Question 1

A perfectly competitive firm will shut down when the price is just below the minimum point on the

Accepted Answer

A) average fixed cost curve. 
B) average total cost curve. 
C) marginal cost curve. 
D) average variable cost curve. 
E) marginal revenue curve. 
A) average fixed cost curve. 
B) average total cost curve. 
C) marginal cost curve. 
D) average variable cost curve. 
E) marginal revenue curve.

Question 2

-The above figure shows a perfectly competitive firm.If the market price is $20 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 3

What is the difference between perfect competition and monopolistic competition?

Accepted Answer

A) Perfect competition has a large number of small firms while monopolistic competition does not. 
B) Perfect competition has barriers to entry while monopolistic competition does not. 
C) Perfect competition has no barriers to entry, while monopolistic competition does. 
D) In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods. 
E) In monopolistic competition, firms produce identical goods, while in perfect competition, firms produce slightly different goods. 
A) Perfect competition has a large number of small firms while monopolistic competition does not. 
B) Perfect competition has barriers to entry while monopolistic competition does not. 
C) Perfect competition has no barriers to entry, while monopolistic competition does. 
D) In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods. 
E) In monopolistic competition, firms produce identical goods, while in perfect competition, firms produce slightly different goods.

Question 4

If the price received by a perfectly competitive firm is less than its average variable cost, what will the firm do in the short run? Why?

Accepted Answer

If the price is less than the average va

Question 5

A perfectly competitive firm

Accepted Answer

A) sells a product that has perfect substitutes. 
B) has a perfectly inelastic demand. 
C) has a perfectly elastic supply. 
D) Answers A and B are correct. 
E) Answers A and C are correct. 
A) sells a product that has perfect substitutes. 
B) has a perfectly inelastic demand. 
C) has a perfectly elastic supply. 
D) Answers A and B are correct. 
E) Answers A and C are correct.

Question 6

In the long run, a perfectly competitive firm makes zero economic profit.What incentive does the firm have to stay in business if it is making zero economic profit?

Accepted Answer

Zero economic profits do not mean no pro

Question 7

A monopoly occurs when

Accepted Answer

A) each of many firms produces a product that is slightly different from that of the other firms. 
B) one firm sells a good that has no close substitutes and a barrier blocks entry for other firms. 
C) there are many firms producing the same product. 
D) a few firms control the market. 
E) one firm is larger than the many other firms that make an identical product. 
A) each of many firms produces a product that is slightly different from that of the other firms. 
B) one firm sells a good that has no close substitutes and a barrier blocks entry for other firms. 
C) there are many firms producing the same product. 
D) a few firms control the market. 
E) one firm is larger than the many other firms that make an identical product.

Question 8

________ a large number of firms competing by making similar but slightly different products.

Accepted Answer

A) Monopoly requires 
B) Perfect competition requires 
C) Monopolistic competition requires 
D) Oligopoly requires 
E) Both perfect competition and monopolistic competition require 
A) Monopoly requires 
B) Perfect competition requires 
C) Monopolistic competition requires 
D) Oligopoly requires 
E) Both perfect competition and monopolistic competition require

Question 9

If perfectly firms are making an economic profit, the economic profit

Accepted Answer

A) attracts entry by more firms, which lowers the price. 
B) can be earned both in the short run and the long run. 
C) is less than the normal profit. 
D) leads to a decrease in market demand. 
E) generally leads to firms exiting as they seek higher profit in other markets. 
A) attracts entry by more firms, which lowers the price. 
B) can be earned both in the short run and the long run. 
C) is less than the normal profit. 
D) leads to a decrease in market demand. 
E) generally leads to firms exiting as they seek higher profit in other markets.

Question 10

A perfectly competitive firm should shut down in the short-run if price falls below the minimum of

Accepted Answer

A) marginal cost. 
B) marginal revenue. 
C) average total cost. 
D) fixed costs. 
E) average variable costs. 
A) marginal cost. 
B) marginal revenue. 
C) average total cost. 
D) fixed costs. 
E) average variable costs.

Question 11

When firms in a perfectly competitive market are earning an economic profit, in the long run

Accepted Answer

A) no new firms will enter the market. 
B) new firms will enter the market. 
C) firms will exit the market. 
D) the long-run average cost curve shifts downward. 
E) the initial firms continue to earn an economic profit. 
A) no new firms will enter the market. 
B) new firms will enter the market. 
C) firms will exit the market. 
D) the long-run average cost curve shifts downward. 
E) the initial firms continue to earn an economic profit.

Question 12

A perfectly competitive market is in equilibrium and then demand decreases.The decrease in demand means the market price will ________ and eventually there will be ________.

Accepted Answer

A) rise; entry by new firms 
B) fall; exit by existing firms 
C) fall; entry by new firms 
D) rise; exit by existing firms 
E) fall; neither entry nor exit because the market is perfectly competitive 
A) rise; entry by new firms 
B) fall; exit by existing firms 
C) fall; entry by new firms 
D) rise; exit by existing firms 
E) fall; neither entry nor exit because the market is perfectly competitive

Question 13

The market for watermelons in Alabama is perfectly competitive.A watermelon producer making zero economic profit could make an economic profit if the

Accepted Answer

A) average total cost of selling watermelons does not change. 
B) average total cost of selling watermelons rises. 
C) average total cost of selling watermelons falls. 
D) marginal cost of selling watermelons does not change. 
E) marginal cost of selling watermelons rises. 
A) average total cost of selling watermelons does not change. 
B) average total cost of selling watermelons rises. 
C) average total cost of selling watermelons falls. 
D) marginal cost of selling watermelons does not change. 
E) marginal cost of selling watermelons rises.

