Question 1

In the short run, a perfectly competitive firm ________ make an economic profit and ________ incur an economic loss.

Accepted Answer

A) might; will never 
B) will never; might 
C) might; might 
D) will never; will never 
E) will definitely; will never 
A) might; will never 
B) will never; might 
C) might; might 
D) will never; will never 
E) will definitely; will never

Question 2

In a perfectly competitive industry,
I∙entry by new firms shifts the market supply curve rightward.
Ii∙exit by existing firms shifts the market supply curve leftward.
Iii∙at all times existing firms make only zero economic profit.

Accepted Answer

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

Question 3

For a perfectly competitive palm tree nursery in South Carolina, the total revenue curve is

Accepted Answer

A) downward sloping. 
B) a horizontal line. 
C) upward sloping. 
D) U-shaped. 
E) undefined because the firm is perfectly competitive. 
A) downward sloping. 
B) a horizontal line. 
C) upward sloping. 
D) U-shaped. 
E) undefined because the firm is perfectly competitive.

Question 4

In the short run, a perfectly competitive firm

Accepted Answer

A) must make an economic profit. 
B) must incur an economic loss. 
C) must make zero economic profit. 
D) might make an economic profit, zero economic profit, or incur an economic loss. 
E) None of the above answers is correct. 
A) must make an economic profit. 
B) must incur an economic loss. 
C) must make zero economic profit. 
D) might make an economic profit, zero economic profit, or incur an economic loss. 
E) None of the above answers is correct.

Question 5

For a perfectly competitive firm, profit is maximized at the output level where
I∙total revenue exceeds total cost by the largest amount.
Ii∙marginal revenue equals marginal cost.
Iii∙price equals marginal cost.

Accepted Answer

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

Question 6

Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?

Accepted Answer

A) if the total revenue exceeds the total fixed cost 
B) if the total revenue exceeds the total variable cost 
C) if the total revenue is positive 
D) if the total revenue is increasing 
E) if the marginal revenue exceeds the price. 
A) if the total revenue exceeds the total fixed cost 
B) if the total revenue exceeds the total variable cost 
C) if the total revenue is positive 
D) if the total revenue is increasing 
E) if the marginal revenue exceeds the price.

Question 7

Suppose that marginal revenue for a perfectly competitive firm is $20 .When the firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17.Then to maximize its profit in the short run, the firm

Accepted Answer

A) should stay open and incur an economic loss of $20. 
B) must increase its output to increase its profit. 
C) must decrease its output to increase its profit. 
D) should shut down. 
E) should not change its production because it is already maximizing its profit and is making an economic profit. 
A) should stay open and incur an economic loss of $20. 
B) must increase its output to increase its profit. 
C) must decrease its output to increase its profit. 
D) should shut down. 
E) should not change its production because it is already maximizing its profit and is making an economic profit.

Question 8

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

Accepted Answer

A) loss; $800 per week 
B) profit; $1,280 per week 
C) profit; $480 per week 
D) loss; $1,280 per week 
E) profit; $32 per week 
A) loss; $800 per week 
B) profit; $1,280 per week 
C) profit; $480 per week 
D) loss; $1,280 per week 
E) profit; $32 per week

Question 9

If perfectly competitive lawn care firms are making an economic profit, then

Accepted Answer

A) wages will be bid up until the economic profit are gone. 
B) the firms must be superior and will continue to make an economic profit. 
C) new firms will enter the industry. 
D) they are not equating marginal revenue to marginal cost. 
E) government regulation will be imposed to decrease their profit. 
A) wages will be bid up until the economic profit are gone. 
B) the firms must be superior and will continue to make an economic profit. 
C) new firms will enter the industry. 
D) they are not equating marginal revenue to marginal cost. 
E) government regulation will be imposed to decrease their profit.

