Question 1

A firm will make a profit when

Accepted Answer

A) P > AVC. 
B) P > ATC. 
C) P = ATC. 
D) P = MC. 
A) P > AVC. 
B) P > ATC. 
C) P = ATC. 
D) P = MC.

Question 2

Use a graph to show the demand,AVC,ATC,MC,and MR curves of a firm that should temporarily shut down in the short run.Identify the shutdown point on the graph.

Accepted Answer

The answer of Use a graph to show the demand,AVC,ATC,MC,and...

Question 3

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

Accepted Answer

A) total variable cost 
B) profit 
C) total fixed cost 
D) total revenue 
A) total variable cost 
B) profit 
C) total fixed cost 
D) total revenue

Question 4

How are sunk costs and fixed costs related?

Accepted Answer

A) They are not related in any way. 
B) Sunk costs cannot be recovered and fixed costs can be avoided by shutting down. 
C) In the short run they are equal to each other. 
D) In the long run they are equal to each other. 
A) They are not related in any way. 
B) Sunk costs cannot be recovered and fixed costs can be avoided by shutting down. 
C) In the short run they are equal to each other. 
D) In the long run they are equal to each other.

Question 5

Letters are used to represent the terms used to answer this question: price (P),quantity of output (Q),total cost (TC)and average total cost (ATC).Which of the following equations is equal to a firm's average profit?

Accepted Answer

A) P - ATC 
B) (P - AT
C) × Q 
C) (P × Q)- TC 
D) P - TC 
A) P - ATC 
B) (P - AT
C) × Q 
C) (P × Q)- TC 
D) P - TC

Question 6

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 if the firm is producing output,what is the amount of its total variable cost?

Accepted Answer

A) $7,200 
B) $6,480 
C) $5,400 
D) $3,960 
A) $7,200 
B) $6,480 
C) $5,400 
D) $3,960

Question 7

Figure 9-1
  
-Refer to Figure 9-1.If the firm is charging a price of $12 per unit

Accepted Answer

A) it breaks even. 
B)  it is making a profit. 
C) it is selling 700 units. 
D) it is not selling any output. 
A) it breaks even. 
B)  it is making a profit. 
C) it is selling 700 units. 
D) it is not selling any output.

Question 8

Which of the following is not a characteristic of a monopolistically competitive market structure?

Accepted Answer

A) There is a large number of independently acting small sellers. 
B) All sellers sell products that are differentiated. 
C) There are low barriers to entry of new firms. 
D) Each firm must react to actions of other firms. 
A) There is a large number of independently acting small sellers. 
B) All sellers sell products that are differentiated. 
C) There are low barriers to entry of new firms. 
D) Each firm must react to actions of other firms.

Question 9

If,for a given output level,a perfectly competitive firm's price is less than its average variable cost,the firm

Accepted Answer

A) is earning a profit. 
B) should shut down. 
C) should increase output. 
D) should increase price. 
A) is earning a profit. 
B) should shut down. 
C) should increase output. 
D) should increase price.

Question 10

In long-run perfectly competitive equilibrium,which of the following is false?

Accepted Answer

A) There is efficient, low-cost production at the minimum efficient scale. 
B) Economic surplus is maximized. 
C) Firms earn economic profit. 
D) Economies of scale are exhausted. 
A) There is efficient, low-cost production at the minimum efficient scale. 
B) Economic surplus is maximized. 
C) Firms earn economic profit. 
D) Economies of scale are exhausted.

Question 11

If a perfectly competitive firm's total revenue is less than its total variable cost,the firm

Accepted Answer

A) should raise its price above its average variable cost. 
B) should continue to produce and increase its demand. 
C) should stop production by shutting down temporarily. 
D) should adopt new technology in order to lower its costs of production. 
A) should raise its price above its average variable cost. 
B) should continue to produce and increase its demand. 
C) should stop production by shutting down temporarily. 
D) should adopt new technology in order to lower its costs of production.

Question 12

If productive efficiency characterizes a market

Accepted Answer

A) the marginal cost of production is minimized. 
B) firms produce the goods that consumers desire most. 
C) the output is being produced at the lowest possible cost. 
D) firms use the best technology available to produce the good. 
A) the marginal cost of production is minimized. 
B) firms produce the goods that consumers desire most. 
C) the output is being produced at the lowest possible cost. 
D) firms use the best technology available to produce the good.

Question 13

A wheat farmer and a firm in a perfectly competitive market are similar in that

Accepted Answer

A) both face vertical demand curves. 
B) both have to lower their prices if a rival firm lowers its price. 
C) both face horizontal demand curves. 
D) both will earn an economic profit if their total revenue equals their total cost. 
A) both face vertical demand curves. 
B) both have to lower their prices if a rival firm lowers its price. 
C) both face horizontal demand curves. 
D) both will earn an economic profit if their total revenue equals their total cost.

Question 14

Figure 9-16
  
-Refer to Figure 9-16.Which panel best represents the perfectly competitive organic produce market's transition to the long run when some firms in the market are earning economic profits?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D

Question 15

Assume that price is greater than average variable cost.If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54,then to maximize profits the firm should

Accepted Answer

A) continue producing at the current output. 
B) produce a larger level of output. 
C) produce a smaller level of output. 
D) There is not enough information given to answer the question. 
A) continue producing at the current output. 
B) produce a larger level of output. 
C) produce a smaller level of output. 
D) There is not enough information given to answer the question.

