Question 1

All of the following conditions,except one,will necessarily be satisfied when a perfectly competitive firm is in short-run equilibrium.Which condition is the exception?

Accepted Answer

A) marginal revenue equals average total cost 
B) marginal cost crosses marginal revenue from below 
C) marginal revenue equals price 
D) price equals marginal revenue 
E) profit is maximized or loss is minimized 
A) marginal revenue equals average total cost 
B) marginal cost crosses marginal revenue from below 
C) marginal revenue equals price 
D) price equals marginal revenue 
E) profit is maximized or loss is minimized

Question 2

In the long run,perfectly competitive firms earn zero economic profit;this means that each firm is

Accepted Answer

A) always trying to move into a more profitable market. 
B) content to stay in its market. 
C) always facing new entrants to its market. 
D) earning negative accounting profit. 
A) always trying to move into a more profitable market. 
B) content to stay in its market. 
C) always facing new entrants to its market. 
D) earning negative accounting profit.

Question 3

In a perfectly competitive market,the

Accepted Answer

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

Question 4

One of the defining characteristics of a perfectly competitive market is

Accepted Answer

A) a small number of sellers 
B) a large number of buyers and a small number of sellers 
C) a standardized product 
D) significant nonprice competition among firms 
E) an inefficient information system 
A) a small number of sellers 
B) a large number of buyers and a small number of sellers 
C) a standardized product 
D) significant nonprice competition among firms 
E) an inefficient information system

Question 5

Because perfectly competitive markets rarely exist in the real world,the model has limited usefulness.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a basic characteristic of a perfectly competitive market?

Accepted Answer

A) a large number of buyers and sellers 
B) significant nonprice competition among firms 
C) a standardized product produced by firms 
D) no barriers to entry 
E) no barriers to exit 
A) a large number of buyers and sellers 
B) significant nonprice competition among firms 
C) a standardized product produced by firms 
D) no barriers to entry 
E) no barriers to exit

Question 7

When a perfectly competitive market is in long-run equilibrium,each firm's price equals

Accepted Answer

A) both marginal cost and average total cost 
B) marginal cost,but exceeds average total cost 
C) marginal cost,but falls below average total cost 
D) average total cost,but exceeds marginal cost 
E) average total cost,but falls below marginal cost. 
A) both marginal cost and average total cost 
B) marginal cost,but exceeds average total cost 
C) marginal cost,but falls below average total cost 
D) average total cost,but exceeds marginal cost 
E) average total cost,but falls below marginal cost.

Question 8

Figure 9-19
  
-The perfectly competitive firm pictured in Figure 9-19 will maximize profits by producing

Accepted Answer

A) 0 units. 
B) 100 units. 
C) 140 units. 
D) 220 units. 
A) 0 units. 
B) 100 units. 
C) 140 units. 
D) 220 units.

Question 9

Which of the following would result from a technological advance in a perfectly competitive market?

Accepted Answer

A) The market demand curve will shift rightward. 
B) Consumers will benefit as the price declines. 
C) Producers will benefit as long-run profits rise. 
D) The market supply curve will shift leftward. 
E) In a constant-cost industry,the price will not change in the long run. 
A) The market demand curve will shift rightward. 
B) Consumers will benefit as the price declines. 
C) Producers will benefit as long-run profits rise. 
D) The market supply curve will shift leftward. 
E) In a constant-cost industry,the price will not change in the long run.

Question 10

Teddy's Bear Shop operates in a perfectly competitive market where the prevailing price is $15.Teddy's marginal cost curve crosses his average total cost curve at $20.The marginal cost curve crosses his average variable cost curve at $17.In the short run,Teddy's Bear Shop

Accepted Answer

A) should operate at a lower output level where it can suffer less of an economic loss 
B) will suffer an economic loss,but should continue to operate at the minimum of its average variable costs 
C) will just break even,with neither a profit nor a loss,and should operate 
D) will suffer an economic loss and should shut down 
E) should operate at a higher output level where it can suffer less of an economic loss 
A) should operate at a lower output level where it can suffer less of an economic loss 
B) will suffer an economic loss,but should continue to operate at the minimum of its average variable costs 
C) will just break even,with neither a profit nor a loss,and should operate 
D) will suffer an economic loss and should shut down 
E) should operate at a higher output level where it can suffer less of an economic loss

Question 11

Under perfect competition,a rightward shift of the market supply curve could be caused by

Accepted Answer

A) decrease in consumer demand 
B) technological advance 
C) high rate of inflation 
D) high interest rate 
E) increase in consumers' income for a normal good 
A) decrease in consumer demand 
B) technological advance 
C) high rate of inflation 
D) high interest rate 
E) increase in consumers' income for a normal good

Question 12

In the short run,the horizontal sum of all of the marginal cost curves (above minimum average variable cost)of individual firms in a competitive market defines the

Accepted Answer

A) average variable cost curve 
B) market demand curve 
C) market supply curve 
D) average total cost curve 
E) total quantity demanded 
A) average variable cost curve 
B) market demand curve 
C) market supply curve 
D) average total cost curve 
E) total quantity demanded

Question 13

In a competitive market,a decrease in consumer demand leads to

Accepted Answer

A) a decrease in output 
B) an increase in output 
C) economic profits 
D) higher prices 
E) technological innovation 
A) a decrease in output 
B) an increase in output 
C) economic profits 
D) higher prices 
E) technological innovation

Question 14

In the short run,a perfectly competitive firm is producing an output level where marginal cost equals $10,average total cost equals $7,and marginal revenue equals $9.Which of the following statements is correct?

Accepted Answer

A) The firm is earning an economic profit which could be increased by raising output. 
B) The firm is earning an economic profit which could be increased by lowering output. 
C) The firm is maximizing its economic profit. 
D) The firm is suffering an economic loss which could be decreased by raising output. 
E) The firm is suffering an economic loss which could be decreased by lowering output. 
A) The firm is earning an economic profit which could be increased by raising output. 
B) The firm is earning an economic profit which could be increased by lowering output. 
C) The firm is maximizing its economic profit. 
D) The firm is suffering an economic loss which could be decreased by raising output. 
E) The firm is suffering an economic loss which could be decreased by lowering output.

Question 15

-If a perfectly competitive firm like the one depicted in Figure 9-3 produces 275 units

Accepted Answer

A) its profit will be larger than if it produces only 475 
B) its profit will be exactly the same as if it produces 475 
C) its profit will be smaller than if it produces only 475 
D) it will be forced to shutdown 
E) its profit will be smaller than if it produced 475 but it will still make a profit. 
A) its profit will be larger than if it produces only 475 
B) its profit will be exactly the same as if it produces 475 
C) its profit will be smaller than if it produces only 475 
D) it will be forced to shutdown 
E) its profit will be smaller than if it produced 475 but it will still make a profit.

Question 16

Which of the following markets most closely matches the description of perfect competition?

Accepted Answer

A) Fast-food hamburgers. 
B) Subcompact cars. 
C) Grain. 
D) Personal computers. 
A) Fast-food hamburgers. 
B) Subcompact cars. 
C) Grain. 
D) Personal computers.

Question 17

Which of the following formulas represents total profit for a perfectly competitive firm?

Accepted Answer

A) MR - MC 
B) AR - ATC 
C) P - ATC 
D) Q × (MR - M
C)  
E) Q × (P - AT
C)  
A) MR - MC 
B) AR - ATC 
C) P - ATC 
D) Q × (MR - M
C)  
E) Q × (P - AT
C)

Question 18

In a perfectly competitive market,an increase in output could be caused by

Accepted Answer

A) decrease in consumer demand 
B) an unavoidable increase in fixed costs 
C) higher input prices 
D) an increase in consumer demand 
A) decrease in consumer demand 
B) an unavoidable increase in fixed costs 
C) higher input prices 
D) an increase in consumer demand

Question 19

A perfectly competitive firm's marginal revenue

Accepted Answer

A) curve is a vertical line 
B) equals price 
C) rises at a constant rate 
D) rises at an increasing rate 
E) falls at a constant rate 
A) curve is a vertical line 
B) equals price 
C) rises at a constant rate 
D) rises at an increasing rate 
E) falls at a constant rate

Question 20

If the typical firm in a perfectly competitive market is earning positive economic profits then which of the following would be expected to happen?

