Question 1

The firm in the figure above has a total cost equal to ________.

Accepted Answer

A) $5.14 × 7 
B) $3.00 × 7 
C) ($5.14 - $3.00)× 7 
D) ($3.00 - $5.14)× 7 
E) None of the above answers are correct because more information is needed. 
A) $5.14 × 7 
B) $3.00 × 7 
C) ($5.14 - $3.00)× 7 
D) ($3.00 - $5.14)× 7 
E) None of the above answers are correct because more information is needed.

Question 2

The largest loss a profit-maximizing perfectly competitive firm can incur in the short run equals its

Accepted Answer

A) average variable cost multiplied by output. 
B) total fixed cost. 
C) marginal cost multiplied by the number of units produced. 
D) average total cost multiplied by the number of units produced. 
E) total variable cost. 
A) average variable cost multiplied by output. 
B) total fixed cost. 
C) marginal cost multiplied by the number of units produced. 
D) average total cost multiplied by the number of units produced. 
E) total variable cost.

Question 3

The cranberry market is perfectly competitive.Reports that consuming cranberries can lead to improved health result in a permanent increase in the demand for cranberries and an immediate upward jump in the price of cranberries.As time passes, the price of cranberries ________ and the initial firms' economic ________.

Accepted Answer

A) falls; profit will be eliminated 
B) rises still higher; loss will be eliminated 
C) rises still higher; profit will not change 
D) falls; loss will be increased 
E) falls; profit will not change 
A) falls; profit will be eliminated 
B) rises still higher; loss will be eliminated 
C) rises still higher; profit will not change 
D) falls; loss will be increased 
E) falls; profit will not change

Question 4

For a perfectly competitive syrup producer whose average total cost curve does not change, an economic profit could turn into an economic loss if the

Accepted Answer

A) market demand for syrup decreases. 
B) marginal cost curve shifts downward. 
C) market demand for syrup does not change. 
D) market demand for syrup increases. 
E) price of syrup rises. 
A) market demand for syrup decreases. 
B) marginal cost curve shifts downward. 
C) market demand for syrup does not change. 
D) market demand for syrup increases. 
E) price of syrup rises.

Question 5

Marginal revenue is

Accepted Answer

A) the change in total revenue from a one-unit increase in the quantity sold. 
B) another name for total revenue. 
C) the change in total cost from producing an additional unit of output. 
D) the economic profit from producing an additional unit of output. 
E) less than price for a perfectly competitive firm. 
A) the change in total revenue from a one-unit increase in the quantity sold. 
B) another name for total revenue. 
C) the change in total cost from producing an additional unit of output. 
D) the economic profit from producing an additional unit of output. 
E) less than price for a perfectly competitive firm.

Question 6

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

Accepted Answer

If a firm produces at a level where marg

Question 7

The U.S.oil industry has only a few firms in it, so an economists is likely to describe the industry as

Accepted Answer

A) a monopoly. 
B) an oligopoly. 
C) perfectly competitive. 
D) monopolistically competitive. 
E) Both answers C and D can be correct. 
A) a monopoly. 
B) an oligopoly. 
C) perfectly competitive. 
D) monopolistically competitive. 
E) Both answers C and D can be correct.

Question 8

In the long run, perfectly competitive firms cannot make an economic profit.Why?

Accepted Answer

An economic profit attracts entry by new

Question 9

One requirement for an industry to be perfectly competitive is that

Accepted Answer

A) sellers and buyers have imperfect information about prices. 
B) established firms have no advantage over new firms. 
C) established firms have a significant advantage over new firms. 
D) different firms produce widely different products. 
E) many firms produce slightly different products. 
A) sellers and buyers have imperfect information about prices. 
B) established firms have no advantage over new firms. 
C) established firms have a significant advantage over new firms. 
D) different firms produce widely different products. 
E) many firms produce slightly different products.

Question 10

In the long run, a firm in a perfectly competitive market will

Accepted Answer

A) make zero economic profit, so that its owners earn a normal profit. 
B) make zero normal profit but its owners will make an economic profit. 
C) remove all competitors and become a monopolistically competitive firm. 
D) incur an economic normal loss but not earn a positive economic profit. 
E) remove all competitors and become a monopoly. 
A) make zero economic profit, so that its owners earn a normal profit. 
B) make zero normal profit but its owners will make an economic profit. 
C) remove all competitors and become a monopolistically competitive firm. 
D) incur an economic normal loss but not earn a positive economic profit. 
E) remove all competitors and become a monopoly.

Question 11

When new firms enter the perfectly competitive Miami bagel market, the market

Accepted Answer

A) supply curve shifts leftward. 
B) supply curve does not change. 
C) demand curve shifts rightward. 
D) supply curve shifts rightward. 
E) demand curve shifts leftward. 
A) supply curve shifts leftward. 
B) supply curve does not change. 
C) demand curve shifts rightward. 
D) supply curve shifts rightward. 
E) demand curve shifts leftward.

Question 12

For a perfectly competitive corn grower in Nebraska, the marginal revenue curve is

Accepted Answer

A) downward sloping. 
B) the same as its demand curve. 
C) upward sloping. 
D) U-shaped. 
E) vertical at the profit maximizing quantity of production. 
A) downward sloping. 
B) the same as its demand curve. 
C) upward sloping. 
D) U-shaped. 
E) vertical at the profit maximizing quantity of production.

Question 13

If the technology associated with producing fiber-optic cable continues to advance, over time the cost of producing fiber-optic cable will

Accepted Answer

A) decrease, firms that use the new technology will make an economic profit, and in the long run new firms will enter the market. 
B) decrease, firms that use the new technology will incur an economic loss, and in the long run some firms will exit the industry. 
C) increase, firms that use the new technology will make an economic profit, and in the long run new firms will enter the market. 
D) increase, firms that use the new technology will incur an economic loss, and in the long run some firms will exit the industry. 
E) decrease, firms that do not use the new technology will make an economic profit, and in the long run new firms will enter the market. 
A) decrease, firms that use the new technology will make an economic profit, and in the long run new firms will enter the market. 
B) decrease, firms that use the new technology will incur an economic loss, and in the long run some firms will exit the industry. 
C) increase, firms that use the new technology will make an economic profit, and in the long run new firms will enter the market. 
D) increase, firms that use the new technology will incur an economic loss, and in the long run some firms will exit the industry. 
E) decrease, firms that do not use the new technology will make an economic profit, and in the long run new firms will enter the market.

Question 14

In which market structure does one firm sell a good or service with no close substitutes and there is a barrier blocking the entry of new firms?

Accepted Answer

A) only monopoly 
B) only oligopoly 
C) perfect competition 
D) monopolistic competition 
E) either monopoly or oligopoly 
A) only monopoly 
B) only oligopoly 
C) perfect competition 
D) monopolistic competition 
E) either monopoly or oligopoly

Question 15

A market in which many firms sell identical products is

Accepted Answer

A) a monopoly. 
B) an oligopoly. 
C) only perfectly competition. 
D) only monopolistic competition. 
E) both perfect competition and monopolistic competition. 
A) a monopoly. 
B) an oligopoly. 
C) only perfectly competition. 
D) only monopolistic competition. 
E) both perfect competition and monopolistic competition.

Question 16

Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10.In the long run, definitely

Accepted Answer

A) each firm increases its production above 1,000 units. 
B) the number of firms is more than 10,000. 
C) consumer surplus decreases. 
D) producer surplus increases. 
E) the number of firms is less than 10,000. 
A) each firm increases its production above 1,000 units. 
B) the number of firms is more than 10,000. 
C) consumer surplus decreases. 
D) producer surplus increases. 
E) the number of firms is less than 10,000.

Question 17

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

Accepted Answer

A) 0 
B) more than 0 and less than 5 
C) 5 or more but less than 10 
D) 10 
E) more than 10 
A) 0 
B) more than 0 and less than 5 
C) 5 or more but less than 10 
D) 10 
E) more than 10

Question 18

Is the number of sellers in the market the only thing that is different in each of the four market types economists study?

Accepted Answer

No, the number of sellers is not the onl

Question 19

If a perfectly competitive firm is maximizing its profit and is making an economic profit, which of the following is correct?
I∙Price equals marginal revenue.
Ii∙Marginal revenue equals marginal cost.
Iii∙Price is greater than average total cost.

Accepted Answer

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

Question 20

-Pete is a perfectly competitive rose grower.The above table gives quantities and the price for which Pete can sell his roses.
a∙What is Pete's total revenue if he sells 1 dozen roses? 2 dozen roses? 3 dozen roses? 4 dozen roses?
b∙What is the marginal revenue of the 2nd dozen roses sold? Of the 3rd dozen? Of the 4th dozen?

Accepted Answer

a∙The total revenue when 1 dozen roses i

The firm in the figure above has a total cost equal to ________.

The largest loss a profit-maximizing perfectly competitive firm can incur in the short run equals its

For a perfectly competitive syrup producer whose average total cost curve does not change, an economic profit could turn into an economic loss if the

Marginal revenue is

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

The U.S.oil industry has only a few firms in it, so an economists is likely to describe the industry as

In the long run, perfectly competitive firms cannot make an economic profit.Why?

One requirement for an industry to be perfectly competitive is that

In the long run, a firm in a perfectly competitive market will

When new firms enter the perfectly competitive Miami bagel market, the market

For a perfectly competitive corn grower in Nebraska, the marginal revenue curve is

If the technology associated with producing fiber-optic cable continues to advance, over time the cost of producing fiber-optic cable will

In which market structure does one firm sell a good or service with no close substitutes and there is a barrier blocking the entry of new firms?

A market in which many firms sell identical products is

Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10.In the long run, definitely

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

Is the number of sellers in the market the only thing that is different in each of the four market types economists study?

If a perfectly competitive firm is maximizing its profit and is making an economic profit, which of the following is correct? I∙Price equals marginal revenue. Ii∙Marginal revenue equals marginal cost. Iii∙Price is greater than average total cost.

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

The firm in the figure above has a total cost equal to ________.

The largest loss a profit-maximizing perfectly competitive firm can incur in the short run equals its

For a perfectly competitive syrup producer whose average total cost curve does not change, an economic profit could turn into an economic loss if the

Marginal revenue is

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

The U.S.oil industry has only a few firms in it, so an economists is likely to describe the industry as

In the long run, perfectly competitive firms cannot make an economic profit.Why?

One requirement for an industry to be perfectly competitive is that

In the long run, a firm in a perfectly competitive market will

When new firms enter the perfectly competitive Miami bagel market, the market

For a perfectly competitive corn grower in Nebraska, the marginal revenue curve is

If the technology associated with producing fiber-optic cable continues to advance, over time the cost of producing fiber-optic cable will

In which market structure does one firm sell a good or service with no close substitutes and there is a barrier blocking the entry of new firms?

A market in which many firms sell identical products is

Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10.In the long run, definitely

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

Is the number of sellers in the market the only thing that is different in each of the four market types economists study?

If a perfectly competitive firm is maximizing its profit and is making an economic profit, which of the following is correct? I∙Price equals marginal revenue. Ii∙Marginal revenue equals marginal cost. Iii∙Price is greater than average total cost.

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