Question 1

In a market undergoing technological change, firms that

Accepted Answer

A) adopt the new technology temporarily incur an economic loss. 
B) adopt the new technology temporarily make an economic profit. 
C) do not adopt the new technology temporarily make an economic profit. 
D) do not adopt the new technology increase their market share. 
E) do not adopt the new technology continue to make a normal profit. 
A) adopt the new technology temporarily incur an economic loss. 
B) adopt the new technology temporarily make an economic profit. 
C) do not adopt the new technology temporarily make an economic profit. 
D) do not adopt the new technology increase their market share. 
E) do not adopt the new technology continue to make a normal profit.

Question 2

A market is classified as an oligopoly when

Accepted Answer

A) a few firms compete. 
B) many firms produce a slightly differentiated product. 
C) no matter how many firms are in the market, a barrier blocks entry by other new firms. 
D) many firms produce the same product. 
E) only one firm sells a product with no close substitutes. 
A) a few firms compete. 
B) many firms produce a slightly differentiated product. 
C) no matter how many firms are in the market, a barrier blocks entry by other new firms. 
D) many firms produce the same product. 
E) only one firm sells a product with no close substitutes.

Question 3

Which of the following is true if a firm shuts down?
I∙The price is less than minimum average variable cost.
Ii∙The firm is able to avoid an economic loss.
Iii∙The firm incurs a loss equal to its total variable cost.

Accepted Answer

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

Question 4

Perfect competition is characterized by all of the following EXCEPT

Accepted Answer

A) a large number of buyers and sellers. 
B) no restrictions on entry into or exit from the industry. 
C) considerable advertising by individual firms. 
D) buyers and sellers are well informed about prices. 
E) firms produce an identical product. 
A) a large number of buyers and sellers. 
B) no restrictions on entry into or exit from the industry. 
C) considerable advertising by individual firms. 
D) buyers and sellers are well informed about prices. 
E) firms produce an identical product.

Question 5

Pineapple growing is a perfectly competitive industry.How does the market demand curve for pineapples compare to the demand curve for an individual pineapple grower?

Accepted Answer

The market demand curve for pineapples i

Question 6

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

Accepted Answer

A) is incurring an economic loss. 
B) is making an economic profit. 
C) is making zero economic profit. 
D) will immediately shut down. 
E) might shut down but more information is needed about the AVC. 
A) is incurring an economic loss. 
B) is making an economic profit. 
C) is making zero economic profit. 
D) will immediately shut down. 
E) might shut down but more information is needed about the AVC.

Question 7

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23.The firm's average total cost is $20.What is the firm's economic profit?

Accepted Answer

A) $23 
B) $150 
C) $1,000 
D) $1,150 
E) $50 
A) $23 
B) $150 
C) $1,000 
D) $1,150 
E) $50

Question 8

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

Accepted Answer

A) when it is making a normal profit 
B) whenever its marginal cost is less than its marginal revenue 
C) when the price is less than its minimum average variable cost 
D) whenever its total cost is greater than its total revenue 
E) when the price is less than its minimum average total cost 
A) when it is making a normal profit 
B) whenever its marginal cost is less than its marginal revenue 
C) when the price is less than its minimum average variable cost 
D) whenever its total cost is greater than its total revenue 
E) when the price is less than its minimum average total cost

Question 9

Why do you never see firms in a perfectly competitive market advertise their product?

Accepted Answer

Advertising has costs and benefits for t

Question 10

A firm's marginal revenue is

Accepted Answer

A) the change in total revenue that results from a one-unit increase in the quantity sold. 
B) total revenue minus total cost. 
C) the change in total revenue minus the change in total cost. 
D) the change in total revenue that results from an increase in the demand for the good or service. 
E) less than the market price for a perfectly competitive firm. 
A) the change in total revenue that results from a one-unit increase in the quantity sold. 
B) total revenue minus total cost. 
C) the change in total revenue minus the change in total cost. 
D) the change in total revenue that results from an increase in the demand for the good or service. 
E) less than the market price for a perfectly competitive firm.

