Question 1

The portion of the marginal cost curve above the minimum point on the average variable cost curve is part of the perfectly competitive firm's

Accepted Answer

A) average revenue curve 
B) effective demand curve 
C) average variable cost curve 
D) supply curve 
E) total revenue curve 
A) average revenue curve 
B) effective demand curve 
C) average variable cost curve 
D) supply curve 
E) total revenue curve

Question 2

A perfectly competitive firm may earn economic profits in

Accepted Answer

A) only the short run. 
B) only the long run. 
C) the short run and the long run. 
D) neither the short run nor the long run. 
A) only the short run. 
B) only the long run. 
C) the short run and the long run. 
D) neither the short run nor the long run.

Question 3

-Assume the initial equilibrium is at point D in Figure 9-13.If the market demand curve shifts from D₁ to D₂,and this results in entry of new firms in the long-run,the new equilibrium in this increasing-cost industry will be

Accepted Answer

A) both C and E 
B) both D and E 
C) at a price less than P₁ 
D) at a price higher than P₁ 
E) at an output greater than Q₁ 
A) both C and E 
B) both D and E 
C) at a price less than P₁ 
D) at a price higher than P₁ 
E) at an output greater than Q₁

Question 4

The long-run market supply curve in a perfectly competitive market shows

Accepted Answer

A) the effects of all short-run price fluctuations 
B) how the market supply curve shifts in the short run in response to entry and exit of firms 
C) the relationship between market price and market quantity 
D) the relationship between average total costs and output in the long run 
E) the level of output produced by each firm,and how the market price affects this output level 
A) the effects of all short-run price fluctuations 
B) how the market supply curve shifts in the short run in response to entry and exit of firms 
C) the relationship between market price and market quantity 
D) the relationship between average total costs and output in the long run 
E) the level of output produced by each firm,and how the market price affects this output level

Question 5

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

Accepted Answer

A) zero units of output 
B) 200 units of output 
C) 275 units of output 
D) 475 units of output 
E) 575 units of output 
A) zero units of output 
B) 200 units of output 
C) 275 units of output 
D) 475 units of output 
E) 575 units of output

Question 6

A firm in a perfectly competitive market can increase total revenue by raising the price of its product.

Accepted Answer

A) True 
 B)False

Question 7

-The All-the-Rage microbrewery is represented in Figure 9-9.If the market price is $2.50 per pint,then in the short run,the microbrewery will

Accepted Answer

A) earn the same profit by producing zero pints as by producing 50 pints per day 
B) produce zero pints per day to avoid an economic loss 
C) produce 50 pints per day and break even 
D) produce between zero and 50 pints per day 
E) produce more than 50 pints per day 
A) earn the same profit by producing zero pints as by producing 50 pints per day 
B) produce zero pints per day to avoid an economic loss 
C) produce 50 pints per day and break even 
D) produce between zero and 50 pints per day 
E) produce more than 50 pints per day

Question 8

A perfectly competitive firm

Accepted Answer

A) can increase total revenue by raising its price 
B) can sell more goods by lowering its price 
C) can sell more goods by raising its price 
D) cannot increase sales or total revenue by changing its price 
E) typically tries to offer lower prices than rival firms 
A) can increase total revenue by raising its price 
B) can sell more goods by lowering its price 
C) can sell more goods by raising its price 
D) cannot increase sales or total revenue by changing its price 
E) typically tries to offer lower prices than rival firms

Question 9

If the typical firm in a perfectly competitive market is currently earning a 5% economic profit,what will happen in this market in the long run?

Accepted Answer

A) new firms will enter until the economic profits have disappeared. 
B) firms will exit until the economic profit reaches 10%. 
C) firms will neither enter nor exit,since 5% economic profit is enough to maintain the existing number of firms in the market. 
D) It depends on the rate of normal profit in this market. 
A) new firms will enter until the economic profits have disappeared. 
B) firms will exit until the economic profit reaches 10%. 
C) firms will neither enter nor exit,since 5% economic profit is enough to maintain the existing number of firms in the market. 
D) It depends on the rate of normal profit in this market.

