Question 1

A perfectly competitive firm will maximize profit when the quantity produced is such that the

Accepted Answer

A) firm's total revenue is equal to total cost. 
B) firm's marginal revenue is equal to the price. 
C) firm's marginal revenue is equal to its marginal cost. 
D) price exceeds the firm's marginal cost by as much as possible. 
E) firm's marginal revenue exceeds its marginal cost by the maximum amount possible. 
A) firm's total revenue is equal to total cost. 
B) firm's marginal revenue is equal to the price. 
C) firm's marginal revenue is equal to its marginal cost. 
D) price exceeds the firm's marginal cost by as much as possible. 
E) firm's marginal revenue exceeds its marginal cost by the maximum amount possible.

Question 2

Alice, Bud, and Celia can produce rubber bands in a perfectly competitive market.If they enter the market, the minimum average total cost for a bundle of rubber bands, for the three of them is $2, $3, and $4, respectively.If the market price is $2.10 per bundle, then

Accepted Answer

A) all three of them will enter the market. 
B) only Alice will enter the market. 
C) Alice and Bud will enter the market. 
D) Bud and Celia will enter the market. 
E) Alice and Celia will enter the market. 
A) all three of them will enter the market. 
B) only Alice will enter the market. 
C) Alice and Bud will enter the market. 
D) Bud and Celia will enter the market. 
E) Alice and Celia will enter the market.

Question 3

-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 ATC₁, each produce 30 units, and the market price of the good is $16 per unit, then the firms

Accepted Answer

A) make zero economic profit and firms neither enter nor exit the industry. 
B) make zero economic profit and so some firms exit the industry. 
C) incur an economic loss and so some firms exit the industry. 
D) incur an economic loss and so new firms enter the industry. 
E) make an economic profit and new firms enter the industry. 
A) make zero economic profit and firms neither enter nor exit the industry. 
B) make zero economic profit and so some firms exit the industry. 
C) incur an economic loss and so some firms exit the industry. 
D) incur an economic loss and so new firms enter the industry. 
E) make an economic profit and new firms enter the industry.

Question 4

In the short run, a perfectly competitive firm can experience which of the following?
I∙an economic profit
Ii∙an economic loss but it continues to stay open
Iii∙an economic loss equal to its total fixed cost when it shuts down

Accepted Answer

A) only i 
B) i and ii 
C) i and iii 
D) ii and iii 
E) i, ii, and iii 
A) only i 
B) i and ii 
C) i and iii 
D) ii and iii 
E) i, ii, and iii

Question 5

The rutabaga market is perfectly competitive.Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases.The permanent decrease in demand results in a

Accepted Answer

A) lower price, economic losses by rutabaga farmers, and entry into the market. 
B) lower price, economic losses by rutabaga farmers, and exit from the market. 
C) higher price, economic profits for rutabaga farmers, and entry into the market. 
D) higher price, economic losses by rutabaga farmers, and exit from the market. 
E) lower price, economic profits for rutabaga farmers, and entry into the market. 
A) lower price, economic losses by rutabaga farmers, and entry into the market. 
B) lower price, economic losses by rutabaga farmers, and exit from the market. 
C) higher price, economic profits for rutabaga farmers, and entry into the market. 
D) higher price, economic losses by rutabaga farmers, and exit from the market. 
E) lower price, economic profits for rutabaga farmers, and entry into the market.

Question 6

In the long run, perfectly competitive firms will exit the market if the price is

Accepted Answer

A) higher than average variable cost. 
B) equal to average total cost. 
C) less than average total cost. 
D) equal to average fixed cost. 
E) equal to marginal revenue. 
A) higher than average variable cost. 
B) equal to average total cost. 
C) less than average total cost. 
D) equal to average fixed cost. 
E) equal to marginal revenue.

Question 7

-The above figure shows a perfectly competitive firm.If the market price is $15 per unit, the firm

Accepted Answer

A) will definitely shut down to minimize its losses. 
B) will stay open to produce and will make zero economic profit. 
C) will stay open to produce and will incur an economic loss. 
D) will stay open to produce and will make an economic profit. 
E) might shut down but more information is needed about the fixed cost. 
A) will definitely shut down to minimize its losses. 
B) will stay open to produce and will make zero economic profit. 
C) will stay open to produce and will incur an economic loss. 
D) will stay open to produce and will make an economic profit. 
E) might shut down but more information is needed about the fixed cost.

Question 8

The price charged by a perfectly competitive firm is

Accepted Answer

A) the same as the market price. 
B) different than the price charged by competing firms. 
C) lower the more the firm produces. 
D) higher the more the firm produces. 
E) indeterminate. 
A) the same as the market price. 
B) different than the price charged by competing firms. 
C) lower the more the firm produces. 
D) higher the more the firm produces. 
E) indeterminate.

Question 9

A large number of sellers all selling an identical product implies which of the following?

Accepted Answer

A) market chaos 
B) the inability of any seller to change the price of the product 
C) large losses incurred by all sellers 
D) horizontal market supply curves 
E) vertical market supply curves 
A) market chaos 
B) the inability of any seller to change the price of the product 
C) large losses incurred by all sellers 
D) horizontal market supply curves 
E) vertical market supply curves

Question 10

When new firms enter a perfectly competitive market, the market supply curve shifts ________ and the price ________.

Accepted Answer

A) rightward; falls 
B) rightward; rises 
C) leftward; falls 
D) leftward; rises 
E) rightward; does not change 
A) rightward; falls 
B) rightward; rises 
C) leftward; falls 
D) leftward; rises 
E) rightward; does not change

Question 11

The firm's supply curve is its

Accepted Answer

A) marginal cost curve above the average variable cost curve. 
B) marginal cost curve below the average variable cost curve. 
C) average variable cost curve above the marginal cost curve. 
D) average total cost curve above the marginal cost curve. 
E) marginal revenue curve above the average total cost curve. 
A) marginal cost curve above the average variable cost curve. 
B) marginal cost curve below the average variable cost curve. 
C) average variable cost curve above the marginal cost curve. 
D) average total cost curve above the marginal cost curve. 
E) marginal revenue curve above the average total cost curve.

Question 12

What is a perfectly competitive firm's short-run supply curve?

Accepted Answer

A perfectly competitive firm's

Question 13

If the market price faced by a perfectly competitive firm increases, in the short run how does the firm respond?

Accepted Answer

If the market price rises, a p

Question 14

A perfectly competitive firm is a price taker because

Accepted Answer

A) many other firms produce the same product. 
B) only one firm produces the product. 
C) many firms produce a slightly differentiated product. 
D) a few firms compete. 
E) it faces a vertical demand curve. 
A) many other firms produce the same product. 
B) only one firm produces the product. 
C) many firms produce a slightly differentiated product. 
D) a few firms compete. 
E) it faces a vertical demand curve.

Question 15

Suppose a perfectly competitive market is in short-run equilibrium.Firms that are incurring a ________ economic loss ________.

Accepted Answer

A) persistent; increase their output to increase their profit 
B) temporary; exit the industry 
C) temporary; decrease their production but definitely stay open 
D) persistent; exit the industry and shift the market supply curve leftward 
E) persistent; exit the industry and shift the market supply curve rightward 
A) persistent; increase their output to increase their profit 
B) temporary; exit the industry 
C) temporary; decrease their production but definitely stay open 
D) persistent; exit the industry and shift the market supply curve leftward 
E) persistent; exit the industry and shift the market supply curve rightward

A perfectly competitive firm will maximize profit when the quantity produced is such that the

Alice, Bud, and Celia can produce rubber bands in a perfectly competitive market.If they enter the market, the minimum average total cost for a bundle of rubber bands, for the three of them is $2, $3, and $4, respectively.If the market price is $2.10 per bundle, then

-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 ATC₁, each produce 30 units, and the market price of the good is $16 per unit, then the firms

In the short run, a perfectly competitive firm can experience which of the following? I∙an economic profit Ii∙an economic loss but it continues to stay open Iii∙an economic loss equal to its total fixed cost when it shuts down

The rutabaga market is perfectly competitive.Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases.The permanent decrease in demand results in a

In the long run, perfectly competitive firms will exit the market if the price is

-The above figure shows a perfectly competitive firm.If the market price is $15 per unit, the firm

The price charged by a perfectly competitive firm is

A large number of sellers all selling an identical product implies which of the following?

When new firms enter a perfectly competitive market, the market supply curve shifts and the price .

The firm's supply curve is its

What is a perfectly competitive firm's short-run supply curve?

If the market price faced by a perfectly competitive firm increases, in the short run how does the firm respond?

A perfectly competitive firm is a price taker because

Suppose a perfectly competitive market is in short-run equilibrium.Firms that are incurring a economic loss .

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

A perfectly competitive firm will maximize profit when the quantity produced is such that the

Alice, Bud, and Celia can produce rubber bands in a perfectly competitive market.If they enter the market, the minimum average total cost for a bundle of rubber bands, for the three of them is $2, $3, and $4, respectively.If the market price is $2.10 per bundle, then

-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 ATC₁, each produce 30 units, and the market price of the good is $16 per unit, then the firms

In the short run, a perfectly competitive firm can experience which of the following? I∙an economic profit Ii∙an economic loss but it continues to stay open Iii∙an economic loss equal to its total fixed cost when it shuts down

The rutabaga market is perfectly competitive.Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases.The permanent decrease in demand results in a

In the long run, perfectly competitive firms will exit the market if the price is

-The above figure shows a perfectly competitive firm.If the market price is $15 per unit, the firm

The price charged by a perfectly competitive firm is

A large number of sellers all selling an identical product implies which of the following?

When new firms enter a perfectly competitive market, the market supply curve shifts ________ and the price ________.

The firm's supply curve is its

What is a perfectly competitive firm's short-run supply curve?

If the market price faced by a perfectly competitive firm increases, in the short run how does the firm respond?

A perfectly competitive firm is a price taker because

Suppose a perfectly competitive market is in short-run equilibrium.Firms that are incurring a ________ economic loss ________.

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

When new firms enter a perfectly competitive market, the market supply curve shifts and the price .

Suppose a perfectly competitive market is in short-run equilibrium.Firms that are incurring a economic loss .