Question 11

To maximize its profit, in the short run a perfectly competitive firm decides

Accepted Answer

A) what price to charge for its product. 
B) what quantity of output to produce. 
C) whether to exit the market. 
D) whether to increase the size of its plant. 
E) how much advertising it should undertake. 
A) what price to charge for its product. 
B) what quantity of output to produce. 
C) whether to exit the market. 
D) whether to increase the size of its plant. 
E) how much advertising it should undertake.

Question 12

To eliminate losses in a perfectly competitive market, firms exit the industry.This exit results in

Accepted Answer

A) an increase in market supply. 
B) a decrease in market supply. 
C) an increase in market demand. 
D) a decrease in market demand. 
E) a decrease in both the market supply and the market demand. 
A) an increase in market supply. 
B) a decrease in market supply. 
C) an increase in market demand. 
D) a decrease in market demand. 
E) a decrease in both the market supply and the market demand.

Question 13

If a perfectly competitive wheat farmer is maximizing its profit and then increases its output, the farmer's

Accepted Answer

A) total revenue increases, but total cost rises by more so that the farmer's total profit decreases. 
B) total revenue decreases and total cost increases, both thereby decreasing the farmer's total profit. 
C) total revenue does not change but total cost increases, thereby decreasing the farmer's total profit. 
D) marginal revenue increases, but so does marginal cost so that the farmer's total profit increases. 
E) total revenue and total cost both rise but the effect on the farmer's total profit is uncertain. 
A) total revenue increases, but total cost rises by more so that the farmer's total profit decreases. 
B) total revenue decreases and total cost increases, both thereby decreasing the farmer's total profit. 
C) total revenue does not change but total cost increases, thereby decreasing the farmer's total profit. 
D) marginal revenue increases, but so does marginal cost so that the farmer's total profit increases. 
E) total revenue and total cost both rise but the effect on the farmer's total profit is uncertain.

Question 14

A perfectly competitive firm definitely makes an economic profit in the short run if price is

Accepted Answer

A) equal to marginal cost. 
B) equal to average total cost. 
C) greater than average total cost. 
D) greater than marginal cost. 
E) greater than average variable cost. 
A) equal to marginal cost. 
B) equal to average total cost. 
C) greater than average total cost. 
D) greater than marginal cost. 
E) greater than average variable cost.

Question 15

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

Accepted Answer

A) greater than the marginal revenue of each rental. 
B) less than the marginal revenue of each rental. 
C) equal to the marginal revenue of each rental. 
D) equal to the price of each rental. 
E) greater than the average variable cost of each rental. 
A) greater than the marginal revenue of each rental. 
B) less than the marginal revenue of each rental. 
C) equal to the marginal revenue of each rental. 
D) equal to the price of each rental. 
E) greater than the average variable cost of each rental.

Question 16

If there are 1,000 identical rice farmers who are each willing to supply 200 bushels of rice at $2 per bushel, what price and quantity combination is a point on the market supply curve for rice?

Accepted Answer

A) $2 and 200 bushels 
B) $2 and 200,000 bushels 
C) $2,000 and 200,000 bushels 
D) $2,000 and 1,000 bushels 
E) $2 and 1,000 farmers 
A) $2 and 200 bushels 
B) $2 and 200,000 bushels 
C) $2,000 and 200,000 bushels 
D) $2,000 and 1,000 bushels 
E) $2 and 1,000 farmers

Question 17

The rutabaga market is perfectly competitive and the price of a ton of rutabagas rises.As a result, Rudy, a rutabaga farmer, will

Accepted Answer

A) decrease his output of rutabagas. 
B) not change his output of rutabagas because Rudy's firm is a price taker. 
C) increase his output of rutabagas. 
D) at first decrease and then increase his output of rutabagas. 
E) probably change his output of rutabagas, but more information is needed about the change in the marginal revenue of a ton of rutabagas. 
A) decrease his output of rutabagas. 
B) not change his output of rutabagas because Rudy's firm is a price taker. 
C) increase his output of rutabagas. 
D) at first decrease and then increase his output of rutabagas. 
E) probably change his output of rutabagas, but more information is needed about the change in the marginal revenue of a ton of rutabagas.

Question 18

A requirement of perfect competition is that
I∙many firms sell an identical product to many buyers.
Ii∙there are no restrictions on entry into (or exit from)the market, and established firms have no advantage over new firms
Iii∙sellers and buyers are well informed about prices.