Question 10

If one firm sets the market price

Accepted Answer

A) the market is perfectly competitive 
B) the market is not perfectly competitive 
C) there are a large number of buyers who can buy from a wide range of competitors 
D) there is free entry into the market 
E) its product must be a standardized commodity,produced by many competitors 
A) the market is perfectly competitive 
B) the market is not perfectly competitive 
C) there are a large number of buyers who can buy from a wide range of competitors 
D) there is free entry into the market 
E) its product must be a standardized commodity,produced by many competitors

Question 11

In order to maximize profit,a perfectly competitive firm should select the level of output where

Accepted Answer

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

Question 12

For market prices that are below the shut-down point of every firm in the market,the short-run market supply curve

Accepted Answer

A) slopes upward 
B) slope downward 
C) follows the horizontal axis 
D) rises at a 45-degree angle 
E) follows the vertical axis 
A) slopes upward 
B) slope downward 
C) follows the horizontal axis 
D) rises at a 45-degree angle 
E) follows the vertical axis

Question 13

Consider a perfectly competitive firm whose minimum average total cost is $100.This firm is representative of all the firms in the market.If the market price is $80,then in the long run

Accepted Answer

A) new,more-efficient firms will be attracted into the industry 
B) market supply will fall 
C) the firm's average revenue will fall 
D) all the firms currently operating will increase output 
E) total market output will rise 
A) new,more-efficient firms will be attracted into the industry 
B) market supply will fall 
C) the firm's average revenue will fall 
D) all the firms currently operating will increase output 
E) total market output will rise

Question 14

To say that a perfectly competitive market is in short-run equilibrium is to say that

Accepted Answer

A) at least one firm is earning an economic profit 
B) at least one firm is earning a normal profit 
C) no consumer wishes to buy any more or any fewer units at the market price 
D) each firm is earning an economic profit 
E) every consumer is purchasing a positive amount of output 
A) at least one firm is earning an economic profit 
B) at least one firm is earning a normal profit 
C) no consumer wishes to buy any more or any fewer units at the market price 
D) each firm is earning an economic profit 
E) every consumer is purchasing a positive amount of output

Question 15

In short-run equilibrium in a perfectly competitive market,

Accepted Answer

A) each firm earns an economic profit 
B) each firm earns a normal profit 
C) firms shut down if price exceeds average total cost 
D) each firm takes consumers' marginal utility as given 
E) peach firm takes the market price as given 
A) each firm earns an economic profit 
B) each firm earns a normal profit 
C) firms shut down if price exceeds average total cost 
D) each firm takes consumers' marginal utility as given 
E) peach firm takes the market price as given

Question 16

Firms are assumed to be price takers in a perfectly competitive market because

Accepted Answer

A) they are not allowed by law to charge any price other than the market price 
B) they must accept any price offered by consumers 
C) they earn high enough profits at the market price,so they do not want to hurt consumers by raising their prices 
D) each firm is too small to influence the market price 
E) there are too few buyers in the market to absorb price changes 
A) they are not allowed by law to charge any price other than the market price 
B) they must accept any price offered by consumers 
C) they earn high enough profits at the market price,so they do not want to hurt consumers by raising their prices 
D) each firm is too small to influence the market price 
E) there are too few buyers in the market to absorb price changes

Question 17

In a competitive constant-cost industry,an increase in consumer demand leads to

Accepted Answer

A) a decrease in output 
B) high interest rates 
C) an increase in output 
D) inflation 
E) a decrease in resource employment 
A) a decrease in output 
B) high interest rates 
C) an increase in output 
D) inflation 
E) a decrease in resource employment

Question 18

Which of the following factors would be the most useful in determining the structure of a market?

