns $8 profit on each unit sold 
C) marginal revenue equals $10 
D) the firm is losing money in the short run 
E) marginal cost always equals marginal revenue

Question 17

After an increasing cost industry responds to an increase in demand,in the long run the equilibrium price will be ______ than before the demand increase.

Accepted Answer

A) higher 
B) lower 
C) the same as 
D) impossible to predict 
A) higher 
B) lower 
C) the same as 
D) impossible to predict

Question 18

-In Figure 9-13,a movement of long-run equilibrium from point A to point C could be caused by a(n)

Accepted Answer

A) decrease in supply from S₂ to S₁ in response to economic profits following a decrease in demand from D₂ to D₁ 
B) increase in short-run supply from S₁ to S₂ 
C) increase in supply from S₁ to S₂ in response to economic profits following an increase in demand from D₁ to D₂ 
D) increase in demand from D₁ to D₂ in the short run 
A) decrease in supply from S₂ to S₁ in response to economic profits following a decrease in demand from D₂ to D₁ 
B) increase in short-run supply from S₁ to S₂ 
C) increase in supply from S₁ to S₂ in response to economic profits following an increase in demand from D₁ to D₂ 
D) increase in demand from D₁ to D₂ in the short run

Question 19

Suppose that entry of new firms into an industry significantly increases the market demand for a key input.If supply of the key input is very price inelastic,then,for each firm in the industry in the long run,

Accepted Answer

A) external diseconomies shift its entire ATC curve upward 
B) external economies shift its entire ATC curve downward 
C) external diseconomies move it to the left along its original ATC curve 
D) diseconomies of scale shift its entire ATC curve upward 
E) economies of scale shift its entire ATC curve downward 
A) external diseconomies shift its entire ATC curve upward 
B) external economies shift its entire ATC curve downward 
C) external diseconomies move it to the left along its original ATC curve 
D) diseconomies of scale shift its entire ATC curve upward 
E) economies of scale shift its entire ATC curve downward

Question 20

In the short run,each firm in a perfectly competitive market is free to

Accepted Answer

A) increase its plant size 
B) vary its output level within its existing capacity 
C) exit the industry without losses 
D) set a price above the market price 
E) decrease its plant size 
A) increase its plant size 
B) vary its output level within its existing capacity 
C) exit the industry without losses 
D) set a price above the market price 
E) decrease its plant size

If a firm is a price taker,then the demand curve it faces is perfectly

Suppose the market price exceeds the typical perfectly competitive firm's short-run average total cost.What will happen to this market in the long run?

In an increasing-cost industry,the long-run market supply curve is

In a perfectly competitive market,the number of sellers must be large enough that

In the short run under perfect competition,an individual firm should increase output as long as

The number of sellers in a market is considered to be large when

In the long run,the entry of new firms into a competitive market is typically caused by

A firm in a perfectly competitive market faces a demand curve that is

-In short-run if this firm produced 275 units of output,the perfectly competitive firm of Figure 9-8 will earn a total economic profit of

Consider a perfectly competitive market in which the firms are earning above-normal profit in the short run.In the long run,forces will come into play to

Suppose that a firm chose an output level where the total cost and total revenue curves intersect.At this level of output,

In the short run,a perfectly competitive firm will shut down if

The automobile market is an example of a perfectly competitive market.

-In Figure 9-13,assume the initial equilibrium at point A is disturbed by an increase in demand.If long-run equilibrium is established at point C,this is a(n)

If P > ATC for a perfectly competitive firm,then

-Figure 9-1 shows the marginal cost and average total cost curves for a perfectly competitive firm.If the market price is $10,then

After an increasing cost industry responds to an increase in demand,in the long run the equilibrium price will be ______ than before the demand increase.

-In Figure 9-13,a movement of long-run equilibrium from point A to point C could be caused by a(n)

Suppose that entry of new firms into an industry significantly increases the market demand for a key input.If supply of the key input is very price inelastic,then,for each firm in the industry in the long run,

In the short run,each firm in a perfectly competitive market is free to

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 9: Perfect Competition

If a firm is a price taker,then the demand curve it faces is perfectly

Suppose the market price exceeds the typical perfectly competitive firm's short-run average total cost.What will happen to this market in the long run?

In an increasing-cost industry,the long-run market supply curve is

In a perfectly competitive market,the number of sellers must be large enough that

In the short run under perfect competition,an individual firm should increase output as long as

The number of sellers in a market is considered to be large when

In the long run,the entry of new firms into a competitive market is typically caused by

A firm in a perfectly competitive market faces a demand curve that is

-In short-run if this firm produced 275 units of output,the perfectly competitive firm of Figure 9-8 will earn a total economic profit of

Consider a perfectly competitive market in which the firms are earning above-normal profit in the short run.In the long run,forces will come into play to

Suppose that a firm chose an output level where the total cost and total revenue curves intersect.At this level of output,

In the short run,a perfectly competitive firm will shut down if

The automobile market is an example of a perfectly competitive market.

-In Figure 9-13,assume the initial equilibrium at point A is disturbed by an increase in demand.If long-run equilibrium is established at point C,this is a(n)

If P > ATC for a perfectly competitive firm,then

-Figure 9-1 shows the marginal cost and average total cost curves for a perfectly competitive firm.If the market price is $10,then

After an increasing cost industry responds to an increase in demand,in the long run the equilibrium price will be ______ than before the demand increase.

-In Figure 9-13,a movement of long-run equilibrium from point A to point C could be caused by a(n)

Suppose that entry of new firms into an industry significantly increases the market demand for a key input.If supply of the key input is very price inelastic,then,for each firm in the industry in the long run,

In the short run,each firm in a perfectly competitive market is free to

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters