Question 1

Figure 9-8
  
-Refer to Figure 9-8.Suppose the market price is $120.Which of the following is true?

Accepted Answer

A) The firm earns a profit equal to the area A. 
B) The firm earns a profit equal to the area A + B. 
C) The firm suffers a loss equal to the area A. 
D) The firm will break even. 
A) The firm earns a profit equal to the area A. 
B) The firm earns a profit equal to the area A + B. 
C) The firm suffers a loss equal to the area A. 
D) The firm will break even.

Question 2

Figure 9-8
  
-Refer to Figure 9-8.Suppose the firm produces 4,000 units.What does the shaded area labeled B represent?

Accepted Answer

A) the firm's economic loss 
B) total variable cost 
C) average variable cost 
D) total fixed cost 
A) the firm's economic loss 
B) total variable cost 
C) average variable cost 
D) total fixed cost

Question 3

At the profit-maximizing level of output for a perfectly competitive firm

Accepted Answer

A) price equals marginal cost. 
B) average revenue equals average variable cost and price equals marginal cost. 
C) marginal revenue equals marginal cost and average total cost equals average fixed cost. 
D) price equals average revenue and marginal cost equals average variable cost. 
A) price equals marginal cost. 
B) average revenue equals average variable cost and price equals marginal cost. 
C) marginal revenue equals marginal cost and average total cost equals average fixed cost. 
D) price equals average revenue and marginal cost equals average variable cost.

Question 4

Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition.The most common reason for this is

Accepted Answer

A) there are high barriers to entering these markets. 
B) firms in these markets sell identical products. 
C) firms in these markets make high profits. 
D) firms in these markets do not sell identical products. 
A) there are high barriers to entering these markets. 
B) firms in these markets sell identical products. 
C) firms in these markets make high profits. 
D) firms in these markets do not sell identical products.

Question 5

Jason,a high-school student,mows lawns for families in his neighborhood.The going rate is $12 for each lawn-mowing service.Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also offer the same service.If the market for lawn mowing services is perfectly competitive,what would happen if Jason raised his price?

Accepted Answer

A) He would lose some but not all his customers. 
B) Initially, his customers might complain but over time they will come to accept the new rate. 
C) If Jason raises his price he would lose all his customers. 
D) If Jason raises his price, then all others supplying the same service will also raise their prices. 
A) He would lose some but not all his customers. 
B) Initially, his customers might complain but over time they will come to accept the new rate. 
C) If Jason raises his price he would lose all his customers. 
D) If Jason raises his price, then all others supplying the same service will also raise their prices.

Question 6

The long-run supply curve for a perfectly competitive,constant-cost industry

Accepted Answer

A) is upward-sloping. 
B) is horizontal. 
C) is downward-sloping. 
D) is found by adding up the marginal cost curves for all firms in the industry. 
A) is upward-sloping. 
B) is horizontal. 
C) is downward-sloping. 
D) is found by adding up the marginal cost curves for all firms in the industry.

Question 7

If a perfectly competitive firm achieves productive efficiency then

Accepted Answer

A) it will raise its price in order to earn an economic profit. 
B) the price of the good it sells is equal to the benefit consumers receive from consuming the last unit of the good sold. 
C) it is producing at minimum efficient scale. 
D) it is producing the good it sells at the lowest possible cost. 
A) it will raise its price in order to earn an economic profit. 
B) the price of the good it sells is equal to the benefit consumers receive from consuming the last unit of the good sold. 
C) it is producing at minimum efficient scale. 
D) it is producing the good it sells at the lowest possible cost.

Question 8

Figure 9-4
   
Figure 9-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.
-Refer to Figure 9-4.What is the amount of its total fixed cost?

Accepted Answer

A) $1,080 
B) $1,440 
C) $2,520 
D) It cannot be determined. 
A) $1,080 
B) $1,440 
C) $2,520 
D) It cannot be determined.

Question 9

What is the relationship among the following variables in for a perfectly competitive firm: the market price,average revenue and marginal revenue?

