Question 1

In perfect competition,the demand curve facing a firm is a horizontal line at the market price because

Accepted Answer

A) marginal revenue equals total revenue 
B) of the law of demand 
C) price always exceeds average total cost 
D) marginal cost equals average cost 
E) the firm is a price taker 
A) marginal revenue equals total revenue 
B) of the law of demand 
C) price always exceeds average total cost 
D) marginal cost equals average cost 
E) the firm is a price taker

Question 2

-Figure 9-7 shows cost curves for Penny's Parasols,a perfectly competitive firm.At which point(s)would Penny's Parasols endure economic losses,but continue to produce in the short run?

Accepted Answer

A) D 
B) F 
C) A 
D) C 
E) E 
A) D 
B) F 
C) A 
D) C 
E) E

Question 3

Market structure is determined by the

Accepted Answer

A) volume of discounts,the quantity of foreign exchange,and the effects of Federal Reserve policy 
B) influence of government policy,the number of qualified buyers,and the effect of generally accepted accounting principles 
C) number of buyers and sellers,whether the product is standardized,whether there is free entry and exit,and how well informed the buyers and sellers are about the market 
D) volume of discounts,the effect of generally accepted accounting principles,and Federal Reserve policy 
E) influence of government policy,the quantity of foreign exchange,and the effects of Federal Reserve policy 
A) volume of discounts,the quantity of foreign exchange,and the effects of Federal Reserve policy 
B) influence of government policy,the number of qualified buyers,and the effect of generally accepted accounting principles 
C) number of buyers and sellers,whether the product is standardized,whether there is free entry and exit,and how well informed the buyers and sellers are about the market 
D) volume of discounts,the effect of generally accepted accounting principles,and Federal Reserve policy 
E) influence of government policy,the quantity of foreign exchange,and the effects of Federal Reserve policy

Question 4

The short-run market supply curve in a perfectly competitive industry

Accepted Answer

A) shows the total quantity supplied by all firms at each possible price 
B) is perfectly inelastic at the market price 
C) is perfectly elastic at the market price 
D) shows how much output each individual firm will supply at various possible prices 
E) is usually downward sloping 
A) shows the total quantity supplied by all firms at each possible price 
B) is perfectly inelastic at the market price 
C) is perfectly elastic at the market price 
D) shows how much output each individual firm will supply at various possible prices 
E) is usually downward sloping

Question 5

Carla's Candy Store is maximizing profits by producing 1,000 pounds of candy per day.If Carla's fixed costs unexpectedly increase and the market price remains constant,then the profit-maximizing level of output

Accepted Answer

A) is less than 1,000 pounds 
B) is still 1,000 pounds 
C) is more than 1,000 pounds 
D) will increase 
E) cannot be determined without more information 
A) is less than 1,000 pounds 
B) is still 1,000 pounds 
C) is more than 1,000 pounds 
D) will increase 
E) cannot be determined without more information

Question 6

Justina operates in a perfectly competitive market.Which of the following is her short-run supply curve?

Accepted Answer

A) the MC curve above its point of intersection with the ATC curve 
B) the market supply curve 
C) the MC curve above its point of intersection with the AVC curve 
D) the market demand curve 
E) its MC curve 
A) the MC curve above its point of intersection with the ATC curve 
B) the market supply curve 
C) the MC curve above its point of intersection with the AVC curve 
D) the market demand curve 
E) its MC curve

Question 7

In a decreasing cost industry,the

Accepted Answer

A) long-run supply curve is horizontal 
B) short-run supply curve slopes downward 
C) long-run demand curve slopes upward 
D) long-run supply curve slopes downward 
E) long-run supply curve slopes upward 
A) long-run supply curve is horizontal 
B) short-run supply curve slopes downward 
C) long-run demand curve slopes upward 
D) long-run supply curve slopes downward 
E) long-run supply curve slopes upward

Question 8

For a perfectly competitive firm,

Accepted Answer

A) marginal revenue equals total revenue 
B) total revenue always exceeds total cost 
C) price always exceeds average total cost 
D) marginal cost always equals average cost 
E) the marginal revenue curve and the demand curve lie on top of each other 
A) marginal revenue equals total revenue 
B) total revenue always exceeds total cost 
C) price always exceeds average total cost 
D) marginal cost always equals average cost 
E) the marginal revenue curve and the demand curve lie on top of each other

Question 9

In a long-run perfectly competitive equilibrium,

Accepted Answer

A) the typical firm will earn an economic profit 
B) price exceeds marginal cost 
C) barriers to entry are established by entrenched firms 
D) the typical firm will earn a normal profit 
E) marginal cost exceeds average cost 
A) the typical firm will earn an economic profit 
B) price exceeds marginal cost 
C) barriers to entry are established by entrenched firms 
D) the typical firm will earn a normal profit 
E) marginal cost exceeds average cost

Question 10

If price exceeds average total cost

Accepted Answer

A) the firm earns an economic profit 
B) there are a large number of buyers and sellers 
C) the firm suffers an economic loss 
D) the firm closes down 
E) the firm should reduce its production 
A) the firm earns an economic profit 
B) there are a large number of buyers and sellers 
C) the firm suffers an economic loss 
D) the firm closes down 
E) the firm should reduce its production

Question 11

Which of the following expressions equals profit per unit of output?

Accepted Answer

A) MR - MC 
B) P - AVC 
C) MR - P 
D) P - ATC 
E) MR - ATC 
A) MR - MC 
B) P - AVC 
C) MR - P 
D) P - ATC 
E) MR - ATC

Question 12

Java Joe sells 200 cups of coffee each day in a perfectly competitive market at the market price of $2.00 per cup.If Java Joe independently decreased its price per cup to $1.50,

Accepted Answer

A) its sales would rise to 250 cups 
B) its revenue would decrease 
C) its revenue would rise 
D) its total revenue would equal $200 
E) the market price will fall to $0.75 as other coffee sellers match the price cut 
A) its sales would rise to 250 cups 
B) its revenue would decrease 
C) its revenue would rise 
D) its total revenue would equal $200 
E) the market price will fall to $0.75 as other coffee sellers match the price cut

Question 13

The long-run supply curve is horizontal in a(n)

Accepted Answer

A) increasing-cost industry 
B) constant-cost industry 
C) decreasing-cost industry 
D) labor-intensive industry 
E) capital-intensive industry 
A) increasing-cost industry 
B) constant-cost industry 
C) decreasing-cost industry 
D) labor-intensive industry 
E) capital-intensive industry

Question 14

In the long run,the exit of firms from a perfectly competitive market is caused by

Accepted Answer

A) a steeper demand curve constraining the firm 
B) normal profits 
C) economic losses 
D) antitrust enforcement 
E) government policy 
A) a steeper demand curve constraining the firm 
B) normal profits 
C) economic losses 
D) antitrust enforcement 
E) government policy

Question 15

The entire marginal cost curve for a perfectly competitive firm represents its short-run supply curve.

Accepted Answer

A) True 
 B)False

Question 16

-Which point in Figure 9-7 represents a break-even situation for a perfectly competitive firm?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) E 
A) A 
B) B 
C) C 
D) D 
E) E

Question 17

Which of the following is the closest to being a perfectly competitive firm?

Accepted Answer

A) a hot dog vendor in New York 
B) Microsoft Corporation 
C) Ford Motor Company 
D) the campus bookstore 
E) a public university 
A) a hot dog vendor in New York 
B) Microsoft Corporation 
C) Ford Motor Company 
D) the campus bookstore 
E) a public university

Question 18

Which of the following defines total profit?

