Question 1

Which of the following products is most likely to be produced by a perfectly competitive firm?

Accepted Answer

A) color televisions 
B) breakfast cereal 
C) legal services 
D) corn 
E) notebook computers 
A) color televisions 
B) breakfast cereal 
C) legal services 
D) corn 
E) notebook computers

Question 2

In perfect competition,no individual producer can significantly affect the market price because

Accepted Answer

A) the market is regulated by the government 
B) each producer is ignorant of the market price 
C) each producer provides a very small portion of the total market supply 
D) strictly enforced collusion prevents any producer from acting independently 
E) each firm's product is so different that there is no market price 
A) the market is regulated by the government 
B) each producer is ignorant of the market price 
C) each producer provides a very small portion of the total market supply 
D) strictly enforced collusion prevents any producer from acting independently 
E) each firm's product is so different that there is no market price

Question 3

The term price taker is used to describe a situation in which consumers have no influence over the market price for a good or service and must take whatever price is set by the economically powerful firms.

Accepted Answer

A) True 
 B)False

Question 4

In the long run,perfectly competitive firms typically do not earn any economic profit.

Accepted Answer

A) True 
 B)False

Question 5

If demand increases in a perfectly competitive market,

Accepted Answer

A) the market price will fall 
B) firms already in the market will supply more output 
C) new firms will enter the market 
D) the short-run market supply curve will shift to the right 
E) each firm's marginal cost curve will shift to the right 
A) the market price will fall 
B) firms already in the market will supply more output 
C) new firms will enter the market 
D) the short-run market supply curve will shift to the right 
E) each firm's marginal cost curve will shift to the right

Question 6

A firm maximizes its profit by producing that quantity of output for which

Accepted Answer

A) marginal revenue equals total revenue 
B) marginal revenue exceeds marginal cost by the greatest amount 
C) price is the greatest distance above average total cost 
D) the difference between total revenue and total cost is the greatest 
E) marginal cost equals average cost 
A) marginal revenue equals total revenue 
B) marginal revenue exceeds marginal cost by the greatest amount 
C) price is the greatest distance above average total cost 
D) the difference between total revenue and total cost is the greatest 
E) marginal cost equals average cost

Question 7

If a firm's marginal revenue exceeds its marginal cost,it should

Accepted Answer

A) raise its price 
B) advertise more 
C) lay off a few employees 
D) cut back its overhead 
E) increase its output 
A) raise its price 
B) advertise more 
C) lay off a few employees 
D) cut back its overhead 
E) increase its output

Question 8

Jim's Shoe Shine Shop operates in a perfectly competitive market.If its marginal revenue is $5 per shine,then

Accepted Answer

A) the next shine will bring in less than $5 in additional revenue 
B) the next shine will bring in more than $5 in additional revenue 
C) the market price per shine is $5 
D) price is less than $5 
E) price is equal to total revenue at all output levels 
A) the next shine will bring in less than $5 in additional revenue 
B) the next shine will bring in more than $5 in additional revenue 
C) the market price per shine is $5 
D) price is less than $5 
E) price is equal to total revenue at all output levels

Question 9

In order for a firm to face a perfectly elastic demand curve,it must

Accepted Answer

A) be a large firm selling a standardized product 
B) be a small producer selling a standardized product 
C) be a small producer;its product may or may not be standardized 
D) be a large producer selling a non-standardized product 
E) sell a standardized product,but the size of the firm is irrelevant 
A) be a large firm selling a standardized product 
B) be a small producer selling a standardized product 
C) be a small producer;its product may or may not be standardized 
D) be a large producer selling a non-standardized product 
E) sell a standardized product,but the size of the firm is irrelevant

Question 10

If demand increases in a perfectly competitive market,

Accepted Answer

A) then,in the short run,existing firms will find their profits diminishing,or their losses increasing 
B) existing firms will earn an economic profit 
C) the market price will decrease 
D) each firm will produce more along its short-run supply curve and total output will increase along the short-run market supply curve 
E) quantity demanded will increase and quantity supplied will decrease 
A) then,in the short run,existing firms will find their profits diminishing,or their losses increasing 
B) existing firms will earn an economic profit 
C) the market price will decrease 
D) each firm will produce more along its short-run supply curve and total output will increase along the short-run market supply curve 
E) quantity demanded will increase and quantity supplied will decrease

Question 11

All of the following help define market structure,except one.Which is the exception?