Accepted Answer

A) Average revenue is equal to the market price; average revenue is greater than marginal revenue. 
B) The market price is equal to both average revenue and marginal revenue. 
C) Average revenue is equal to marginal revenue; average revenue is greater than the market price. 
D) As a firm lowers the market price to sell more output, marginal revenue and average revenue will be less than the market price. 
A) Average revenue is equal to the market price; average revenue is greater than marginal revenue. 
B) The market price is equal to both average revenue and marginal revenue. 
C) Average revenue is equal to marginal revenue; average revenue is greater than the market price. 
D) As a firm lowers the market price to sell more output, marginal revenue and average revenue will be less than the market price.

Question 10

Figure 9-10
  
-Refer to Figure 9-10.The firm's short-run supply curve is its

Accepted Answer

A) marginal cost curve. 
B) marginal cost curve from b and above. 
C) marginal cost curve from c and above. 
D) marginal cost curve from d and above. 
A) marginal cost curve. 
B) marginal cost curve from b and above. 
C) marginal cost curve from c and above. 
D) marginal cost curve from d and above.

Question 11

If a firm in a perfectly competitive industry introduces a lower-cost way of producing an existing product,the firm will be able to earn economic profits in the long run.

Accepted Answer

A) True 
 B)False

Question 12

Figure 9-1
  
-Refer to Figure 9-1.If the firm is producing 700 units,what is the amount of its profit or loss?

Accepted Answer

A) loss of $280 
B) loss equivalent to the area A 
C) profit equivalent to the area A 
D) There is insufficient information to answer the question. 
A) loss of $280 
B) loss equivalent to the area A 
C) profit equivalent to the area A 
D) There is insufficient information to answer the question.

Question 13

A perfectly competitive firm has to charge the same price as every other firm in the market.Therefore,the firm

Accepted Answer

A) faces a perfectly inelastic demand curve. 
B) is not able to make a profit in the short run. 
C) is a price taker. 
D) faces a perfectly elastic supply curve. 
A) faces a perfectly inelastic demand curve. 
B) is not able to make a profit in the short run. 
C) is a price taker. 
D) faces a perfectly elastic supply curve.

Question 14

A perfectly competitive firm in a constant-cost industry produces 3,000 units of a good at a total cost of $36,000.The prevailing market price is $15.What will happen to the number of firms in the industry and to the industry's output in the long run?

Accepted Answer

A) The number of firms and the industry's output increase. 
B) The number of firms and the industry's output decrease. 
C) The number of firms remains constant and the industry's output increases. 
D)  The number of firms remains constant and the industry's output decreases. 
A) The number of firms and the industry's output increase. 
B) The number of firms and the industry's output decrease. 
C) The number of firms remains constant and the industry's output increases. 
D)  The number of firms remains constant and the industry's output decreases.

Question 15

The market demand curve for a perfectly competitive industry is the horizontal summation of each individual firm's demand curve.

Accepted Answer

A) True 
 B)False

Question 16

Figure 9-4
   
Figure 9-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.
-Refer to Figure 9-4.If the market price is $30 and the firm is producing output,what is the amount of the firm's profit or loss?

Accepted Answer

A) loss of $1,080 
B) profit of $1,440 
C) loss of $2,520 
D) profit of $1,300 
A) loss of $1,080 
B) profit of $1,440 
C) loss of $2,520 
D) profit of $1,300

Question 17

Which of the following describes a situation in which every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it?

Accepted Answer

A) productive efficiency 
B) allocative efficiency 
C) marginal efficiency 
D) profit maximization 
A) productive efficiency 
B) allocative efficiency 
C) marginal efficiency 
D) profit maximization

Question 18

Which of the following arguments could be made as evidence that the market for produce sold at a farmers' market is perfectly competitive?

Accepted Answer

A) The U.S.Department of Agriculture has established standards for the labeling of organic produce sold at farmers' markets. 
B) Sales of organically grown food have increased at a rate of 20 percent per year. 
C) As more farmers began selling their products at farmers' markets, the increase in supply has driven down prices to the point where they just cover the cost of production. 
D) The profits earned by farmers who sell their products at farmers' markets have continued to grow, despite the increasing number of farmers entering this market. 
A) The U.S.Department of Agriculture has established standards for the labeling of organic produce sold at farmers' markets. 
B) Sales of organically grown food have increased at a rate of 20 percent per year. 
C) As more farmers began selling their products at farmers' markets, the increase in supply has driven down prices to the point where they just cover the cost of production. 
D) The profits earned by farmers who sell their products at farmers' markets have continued to grow, despite the increasing number of farmers entering this market.