Accepted Answer

A) average revenue minus average cost 
B) marginal cost times output 
C) marginal revenue minus marginal cost 
D) total revenue minus total cost 
E) average cost divided by output 
A) average revenue minus average cost 
B) marginal cost times output 
C) marginal revenue minus marginal cost 
D) total revenue minus total cost 
E) average cost divided by output

Question 19

In the long-run equilibrium for a perfectly competitive market,firms will choose the level of output where

Accepted Answer

A) profit is minimized 
B) short-run average total cost is minimized 
C) long-run average total cost is minimized 
D) short-run profit is maximized 
E) long-run average fixed cost is minimized 
A) profit is minimized 
B) short-run average total cost is minimized 
C) long-run average total cost is minimized 
D) short-run profit is maximized 
E) long-run average fixed cost is minimized

Question 20

Perfectly competitive firms can earn an economic profit in the short run because

Accepted Answer

A) entry of new firms does not occur instantaneously 
B) competitive firms always invest more to earn more 
C) competitive firms never suffer an economic loss 
D) price always equals average variable cost 
E) price always equals average total cost 
A) entry of new firms does not occur instantaneously 
B) competitive firms always invest more to earn more 
C) competitive firms never suffer an economic loss 
D) price always equals average variable cost 
E) price always equals average total cost

In perfect competition,the demand curve facing a firm is a horizontal line at the market price because

-Figure 9-7 shows cost curves for Penny's Parasols,a perfectly competitive firm.At which point(s)would Penny's Parasols endure economic losses,but continue to produce in the short run?

Market structure is determined by the

The short-run market supply curve in a perfectly competitive industry

Carla's Candy Store is maximizing profits by producing 1,000 pounds of candy per day.If Carla's fixed costs unexpectedly increase and the market price remains constant,then the profit-maximizing level of output

Justina operates in a perfectly competitive market.Which of the following is her short-run supply curve?

In a decreasing cost industry,the

For a perfectly competitive firm,

In a long-run perfectly competitive equilibrium,

If price exceeds average total cost

Which of the following expressions equals profit per unit of output?

Java Joe sells 200 cups of coffee each day in a perfectly competitive market at the market price of $2.00 per cup.If Java Joe independently decreased its price per cup to $1.50,

The long-run supply curve is horizontal in a(n)

In the long run,the exit of firms from a perfectly competitive market is caused by

The entire marginal cost curve for a perfectly competitive firm represents its short-run supply curve.

-Which point in Figure 9-7 represents a break-even situation for a perfectly competitive firm?

Which of the following is the closest to being a perfectly competitive firm?

Which of the following defines total profit?

In the long-run equilibrium for a perfectly competitive market,firms will choose the level of output where

Perfectly competitive firms can earn an economic profit in the short run because

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

In perfect competition,the demand curve facing a firm is a horizontal line at the market price because

-Figure 9-7 shows cost curves for Penny's Parasols,a perfectly competitive firm.At which point(s)would Penny's Parasols endure economic losses,but continue to produce in the short run?

Market structure is determined by the

The short-run market supply curve in a perfectly competitive industry

Carla's Candy Store is maximizing profits by producing 1,000 pounds of candy per day.If Carla's fixed costs unexpectedly increase and the market price remains constant,then the profit-maximizing level of output

Justina operates in a perfectly competitive market.Which of the following is her short-run supply curve?

In a decreasing cost industry,the

For a perfectly competitive firm,

In a long-run perfectly competitive equilibrium,

If price exceeds average total cost

Which of the following expressions equals profit per unit of output?

Java Joe sells 200 cups of coffee each day in a perfectly competitive market at the market price of $2.00 per cup.If Java Joe independently decreased its price per cup to $1.50,

The long-run supply curve is horizontal in a(n)

In the long run,the exit of firms from a perfectly competitive market is caused by

The entire marginal cost curve for a perfectly competitive firm represents its short-run supply curve.

-Which point in Figure 9-7 represents a break-even situation for a perfectly competitive firm?

Which of the following is the closest to being a perfectly competitive firm?

Which of the following defines total profit?

In the long-run equilibrium for a perfectly competitive market,firms will choose the level of output where

Perfectly competitive firms can earn an economic profit in the short run because

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