Accepted Answer

A) number of sellers 
B) barriers to entry 
C) barriers to exit 
D) standardization of product 
E) how firms are organized (i.e. ,as proprietorships,partnerships,or corporations) 
A) number of sellers 
B) barriers to entry 
C) barriers to exit 
D) standardization of product 
E) how firms are organized (i.e. ,as proprietorships,partnerships,or corporations)

Question 12

-If a perfectly competitive firm like the one depicted in Figure 9-3 produces 575 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 13

Which of the following is a characteristic of perfect competition?

Accepted Answer

A) easy entry into or exit from the market 
B) a small number of buyers 
C) a high degree of government regulation 
D) a differentiated product 
E) a high degree of collusion 
A) easy entry into or exit from the market 
B) a small number of buyers 
C) a high degree of government regulation 
D) a differentiated product 
E) a high degree of collusion

Question 14

Which of the following is not a characteristic of perfect competition?

Accepted Answer

A) Many small buyers. 
B) Different firms sell products with different features. 
C) Ease of entry into and exit from the market. 
D) Many small sellers. 
A) Many small buyers. 
B) Different firms sell products with different features. 
C) Ease of entry into and exit from the market. 
D) Many small sellers.

Question 15

-In short-run equilibrium,the perfectly competitive firm of Figure 9-3 will charge

Accepted Answer

A) $5 
B) $7 
C) $8 
D) $10 
E) more than $10 
A) $5 
B) $7 
C) $8 
D) $10 
E) more than $10

Question 16

In a perfectly competitive market,transient economic profit can be earned by

Accepted Answer

A) the firms that hire the most employees 
B) the last firm to enter the market 
C) those firms that supply low-income neighborhoods 
D) the first firm to adopt a new technological advance 
E) those firms that use the most capital-intensive methods of production 
A) the firms that hire the most employees 
B) the last firm to enter the market 
C) those firms that supply low-income neighborhoods 
D) the first firm to adopt a new technological advance 
E) those firms that use the most capital-intensive methods of production

Question 17

-Figure 9-2 shows the total revenue and total cost data for a perfectly competitive firm.At what output level will the firm break even?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
E) 5 
A) 1 
B) 2 
C) 3 
D) 4 
E) 5

Question 18

Which of the following is true of a perfectly competitive firm?

Accepted Answer

A) It can exert slight control over the market price of its output. 
B) It can exert significant control over the market price of its output. 
C) It can exert no control over the market price of its output. 
D) It can work with competitors to exert control over the market price of its output. 
A) It can exert slight control over the market price of its output. 
B) It can exert significant control over the market price of its output. 
C) It can exert no control over the market price of its output. 
D) It can work with competitors to exert control over the market price of its output.

Question 19

-Figure 9-12 shows three possible long-run supply curves for an industry that is currently in equilibrium with price (P*)and quantity (Q*).Which of the following statements is correct?

Accepted Answer

A) The long-run supply curve would be F for a decreasing-cost industry,H for an increasing-cost industry,and G for a constant-cost industry. 
B) All three long-run supply curves indicate that the firms' LRATC curves shift as industry output expands. 
C) If the industry uses a significant portion of a scarce input,the long-run supply curve would likely be curve H. 
D) An industry that moves along long-run supply curve F earns above-normal profits in the long run. 
E) If an increase in market output leads to lower prices for a key input,the long-run supply curve would likely be curve H. 
A) The long-run supply curve would be F for a decreasing-cost industry,H for an increasing-cost industry,and G for a constant-cost industry. 
B) All three long-run supply curves indicate that the firms' LRATC curves shift as industry output expands. 
C) If the industry uses a significant portion of a scarce input,the long-run supply curve would likely be curve H. 
D) An industry that moves along long-run supply curve F earns above-normal profits in the long run. 
E) If an increase in market output leads to lower prices for a key input,the long-run supply curve would likely be curve H.

Question 20

In perfect competition

Accepted Answer

A) the demand curve facing the firm is a horizontal line at the market price 
B) marginal revenue equals total revenue 
C) total revenue always exceeds variable cost 
D) price always exceeds average total cost 
E) marginal cost always equals average cost 
A) the demand curve facing the firm is a horizontal line at the market price 
B) marginal revenue equals total revenue 
C) total revenue always exceeds variable cost 
D) price always exceeds average total cost 
E) marginal cost always equals average cost

Which of the following products is most likely to be produced by a perfectly competitive firm?

In perfect competition,no individual producer can significantly affect the market price because

The term price taker is used to describe a situation in which consumers have no influence over the market price for a good or service and must take whatever price is set by the economically powerful firms.

In the long run,perfectly competitive firms typically do not earn any economic profit.

If demand increases in a perfectly competitive market,

A firm maximizes its profit by producing that quantity of output for which

If a firm's marginal revenue exceeds its marginal cost,it should

Jim's Shoe Shine Shop operates in a perfectly competitive market.If its marginal revenue is $5 per shine,then

In order for a firm to face a perfectly elastic demand curve,it must

If demand increases in a perfectly competitive market,

All of the following help define market structure,except one.Which is the exception?

-If a perfectly competitive firm like the one depicted in Figure 9-3 produces 575 units

Which of the following is a characteristic of perfect competition?

Which of the following is not a characteristic of perfect competition?

-In short-run equilibrium,the perfectly competitive firm of Figure 9-3 will charge

In a perfectly competitive market,transient economic profit can be earned by

-Figure 9-2 shows the total revenue and total cost data for a perfectly competitive firm.At what output level will the firm break even?

Which of the following is true of a perfectly competitive firm?

-Figure 9-12 shows three possible long-run supply curves for an industry that is currently in equilibrium with price (P)and quantity (Q).Which of the following statements is correct?

In perfect competition

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

Which of the following products is most likely to be produced by a perfectly competitive firm?

In perfect competition,no individual producer can significantly affect the market price because

The term price taker is used to describe a situation in which consumers have no influence over the market price for a good or service and must take whatever price is set by the economically powerful firms.

In the long run,perfectly competitive firms typically do not earn any economic profit.

If demand increases in a perfectly competitive market,

A firm maximizes its profit by producing that quantity of output for which

If a firm's marginal revenue exceeds its marginal cost,it should

Jim's Shoe Shine Shop operates in a perfectly competitive market.If its marginal revenue is $5 per shine,then

In order for a firm to face a perfectly elastic demand curve,it must

If demand increases in a perfectly competitive market,

All of the following help define market structure,except one.Which is the exception?

-If a perfectly competitive firm like the one depicted in Figure 9-3 produces 575 units

Which of the following is a characteristic of perfect competition?

Which of the following is not a characteristic of perfect competition?

-In short-run equilibrium,the perfectly competitive firm of Figure 9-3 will charge

In a perfectly competitive market,transient economic profit can be earned by

-Figure 9-2 shows the total revenue and total cost data for a perfectly competitive firm.At what output level will the firm break even?

Which of the following is true of a perfectly competitive firm?

-Figure 9-12 shows three possible long-run supply curves for an industry that is currently in equilibrium with price (P*)and quantity (Q*).Which of the following statements is correct?

In perfect competition

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

-Figure 9-12 shows three possible long-run supply curves for an industry that is currently in equilibrium with price (P)and quantity (Q).Which of the following statements is correct?