Question 16

If a typical firm in a perfectly competitive industry is earning profits,then

Accepted Answer

A) all firms will continue to earn profits. 
B) new firms will enter in the long run causing market supply to decrease, market price to rise and profits to increase. 
C) new firms will enter in the long run causing market supply to increase, market price to fall and profits to decrease. 
D) the number of firms in the industry will remain constant in the long run. 
A) all firms will continue to earn profits. 
B) new firms will enter in the long run causing market supply to decrease, market price to rise and profits to increase. 
C) new firms will enter in the long run causing market supply to increase, market price to fall and profits to decrease. 
D) the number of firms in the industry will remain constant in the long run.

Question 17

Marginal revenue is

Accepted Answer

A) total revenue divided by the total quantity of output. 
B) the change in profit divided by the change in the quantity of output. 
C) the change in total revenue divided by the change in total cost. 
D) the change in total revenue divided by the change in the quantity of output. 
A) total revenue divided by the total quantity of output. 
B) the change in profit divided by the change in the quantity of output. 
C) the change in total revenue divided by the change in total cost. 
D) the change in total revenue divided by the change in the quantity of output.

Question 18

Which of the following does not hold true for a perfectly competitive firm in long-run equilibrium?

Accepted Answer

A) Its economic profit will be zero. 
B) It will minimize average total cost. 
C) It will charge a price equal to marginal cost. 
D) Marginal cost will be minimized. 
A) Its economic profit will be zero. 
B) It will minimize average total cost. 
C) It will charge a price equal to marginal cost. 
D) Marginal cost will be minimized.

Question 19

Which of the following is not an assumption of perfectly competitive markets?

Accepted Answer

A) There are many sellers and many buyers, all of which are small relative to the market. 
B) Each firm produces a similar but not identical product. 
C) There are no barriers to new firms entering the market. 
D) The products sold by all firms in the market are identical. 
A) There are many sellers and many buyers, all of which are small relative to the market. 
B) Each firm produces a similar but not identical product. 
C) There are no barriers to new firms entering the market. 
D) The products sold by all firms in the market are identical.

Question 20

Firms in perfect competition produce the allocatively efficient output in the short run and in the long run.

Accepted Answer

A) True 
 B)False

A firm will make a profit when

Use a graph to show the demand,AVC,ATC,MC,and MR curves of a firm that should temporarily shut down in the short run.Identify the shutdown point on the graph.

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

How are sunk costs and fixed costs related?

Letters are used to represent the terms used to answer this question: price (P),quantity of output (Q),total cost (TC)and average total cost (ATC).Which of the following equations is equal to a firm's average profit?

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 if the firm is producing output,what is the amount of its total variable cost?

Figure 9-1 -Refer to Figure 9-1.If the firm is charging a price of $12 per unit

Which of the following is not a characteristic of a monopolistically competitive market structure?

If,for a given output level,a perfectly competitive firm's price is less than its average variable cost,the firm

In long-run perfectly competitive equilibrium,which of the following is false?

If a perfectly competitive firm's total revenue is less than its total variable cost,the firm

If productive efficiency characterizes a market

A wheat farmer and a firm in a perfectly competitive market are similar in that

Figure 9-16 -Refer to Figure 9-16.Which panel best represents the perfectly competitive organic produce market's transition to the long run when some firms in the market are earning economic profits?

Assume that price is greater than average variable cost.If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54,then to maximize profits the firm should

If a typical firm in a perfectly competitive industry is earning profits,then

Marginal revenue is

Which of the following does not hold true for a perfectly competitive firm in long-run equilibrium?

Which of the following is not an assumption of perfectly competitive markets?

Firms in perfect competition produce the allocatively efficient output in the short run and in the long run.

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

A firm will make a profit when

Use a graph to show the demand,AVC,ATC,MC,and MR curves of a firm that should temporarily shut down in the short run.Identify the shutdown point on the graph.

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

How are sunk costs and fixed costs related?

Letters are used to represent the terms used to answer this question: price (P),quantity of output (Q),total cost (TC)and average total cost (ATC).Which of the following equations is equal to a firm's average profit?

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 if the firm is producing output,what is the amount of its total variable cost?

Figure 9-1 -Refer to Figure 9-1.If the firm is charging a price of $12 per unit

Which of the following is not a characteristic of a monopolistically competitive market structure?

If,for a given output level,a perfectly competitive firm's price is less than its average variable cost,the firm

In long-run perfectly competitive equilibrium,which of the following is false?

If a perfectly competitive firm's total revenue is less than its total variable cost,the firm

If productive efficiency characterizes a market

A wheat farmer and a firm in a perfectly competitive market are similar in that

Figure 9-16 -Refer to Figure 9-16.Which panel best represents the perfectly competitive organic produce market's transition to the long run when some firms in the market are earning economic profits?

Assume that price is greater than average variable cost.If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54,then to maximize profits the firm should

If a typical firm in a perfectly competitive industry is earning profits,then

Marginal revenue is

Which of the following does not hold true for a perfectly competitive firm in long-run equilibrium?

Which of the following is not an assumption of perfectly competitive markets?

Firms in perfect competition produce the allocatively efficient output in the short run and in the long run.

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