Accepted Answer

A) the number of firms in the market 
B) the price of the product sold in the market 
C) the size of the physical structure 
D) the geographical dispersion of the market 
E) the age of the market 
A) the number of firms in the market 
B) the price of the product sold in the market 
C) the size of the physical structure 
D) the geographical dispersion of the market 
E) the age of the market

Question 19

Figure 9-20
  
-If the perfectly competitive firm pictured in Figure 9-20 is maximizing profits,it is currently selling output at a price of

Accepted Answer

A) $0. 
B) $5. 
C) $7. 
D) $10. 
A) $0. 
B) $5. 
C) $7. 
D) $10.

Question 20

In a perfectly competitive market,a given short-run equilibrium cannot persist into the long run unless the firms are earning (suffering)

Accepted Answer

A) above-normal profits 
B) below-normal profits 
C) economic losses 
D) economic profits 
E) just enough profit to cover all the owners' opportunity costs 
A) above-normal profits 
B) below-normal profits 
C) economic losses 
D) economic profits 
E) just enough profit to cover all the owners' opportunity costs

The portion of the marginal cost curve above the minimum point on the average variable cost curve is part of the perfectly competitive firm's

A perfectly competitive firm may earn economic profits in

-Assume the initial equilibrium is at point D in Figure 9-13.If the market demand curve shifts from D₁ to D₂,and this results in entry of new firms in the long-run,the new equilibrium in this increasing-cost industry will be

The long-run market supply curve in a perfectly competitive market shows

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

A firm in a perfectly competitive market can increase total revenue by raising the price of its product.

-The All-the-Rage microbrewery is represented in Figure 9-9.If the market price is $2.50 per pint,then in the short run,the microbrewery will

A perfectly competitive firm

If the typical firm in a perfectly competitive market is currently earning a 5% economic profit,what will happen in this market in the long run?

If one firm sets the market price

In order to maximize profit,a perfectly competitive firm should select the level of output where

For market prices that are below the shut-down point of every firm in the market,the short-run market supply curve

Consider a perfectly competitive firm whose minimum average total cost is $100.This firm is representative of all the firms in the market.If the market price is $80,then in the long run

To say that a perfectly competitive market is in short-run equilibrium is to say that

In short-run equilibrium in a perfectly competitive market,

Firms are assumed to be price takers in a perfectly competitive market because

In a competitive constant-cost industry,an increase in consumer demand leads to

Which of the following factors would be the most useful in determining the structure of a market?

Figure 9-20 -If the perfectly competitive firm pictured in Figure 9-20 is maximizing profits,it is currently selling output at a price of

In a perfectly competitive market,a given short-run equilibrium cannot persist into the long run unless the firms are earning (suffering)

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

The portion of the marginal cost curve above the minimum point on the average variable cost curve is part of the perfectly competitive firm's

A perfectly competitive firm may earn economic profits in

-Assume the initial equilibrium is at point D in Figure 9-13.If the market demand curve shifts from D₁ to D₂,and this results in entry of new firms in the long-run,the new equilibrium in this increasing-cost industry will be

The long-run market supply curve in a perfectly competitive market shows

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

A firm in a perfectly competitive market can increase total revenue by raising the price of its product.

-The All-the-Rage microbrewery is represented in Figure 9-9.If the market price is $2.50 per pint,then in the short run,the microbrewery will

A perfectly competitive firm

If the typical firm in a perfectly competitive market is currently earning a 5% economic profit,what will happen in this market in the long run?

If one firm sets the market price

In order to maximize profit,a perfectly competitive firm should select the level of output where

For market prices that are below the shut-down point of every firm in the market,the short-run market supply curve

Consider a perfectly competitive firm whose minimum average total cost is $100.This firm is representative of all the firms in the market.If the market price is $80,then in the long run

To say that a perfectly competitive market is in short-run equilibrium is to say that

In short-run equilibrium in a perfectly competitive market,

Firms are assumed to be price takers in a perfectly competitive market because

In a competitive constant-cost industry,an increase in consumer demand leads to

Which of the following factors would be the most useful in determining the structure of a market?

Figure 9-20 -If the perfectly competitive firm pictured in Figure 9-20 is maximizing profits,it is currently selling output at a price of

In a perfectly competitive market,a given short-run equilibrium cannot persist into the long run unless the firms are earning (suffering)

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