Question 14

The table below gives Amy's total cost schedule for producing holiday wreaths.Amy is a perfect competitor and can sell each wreath for $9.
a∙Complete the table by calculating Amy's total revenue and her profit or loss schedule.
   
b∙When Amy is producing 4 wreaths, what is her total cost? What is her total revenue? What is her economic profit or economic loss?
c∙What number of wreaths maximizes Amy's profit?

Accepted Answer

@#IMG-DLM& 
a∙The completed table is above.
b∙When

Question 15

What four conditions define a perfectly competitive market?

Accepted Answer

The four conditions are that:
a∙many fir

Question 16

If a perfectly competitive seller is maximizing profit and is making zero economic profit, which of the following will this seller do?

Accepted Answer

A) go to work in the next-best earning opportunity 
B) shut down, with a loss equal to total fixed cost 
C) continue at the current output, making zero economic profit 
D) increase production in order to make an economic profit 
E) remain open but decrease production in order to make an economic profit 
A) go to work in the next-best earning opportunity 
B) shut down, with a loss equal to total fixed cost 
C) continue at the current output, making zero economic profit 
D) increase production in order to make an economic profit 
E) remain open but decrease production in order to make an economic profit

Question 17

If a perfectly competitive firm raised the price of its product,

Accepted Answer

A) its profits would increase. 
B) the quantity of output it sells decreases to zero. 
C) rival firms will follow suit and raise their prices also. 
D) the firm will be forced to advertise more. 
E) its total revenue would rise but its total cost would rise by more. 
A) its profits would increase. 
B) the quantity of output it sells decreases to zero. 
C) rival firms will follow suit and raise their prices also. 
D) the firm will be forced to advertise more. 
E) its total revenue would rise but its total cost would rise by more.

Question 18

-In the above, a marginal revenue curve for a perfectly competitive firm is shown in Figure ________.

Accepted Answer

A) W 
B) X 
C) Y 
D) Z 
E) X and Figure Z 
A) W 
B) X 
C) Y 
D) Z 
E) X and Figure Z

Question 19

The four market types are

Accepted Answer

A) perfect competition, imperfect competition, monopoly, and oligopoly. 
B) oligopoly, monopsony, monopoly, and imperfect competition. 
C) perfect competition, monopoly, monopolistic competition, and oligopoly. 
D) oligopoly, oligopolistic competition, monopoly, and perfect competition. 
E) perfect competition, imperfect competition, monopoly, and duopoly. 
A) perfect competition, imperfect competition, monopoly, and oligopoly. 
B) oligopoly, monopsony, monopoly, and imperfect competition. 
C) perfect competition, monopoly, monopolistic competition, and oligopoly. 
D) oligopoly, oligopolistic competition, monopoly, and perfect competition. 
E) perfect competition, imperfect competition, monopoly, and duopoly.

Question 20

In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy?

Accepted Answer

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

A perfectly competitive firm will shut down when the price is just below the minimum point on the

-The above figure shows a perfectly competitive firm.If the market price is $20 per unit, the firm

What is the difference between perfect competition and monopolistic competition?

If the price received by a perfectly competitive firm is less than its average variable cost, what will the firm do in the short run? Why?

A perfectly competitive firm

In the long run, a perfectly competitive firm makes zero economic profit.What incentive does the firm have to stay in business if it is making zero economic profit?

A monopoly occurs when

________ a large number of firms competing by making similar but slightly different products.

If perfectly firms are making an economic profit, the economic profit

A perfectly competitive firm should shut down in the short-run if price falls below the minimum of

When firms in a perfectly competitive market are earning an economic profit, in the long run

A perfectly competitive market is in equilibrium and then demand decreases.The decrease in demand means the market price will and eventually there will be .

The market for watermelons in Alabama is perfectly competitive.A watermelon producer making zero economic profit could make an economic profit if the

What four conditions define a perfectly competitive market?

If a perfectly competitive seller is maximizing profit and is making zero economic profit, which of the following will this seller do?

If a perfectly competitive firm raised the price of its product,

-In the above, a marginal revenue curve for a perfectly competitive firm is shown in Figure ________.

The four market types are

In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy?

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 shut down when the price is just below the minimum point on the

-The above figure shows a perfectly competitive firm.If the market price is $20 per unit, the firm

What is the difference between perfect competition and monopolistic competition?

If the price received by a perfectly competitive firm is less than its average variable cost, what will the firm do in the short run? Why?

A perfectly competitive firm

In the long run, a perfectly competitive firm makes zero economic profit.What incentive does the firm have to stay in business if it is making zero economic profit?

A monopoly occurs when

________ a large number of firms competing by making similar but slightly different products.

If perfectly firms are making an economic profit, the economic profit

A perfectly competitive firm should shut down in the short-run if price falls below the minimum of

When firms in a perfectly competitive market are earning an economic profit, in the long run

A perfectly competitive market is in equilibrium and then demand decreases.The decrease in demand means the market price will ________ and eventually there will be ________.

The market for watermelons in Alabama is perfectly competitive.A watermelon producer making zero economic profit could make an economic profit if the

What four conditions define a perfectly competitive market?

If a perfectly competitive seller is maximizing profit and is making zero economic profit, which of the following will this seller do?

If a perfectly competitive firm raised the price of its product,

-In the above, a marginal revenue curve for a perfectly competitive firm is shown in Figure ________.

The four market types are

In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy?

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

A perfectly competitive market is in equilibrium and then demand decreases.The decrease in demand means the market price will and eventually there will be .