Accepted Answer

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

Question 19

If the market price is lower than a perfectly competitive firm's average total cost, the firm will

Accepted Answer

A) immediately shut down. 
B) continue to produce if the price exceeds the average fixed cost. 
C) continue to produce if the price exceeds the average variable cost. 
D) shut down if the price exceeds the average fixed cost. 
E) shut down if the price is less than the average fixed cost. 
A) immediately shut down. 
B) continue to produce if the price exceeds the average fixed cost. 
C) continue to produce if the price exceeds the average variable cost. 
D) shut down if the price exceeds the average fixed cost. 
E) shut down if the price is less than the average fixed cost.

Question 20

A market is classified as monopolistically competitive when

Accepted Answer

A) there is a barrier that blocks entry by other firms. 
B) a small number of firms compete. 
C) many firms produce the same product. 
D) many firms produce a slightly differentiated product. 
E) there is one firm that sells a good or service with no close substitutes. 
A) there is a barrier that blocks entry by other firms. 
B) a small number of firms compete. 
C) many firms produce the same product. 
D) many firms produce a slightly differentiated product. 
E) there is one firm that sells a good or service with no close substitutes.

In a market undergoing technological change, firms that

A market is classified as an oligopoly when

Which of the following is true if a firm shuts down? I∙The price is less than minimum average variable cost. Ii∙The firm is able to avoid an economic loss. Iii∙The firm incurs a loss equal to its total variable cost.

Perfect competition is characterized by all of the following EXCEPT

Pineapple growing is a perfectly competitive industry.How does the market demand curve for pineapples compare to the demand curve for an individual pineapple grower?

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

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23.The firm's average total cost is $20.What is the firm's economic profit?

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

Why do you never see firms in a perfectly competitive market advertise their product?

A firm's marginal revenue is

To maximize its profit, in the short run a perfectly competitive firm decides

To eliminate losses in a perfectly competitive market, firms exit the industry.This exit results in

If a perfectly competitive wheat farmer is maximizing its profit and then increases its output, the farmer's

A perfectly competitive firm definitely makes an economic profit in the short run if price is

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

If there are 1,000 identical rice farmers who are each willing to supply 200 bushels of rice at $2 per bushel, what price and quantity combination is a point on the market supply curve for rice?

The rutabaga market is perfectly competitive and the price of a ton of rutabagas rises.As a result, Rudy, a rutabaga farmer, will

A requirement of perfect competition is that I∙many firms sell an identical product to many buyers. Ii∙there are no restrictions on entry into (or exit from)the market, and established firms have no advantage over new firms Iii∙sellers and buyers are well informed about prices.

If the market price is lower than a perfectly competitive firm's average total cost, the firm will

A market is classified as monopolistically competitive when

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

In a market undergoing technological change, firms that

A market is classified as an oligopoly when

Which of the following is true if a firm shuts down? I∙The price is less than minimum average variable cost. Ii∙The firm is able to avoid an economic loss. Iii∙The firm incurs a loss equal to its total variable cost.

Perfect competition is characterized by all of the following EXCEPT

Pineapple growing is a perfectly competitive industry.How does the market demand curve for pineapples compare to the demand curve for an individual pineapple grower?

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

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23.The firm's average total cost is $20.What is the firm's economic profit?

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

Why do you never see firms in a perfectly competitive market advertise their product?

A firm's marginal revenue is

To maximize its profit, in the short run a perfectly competitive firm decides

To eliminate losses in a perfectly competitive market, firms exit the industry.This exit results in

If a perfectly competitive wheat farmer is maximizing its profit and then increases its output, the farmer's

A perfectly competitive firm definitely makes an economic profit in the short run if price is

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

If there are 1,000 identical rice farmers who are each willing to supply 200 bushels of rice at $2 per bushel, what price and quantity combination is a point on the market supply curve for rice?

The rutabaga market is perfectly competitive and the price of a ton of rutabagas rises.As a result, Rudy, a rutabaga farmer, will

A requirement of perfect competition is that I∙many firms sell an identical product to many buyers. Ii∙there are no restrictions on entry into (or exit from)the market, and established firms have no advantage over new firms Iii∙sellers and buyers are well informed about prices.

If the market price is lower than a perfectly competitive firm's average total cost, the firm will

A market is classified as monopolistically competitive when

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