Accepted Answer

A) Firms will exit the market. 
B) New firms will enter the market. 
C) There will be neither entry nor exit in this market. 
D) There will soon be a depression in the market. 
A) Firms will exit the market. 
B) New firms will enter the market. 
C) There will be neither entry nor exit in this market. 
D) There will soon be a depression in the market.

All of the following conditions,except one,will necessarily be satisfied when a perfectly competitive firm is in short-run equilibrium.Which condition is the exception?

In the long run,perfectly competitive firms earn zero economic profit;this means that each firm is

In a perfectly competitive market,the

One of the defining characteristics of a perfectly competitive market is

Because perfectly competitive markets rarely exist in the real world,the model has limited usefulness.

Which of the following is not a basic characteristic of a perfectly competitive market?

When a perfectly competitive market is in long-run equilibrium,each firm's price equals

Figure 9-19 -The perfectly competitive firm pictured in Figure 9-19 will maximize profits by producing

Which of the following would result from a technological advance in a perfectly competitive market?

Teddy's Bear Shop operates in a perfectly competitive market where the prevailing price is $15.Teddy's marginal cost curve crosses his average total cost curve at $20.The marginal cost curve crosses his average variable cost curve at $17.In the short run,Teddy's Bear Shop

Under perfect competition,a rightward shift of the market supply curve could be caused by

In the short run,the horizontal sum of all of the marginal cost curves (above minimum average variable cost)of individual firms in a competitive market defines the

In a competitive market,a decrease in consumer demand leads to

In the short run,a perfectly competitive firm is producing an output level where marginal cost equals $10,average total cost equals $7,and marginal revenue equals $9.Which of the following statements is correct?

-If a perfectly competitive firm like the one depicted in Figure 9-3 produces 275 units

Which of the following markets most closely matches the description of perfect competition?

Which of the following formulas represents total profit for a perfectly competitive firm?

In a perfectly competitive market,an increase in output could be caused by

A perfectly competitive firm's marginal revenue

If the typical firm in a perfectly competitive market is earning positive economic profits then which of the following would be expected to happen?

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

All of the following conditions,except one,will necessarily be satisfied when a perfectly competitive firm is in short-run equilibrium.Which condition is the exception?

In the long run,perfectly competitive firms earn zero economic profit;this means that each firm is

In a perfectly competitive market,the

One of the defining characteristics of a perfectly competitive market is

Because perfectly competitive markets rarely exist in the real world,the model has limited usefulness.

Which of the following is not a basic characteristic of a perfectly competitive market?

When a perfectly competitive market is in long-run equilibrium,each firm's price equals

Figure 9-19 -The perfectly competitive firm pictured in Figure 9-19 will maximize profits by producing

Which of the following would result from a technological advance in a perfectly competitive market?

Teddy's Bear Shop operates in a perfectly competitive market where the prevailing price is $15.Teddy's marginal cost curve crosses his average total cost curve at $20.The marginal cost curve crosses his average variable cost curve at $17.In the short run,Teddy's Bear Shop

Under perfect competition,a rightward shift of the market supply curve could be caused by

In the short run,the horizontal sum of all of the marginal cost curves (above minimum average variable cost)of individual firms in a competitive market defines the

In a competitive market,a decrease in consumer demand leads to

In the short run,a perfectly competitive firm is producing an output level where marginal cost equals $10,average total cost equals $7,and marginal revenue equals $9.Which of the following statements is correct?

-If a perfectly competitive firm like the one depicted in Figure 9-3 produces 275 units

Which of the following markets most closely matches the description of perfect competition?

Which of the following formulas represents total profit for a perfectly competitive firm?

In a perfectly competitive market,an increase in output could be caused by

A perfectly competitive firm's marginal revenue

If the typical firm in a perfectly competitive market is earning positive economic profits then which of the following would be expected to happen?

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