Question 19

In a graph with output on the horizontal axis and total revenue on the vertical axis,what is the shape of the total revenue curve for a perfectly competitive seller?

Accepted Answer

A) U-shaped 
B) inverted U-shaped 
C) a horizontal line 
D) a ray from the origin 
A) U-shaped 
B) inverted U-shaped 
C) a horizontal line 
D) a ray from the origin

Question 20

If price is equal to average variable cost,a perfectly competitive firm breaks even.

Accepted Answer

A) True 
 B)False

Figure 9-8 -Refer to Figure 9-8.Suppose the market price is $120.Which of the following is true?

Figure 9-8 -Refer to Figure 9-8.Suppose the firm produces 4,000 units.What does the shaded area labeled B represent?

At the profit-maximizing level of output for a perfectly competitive firm

Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition.The most common reason for this is

The long-run supply curve for a perfectly competitive,constant-cost industry

If a perfectly competitive firm achieves productive efficiency then

Figure 9-4 Figure 9-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 9-4.What is the amount of its total fixed cost?

What is the relationship among the following variables in for a perfectly competitive firm: the market price,average revenue and marginal revenue?

Figure 9-10 -Refer to Figure 9-10.The firm's short-run supply curve is its

If a firm in a perfectly competitive industry introduces a lower-cost way of producing an existing product,the firm will be able to earn economic profits in the long run.

Figure 9-1 -Refer to Figure 9-1.If the firm is producing 700 units,what is the amount of its profit or loss?

A perfectly competitive firm has to charge the same price as every other firm in the market.Therefore,the firm

A perfectly competitive firm in a constant-cost industry produces 3,000 units of a good at a total cost of $36,000.The prevailing market price is $15.What will happen to the number of firms in the industry and to the industry's output in the long run?

The market demand curve for a perfectly competitive industry is the horizontal summation of each individual firm's demand curve.

Figure 9-4 Figure 9-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 9-4.If the market price is $30 and the firm is producing output,what is the amount of the firm's profit or loss?

Which of the following describes a situation in which every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it?

Which of the following arguments could be made as evidence that the market for produce sold at a farmers' market is perfectly competitive?

In a graph with output on the horizontal axis and total revenue on the vertical axis,what is the shape of the total revenue curve for a perfectly competitive seller?

If price is equal to average variable cost,a perfectly competitive firm breaks even.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 9: Firms in Perfectly Competitive Markets

Figure 9-8 -Refer to Figure 9-8.Suppose the market price is $120.Which of the following is true?

Figure 9-8 -Refer to Figure 9-8.Suppose the firm produces 4,000 units.What does the shaded area labeled B represent?

At the profit-maximizing level of output for a perfectly competitive firm

Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition.The most common reason for this is

The long-run supply curve for a perfectly competitive,constant-cost industry

If a perfectly competitive firm achieves productive efficiency then

Figure 9-4 Figure 9-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 9-4.What is the amount of its total fixed cost?

What is the relationship among the following variables in for a perfectly competitive firm: the market price,average revenue and marginal revenue?

Figure 9-10 -Refer to Figure 9-10.The firm's short-run supply curve is its

If a firm in a perfectly competitive industry introduces a lower-cost way of producing an existing product,the firm will be able to earn economic profits in the long run.

Figure 9-1 -Refer to Figure 9-1.If the firm is producing 700 units,what is the amount of its profit or loss?

A perfectly competitive firm has to charge the same price as every other firm in the market.Therefore,the firm

A perfectly competitive firm in a constant-cost industry produces 3,000 units of a good at a total cost of $36,000.The prevailing market price is $15.What will happen to the number of firms in the industry and to the industry's output in the long run?

The market demand curve for a perfectly competitive industry is the horizontal summation of each individual firm's demand curve.

Figure 9-4 Figure 9-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 9-4.If the market price is $30 and the firm is producing output,what is the amount of the firm's profit or loss?

Which of the following describes a situation in which every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it?

Which of the following arguments could be made as evidence that the market for produce sold at a farmers' market is perfectly competitive?

In a graph with output on the horizontal axis and total revenue on the vertical axis,what is the shape of the total revenue curve for a perfectly competitive seller?

If price is equal to average variable cost,a perfectly competitive firm breaks even.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters