Question 1

Describe how economic losses are eliminated in a perfectly competitive industry.

Accepted Answer

If firms are incurring economic losses,

Question 2

Catfish farming is a perfectly competitive industry.Catfish farmers suffered tremendous economic losses in the late 2000s.As a result,

Accepted Answer

A) some new catfish farmers entered the market. 
B) some catfish farmers exited the market. 
C) no catfish farmers entered or exited this market. 
D) the supply of catfish increased in 2010. 
E) new demanders entered the market after some firms had exited. 
A) some new catfish farmers entered the market. 
B) some catfish farmers exited the market. 
C) no catfish farmers entered or exited this market. 
D) the supply of catfish increased in 2010. 
E) new demanders entered the market after some firms had exited.

Question 3

A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit.The firm's average total cost is $20.What is the firm's total revenue?

Accepted Answer

A) $23 
B) $150 
C) $1,000 
D) $1,150 
E) $20 
A) $23 
B) $150 
C) $1,000 
D) $1,150 
E) $20

Question 4

What are the four types of markets? Give a brief description of each type.

Accepted Answer

The four types of markets are perfect co

Question 5

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit, to maximize its profit (or minimize its loss)the firm should

Accepted Answer

A) shut down. 
B) produce between 10 and less than 30 units. 
C) produce 30 units. 
D) produce more than 30 units and less than 40 units. 
E) produce 40 units. 
A) shut down. 
B) produce between 10 and less than 30 units. 
C) produce 30 units. 
D) produce more than 30 units and less than 40 units. 
E) produce 40 units.

Question 6

We know that a perfectly competitive firm is a price taker because

Accepted Answer

A) its MC curve slopes upward. 
B) its ATC curve is U-shaped. 
C) its demand curve is horizontal. 
D) MC and ATC are equal at the profit-maximizing amount of output. 
E) it has no supply curve. 
A) its MC curve slopes upward. 
B) its ATC curve is U-shaped. 
C) its demand curve is horizontal. 
D) MC and ATC are equal at the profit-maximizing amount of output. 
E) it has no supply curve.

Question 7

With regard to its profits and losses, how is the short run different from the long run for a perfectly competitive firm?

Accepted Answer

The firm can make an economic profit, in

Question 8

To increase its profit, a perfectly competitive firm will produce more output when

Accepted Answer

A) price is greater than average fixed cost. 
B) price is greater than marginal cost. 
C) marginal cost is less than average total cost. 
D) average variable cost is greater than average fixed cost. 
E) price is greater than average variable cost. 
A) price is greater than average fixed cost. 
B) price is greater than marginal cost. 
C) marginal cost is less than average total cost. 
D) average variable cost is greater than average fixed cost. 
E) price is greater than average variable cost.

Question 9

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-The firm in the figure above is ________ that is equal to ________.

Accepted Answer

A) making an economic profit; $8.00 × 10 
B) making an economic profit; $5.10 × 10 
C) incurring an economic loss; $5.10 × 10 
D) incurring an economic loss; ($8.00 - $5.10)× 10 
E) making an economic profit; ($8.00 - $5.10)× 10 
A) making an economic profit; $8.00 × 10 
B) making an economic profit; $5.10 × 10 
C) incurring an economic loss; $5.10 × 10 
D) incurring an economic loss; ($8.00 - $5.10)× 10 
E) making an economic profit; ($8.00 - $5.10)× 10

Question 10

In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

Accepted Answer

A) monopoly 
B) oligopoly 
C) only perfect competition 
D) only monopolistic competition 
E) both perfect competition and monopolistic competition 
A) monopoly 
B) oligopoly 
C) only perfect competition 
D) only monopolistic competition 
E) both perfect competition and monopolistic competition

Question 11

For a perfectly competitive firm, marginal revenue is

Accepted Answer

A) less than the price. 
B) greater than the price. 
C) equal to the price. 
D) equal to the change in profit from selling one more unit. 
E) undefined because the firm's demand curve is horizontal. 
A) less than the price. 
B) greater than the price. 
C) equal to the price. 
D) equal to the change in profit from selling one more unit. 
E) undefined because the firm's demand curve is horizontal.

Question 12

-Bill owns a lawn-care company in Windermere, Florida, whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.Bill's average total cost curve is ATC, so his total cost of production equals

Accepted Answer

A) $0 because Bill shuts down. 
B) more than $0 and less than $1,200 per week. 
C) more than $1,200 and less than $1,400 per week. 
D) more than $1,400 per week and less than $1,800 per week. 
E) more than $1,800 per week. 
A) $0 because Bill shuts down. 
B) more than $0 and less than $1,200 per week. 
C) more than $1,200 and less than $1,400 per week. 
D) more than $1,400 per week and less than $1,800 per week. 
E) more than $1,800 per week.

Question 13

One part of a perfectly competitive trout farm's supply curve is its

Accepted Answer

A) marginal cost curve below the shutdown point. 
B) entire marginal cost curve. 
C) marginal cost curve above the shutdown point. 
D) average variable cost curve above the shutdown point. 
E) marginal revenue curve above the demand curve. 
A) marginal cost curve below the shutdown point. 
B) entire marginal cost curve. 
C) marginal cost curve above the shutdown point. 
D) average variable cost curve above the shutdown point. 
E) marginal revenue curve above the demand curve.

Question 14

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₀, each produces 20 units, and the market price of the good is $16 per unit, then

Accepted Answer

A) the firms make an economic profit of $8 per unit. 
B) firms will enter the industry and the number of firms increases. 
C) the firms' ATC curves will eventually shift to become the same as ATC₁. 
D) firms will exit the industry and the number of firms decreases. 
E) Both answers A and B are correct. 
A) the firms make an economic profit of $8 per unit. 
B) firms will enter the industry and the number of firms increases. 
C) the firms' ATC curves will eventually shift to become the same as ATC₁. 
D) firms will exit the industry and the number of firms decreases. 
E) Both answers A and B are correct.

Question 15

-The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas.When Omar produces 2 bushels of rutabagas, his total profit equals

Accepted Answer

A) $0. 
B) $20. 
C) $28. 
D) -$8. 
E) $48. 
A) $0. 
B) $20. 
C) $28. 
D) -$8. 
E) $48.

Question 16

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₂, each produces 40 units, and the market price of the good is $20 per unit, then

Accepted Answer

A) the firms incur an economic loss of $12 per unit. 
B) firms will enter the industry and the number of firms increases. 
C) the firms' ATC curves will eventually shift to become the same as ATC₁. 
D) firms will exit the industry and the number of firms decreases. 
E) Both answers A and D are correct. 
A) the firms incur an economic loss of $12 per unit. 
B) firms will enter the industry and the number of firms increases. 
C) the firms' ATC curves will eventually shift to become the same as ATC₁. 
D) firms will exit the industry and the number of firms decreases. 
E) Both answers A and D are correct.

Question 17

The firm's over-riding objective is to

Accepted Answer

A) earn a normal profit. 
B) maximize normal profit. 
C) maximize economic profit. 
D) maximize total revenue. 
E) avoid an economic loss. 
A) earn a normal profit. 
B) maximize normal profit. 
C) maximize economic profit. 
D) maximize total revenue. 
E) avoid an economic loss.

Question 18

-Computer memory chips are produced on wafers, each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.This firm will produce as long as the market price of a wafer is above

Accepted Answer

A) $1,300. 
B) $1,400. 
C) $7,900. 
D) $2,800. 
E) $9,800. 
A) $1,300. 
B) $1,400. 
C) $7,900. 
D) $2,800. 
E) $9,800.

Question 19

One requirement for an industry to be perfectly competitive is that

Accepted Answer

A) there are no restrictions on entry into or exit from the market. 
B) there are multiple restrictions on entry into or exit from the market. 
C) there are many firms selling different products. 
D) sellers and buyers have imperfect information about prices. 
E) the many firms sell slightly different products. 
A) there are no restrictions on entry into or exit from the market. 
B) there are multiple restrictions on entry into or exit from the market. 
C) there are many firms selling different products. 
D) sellers and buyers have imperfect information about prices. 
E) the many firms sell slightly different products.

Question 20

In a perfectly competitive market, one farmer's barley is

Accepted Answer

A) completely different from another farmer's barley. 
B) a perfect substitute for another farmer's barley. 
C) a monopolized product in that farmer's local market. 
D) a monopolized product in the national market. 
E) slightly different from another farmer's barley. 
A) completely different from another farmer's barley. 
B) a perfect substitute for another farmer's barley. 
C) a monopolized product in that farmer's local market. 
D) a monopolized product in the national market. 
E) slightly different from another farmer's barley.

Describe how economic losses are eliminated in a perfectly competitive industry.

Catfish farming is a perfectly competitive industry.Catfish farmers suffered tremendous economic losses in the late 2000s.As a result,

A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit.The firm's average total cost is $20.What is the firm's total revenue?

What are the four types of markets? Give a brief description of each type.

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit, to maximize its profit (or minimize its loss)the firm should

We know that a perfectly competitive firm is a price taker because

With regard to its profits and losses, how is the short run different from the long run for a perfectly competitive firm?

To increase its profit, a perfectly competitive firm will produce more output when

The figure above shows some of a firm's cost curves and its marginal revenue curve. -The firm in the figure above is that is equal to .

In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

For a perfectly competitive firm, marginal revenue is

-Bill owns a lawn-care company in Windermere, Florida, whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.Bill's average total cost curve is ATC, so his total cost of production equals

One part of a perfectly competitive trout farm's supply curve is its

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₀, each produces 20 units, and the market price of the good is $16 per unit, then

-The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas.When Omar produces 2 bushels of rutabagas, his total profit equals

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₂, each produces 40 units, and the market price of the good is $20 per unit, then

The firm's over-riding objective is to

-Computer memory chips are produced on wafers, each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.This firm will produce as long as the market price of a wafer is above

One requirement for an industry to be perfectly competitive is that

In a perfectly competitive market, one farmer's barley is

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 15: Perfect Competition

Describe how economic losses are eliminated in a perfectly competitive industry.

Catfish farming is a perfectly competitive industry.Catfish farmers suffered tremendous economic losses in the late 2000s.As a result,

A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit.The firm's average total cost is $20.What is the firm's total revenue?

What are the four types of markets? Give a brief description of each type.

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit, to maximize its profit (or minimize its loss)the firm should

We know that a perfectly competitive firm is a price taker because

With regard to its profits and losses, how is the short run different from the long run for a perfectly competitive firm?

To increase its profit, a perfectly competitive firm will produce more output when

The figure above shows some of a firm's cost curves and its marginal revenue curve. -The firm in the figure above is ________ that is equal to ________.

In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

For a perfectly competitive firm, marginal revenue is

-Bill owns a lawn-care company in Windermere, Florida, whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.Bill's average total cost curve is ATC, so his total cost of production equals

One part of a perfectly competitive trout farm's supply curve is its

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₀, each produces 20 units, and the market price of the good is $16 per unit, then

-The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas.When Omar produces 2 bushels of rutabagas, his total profit equals

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₂, each produces 40 units, and the market price of the good is $20 per unit, then

The firm's over-riding objective is to

-Computer memory chips are produced on wafers, each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.This firm will produce as long as the market price of a wafer is above

One requirement for an industry to be perfectly competitive is that

In a perfectly competitive market, one farmer's barley is

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

The figure above shows some of a firm's cost curves and its marginal revenue curve. -The firm in the figure above is that is equal to .