Question 10

-In a perfectly competitive industry, when a firm is producing so that its total revenue equals its total cost, the firm is

Accepted Answer

A) making an economic profit. 
B) incurring an economic loss. 
C) making zero economic profit. 
D) definitely not maximizing its profit. 
E) None of the above answers is correct because the relationship between total revenue and total cost has nothing to do with the firm's profit or loss. 
A) making an economic profit. 
B) incurring an economic loss. 
C) making zero economic profit. 
D) definitely not maximizing its profit. 
E) None of the above answers is correct because the relationship between total revenue and total cost has nothing to do with the firm's profit or loss.

Question 11

The firm in the figure above is ________ that is equal to ________.

Accepted Answer

A) making an economic profit; $5.14 × 7 
B) making an economic profit; $3.00 × 7 
C) incurring an economic loss; $5.14 × 7 
D) incurring an economic loss; ($5.14 - $3.00)× 7 
E) making an economic profit; ($5.14 - $3.00)× 7 
A) making an economic profit; $5.14 × 7 
B) making an economic profit; $3.00 × 7 
C) incurring an economic loss; $5.14 × 7 
D) incurring an economic loss; ($5.14 - $3.00)× 7 
E) making an economic profit; ($5.14 - $3.00)× 7

Question 12

A perfectly competitive market arises when

Accepted Answer

A) the market demand is small relative to the output of a firm. 
B) there are many buyers but few sellers. 
C) the market demand is very large relative to the output of one seller. 
D) a firm has control over a unique resource. 
E) each of the many firms produces a slightly different product. 
A) the market demand is small relative to the output of a firm. 
B) there are many buyers but few sellers. 
C) the market demand is very large relative to the output of one seller. 
D) a firm has control over a unique resource. 
E) each of the many firms produces a slightly different product.

Question 13

-As a perfectly competitive firm produces more and more of a good, its economic profit

Accepted Answer

A) constantly increases. 
B) constantly decreases. 
C) first decreases, then increases. 
D) first increases, then decreases. 
E) does not change. 
A) constantly increases. 
B) constantly decreases. 
C) first decreases, then increases. 
D) first increases, then decreases. 
E) does not change.

Question 14

Suppose a perfectly competitive market is in a short-run equilibrium.If some firms exit the market, the profit of the remaining firms ________; if some firms enter the market, the profit of each existing firm ________.

Accepted Answer

A) decreases; is unchanged 
B) increases; decreases 
C) increases; is unchanged 
D) is unchanged; is unchanged 
E) decreases; increases 
A) decreases; is unchanged 
B) increases; decreases 
C) increases; is unchanged 
D) is unchanged; is unchanged 
E) decreases; increases

Question 15

When a firm adopts new technology, generally its

Accepted Answer

A) cost curves shift upward. 
B) cost curves shift downward. 
C) cost curves are unaffected. 
D) supply curve shifts leftward. 
E) production permanently decreases. 
A) cost curves shift upward. 
B) cost curves shift downward. 
C) cost curves are unaffected. 
D) supply curve shifts leftward. 
E) production permanently decreases.

Question 16

Which of the following will increase a perfectly competitive seller's short-run supply and shift the firm's short-run supply curve rightward?

Accepted Answer

A) an increase in the market price 
B) a decrease in average fixed costs 
C) a decrease in marginal cost 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) an increase in the market price 
B) a decrease in average fixed costs 
C) a decrease in marginal cost 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 17

-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.At this price, how many lawns will Bill mow per week?

Accepted Answer

A) more than 10 and less than 30 
B) 30 
C) 40 
D) 50 
E) 0 
A) more than 10 and less than 30 
B) 30 
C) 40 
D) 50 
E) 0

Question 18

The figure above shows a firm's total revenue and total cost curves.
-To maximize its profit, the firm in the figure above produces ________ cans per day and ________.

Accepted Answer

A) 0; incurs an economic loss of less than $20 
B) between 3 to 5 cans; earns a normal profit 
C) 10; earns an economic profit of $2.90 
D) 10; earns an economic profit of $29 
E) more than 10; earns an economic profit 
A) 0; incurs an economic loss of less than $20 
B) between 3 to 5 cans; earns a normal profit 
C) 10; earns an economic profit of $2.90 
D) 10; earns an economic profit of $29 
E) more than 10; earns an economic profit

Question 19

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 total cost?

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 20

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry, then

Accepted Answer

A) consumer surplus decreases. 
B) the existing firms' economic profit decreases. 
C) there must be external benefits to consumption of the good. 
D) the new firms must incur an economic loss. 
E) Both answers A and B are correct. 
A) consumer surplus decreases. 
B) the existing firms' economic profit decreases. 
C) there must be external benefits to consumption of the good. 
D) the new firms must incur an economic loss. 
E) Both answers A and B are correct.

In the short run, a perfectly competitive firm make an economic profit and incur an economic loss.

In a perfectly competitive industry, I∙entry by new firms shifts the market supply curve rightward. Ii∙exit by existing firms shifts the market supply curve leftward. Iii∙at all times existing firms make only zero economic profit.

For a perfectly competitive palm tree nursery in South Carolina, the total revenue curve is

In the short run, a perfectly competitive firm

For a perfectly competitive firm, profit is maximized at the output level where I∙total revenue exceeds total cost by the largest amount. Ii∙marginal revenue equals marginal cost. Iii∙price equals marginal cost.

Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?

Suppose that marginal revenue for a perfectly competitive firm is $20 .When the firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17.Then to maximize its profit in the short run, the firm

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

If perfectly competitive lawn care firms are making an economic profit, then

-In a perfectly competitive industry, when a firm is producing so that its total revenue equals its total cost, the firm is

The firm in the figure above is that is equal to .

A perfectly competitive market arises when

-As a perfectly competitive firm produces more and more of a good, its economic profit

Suppose a perfectly competitive market is in a short-run equilibrium.If some firms exit the market, the profit of the remaining firms ; if some firms enter the market, the profit of each existing firm .

When a firm adopts new technology, generally its

Which of the following will increase a perfectly competitive seller's short-run supply and shift the firm's short-run supply curve rightward?

-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.At this price, how many lawns will Bill mow per week?

The figure above shows a firm's total revenue and total cost curves. -To maximize its profit, the firm in the figure above produces cans per day and .

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 total cost?

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry, then

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 the short run, a perfectly competitive firm ________ make an economic profit and ________ incur an economic loss.

In a perfectly competitive industry, I∙entry by new firms shifts the market supply curve rightward. Ii∙exit by existing firms shifts the market supply curve leftward. Iii∙at all times existing firms make only zero economic profit.

For a perfectly competitive palm tree nursery in South Carolina, the total revenue curve is

In the short run, a perfectly competitive firm

For a perfectly competitive firm, profit is maximized at the output level where I∙total revenue exceeds total cost by the largest amount. Ii∙marginal revenue equals marginal cost. Iii∙price equals marginal cost.

Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?

Suppose that marginal revenue for a perfectly competitive firm is $20 .When the firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17.Then to maximize its profit in the short run, the firm

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

If perfectly competitive lawn care firms are making an economic profit, then

-In a perfectly competitive industry, when a firm is producing so that its total revenue equals its total cost, the firm is

The firm in the figure above is ________ that is equal to ________.

A perfectly competitive market arises when

-As a perfectly competitive firm produces more and more of a good, its economic profit

Suppose a perfectly competitive market is in a short-run equilibrium.If some firms exit the market, the profit of the remaining firms ________; if some firms enter the market, the profit of each existing firm ________.

When a firm adopts new technology, generally its

Which of the following will increase a perfectly competitive seller's short-run supply and shift the firm's short-run supply curve rightward?

-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.At this price, how many lawns will Bill mow per week?

The figure above shows a firm's total revenue and total cost curves. -To maximize its profit, the firm in the figure above produces ________ cans per day and ________.

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 total cost?

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry, then

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

In the short run, a perfectly competitive firm make an economic profit and incur an economic loss.

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

The firm in the figure above is that is equal to .

Suppose a perfectly competitive market is in a short-run equilibrium.If some firms exit the market, the profit of the remaining firms ; if some firms enter the market, the profit of each existing firm .

The figure above shows a firm's total revenue and total cost curves. -To maximize its profit, the firm in the figure above produces cans per day and .