Question 1

If a perfectly competitive firm manufacturing chairs produces 100 more chairs, what happens to the market price of a chair?

Accepted Answer

The price will not change.Any one perfec

Question 2

If the market price is $50 for a unit of a good produced in a perfectly competitive market and the firm's minimum average variable cost is $52, then to maximize its profit (or minimize its loss)the firm should

Accepted Answer

A) definitely produce the unit. 
B) shut down. 
C) not produce the unit but remain open. 
D) not produce the unit. Whether the firm should shut down or remain open cannot be determined without more information. 
E) produce the unit only if the price exceeds the average fixed cost. 
A) definitely produce the unit. 
B) shut down. 
C) not produce the unit but remain open. 
D) not produce the unit. Whether the firm should shut down or remain open cannot be determined without more information. 
E) produce the unit only if the price exceeds the average fixed cost.

Question 3

Technological change brings a ________ to firms that adopt the new technology.

Accepted Answer

A) permanent economic profit 
B) temporary economic profit 
C) permanent economic loss 
D) temporary economic loss 
E) temporary normal profit 
A) permanent economic profit 
B) temporary economic profit 
C) permanent economic loss 
D) temporary economic loss 
E) temporary normal profit

Question 4

Each firm in a perfectly competitive industry

Accepted Answer

A) produces a good that is slightly different from that of the other firms. 
B) produces a good that is identical to that of the other firms. 
C) attains economies of scale so that its efficient size is large compared to the market as a whole. 
D) has control over at least one unique resource to separate themselves from their competitors. 
E) has an important influence on the market price of the good or service being produced. 
A) produces a good that is slightly different from that of the other firms. 
B) produces a good that is identical to that of the other firms. 
C) attains economies of scale so that its efficient size is large compared to the market as a whole. 
D) has control over at least one unique resource to separate themselves from their competitors. 
E) has an important influence on the market price of the good or service being produced.

Question 5

-The above figure shows a perfectly competitive firm.If the market price is $10, 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 6

In part, perfect competition arises if
I∙each firm's minimum efficient scale is large relative to demand.
Ii∙each firm produces a good or service identical to those produced by its many competitors.
Iii∙there are significant barriers to entry.

Accepted Answer

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

Question 7

If concerns about mad-cow disease impose economic losses on the perfectly competitive cattle ranchers, exit by the ranchers combined with no further changes in the demand for beef will force the price of beef to

Accepted Answer

A) decrease. 
B) not change. 
C) increase. 
D) fluctuate, with the trend being lower prices. 
E) probably change, but more information about the market supply of beef is needed to answer the question. 
A) decrease. 
B) not change. 
C) increase. 
D) fluctuate, with the trend being lower prices. 
E) probably change, but more information about the market supply of beef is needed to answer the question.

Question 8

-The above figure illustrates a perfectly competitive wheat farmer.
a∙What will be the firm's profit-maximizing price and output?
b∙When the farmer produces 25,000 bushels of wheat, the difference between the firm's average total cost and the price is at its maximum.Explain why this amount of wheat either is or is not the profit-maximizing quantity.

Accepted Answer

a∙The firm will maximize its profits by

Question 9

In the long run, a perfectly competitive firm makes

Accepted Answer

A) a positive economic profit. 
B) zero economic profit. 
C) negative economic profit, that is, an economic loss. 
D) zero accounting profit. 
E) either a positive economic profit or a normal profit. 
A) a positive economic profit. 
B) zero economic profit. 
C) negative economic profit, that is, an economic loss. 
D) zero accounting profit. 
E) either a positive economic profit or a normal profit.

Question 10

Which of the following is the best example of a perfectly competitive market?

Accepted Answer

A) farming 
B) diamonds 
C) athletic shoes 
D) soft drinks 
E) electricity distribution 
A) farming 
B) diamonds 
C) athletic shoes 
D) soft drinks 
E) electricity distribution

Question 11

American restaurants receive their supply of baby back-ribs from American farms and from farms in Denmark.In the figures above, the left diagram shows the perfectly competitive market for baby back ribs in the United States.The right figure shows the situation at Premium Standard Farm in Kansas, one of the many U.S.farms supplying these ribs.
Now assume that the United States imposes a ban on European meat in response to the foot-and-mouth disease that has infected livestock in Europe.(Which the United States did a few years ago.)In particular, suppose that the U.S.ban decreases the supply by 40 tons a year.Using the figure on the left, show the impact of this ban on the baby back rib market.Using the figure on the right, show the impact on Premium Standard Farm in Kansas.

Accepted Answer

@#IMG-DLM& 
 @#IMG-DLM& The ban on European meat decreases t

Question 12

If firms in a perfectly competitive industry are earning an economic profit, then in the ________ firms will ________ the industry.

Accepted Answer

A) short run; enter 
B) long run; enter 
C) short run; exit 
D) long run; exit 
E) More information about the firms' costs and the price of the product is needed to determine if firms enter or exit the industry. 
A) short run; enter 
B) long run; enter 
C) short run; exit 
D) long run; exit 
E) More information about the firms' costs and the price of the product is needed to determine if firms enter or exit the industry.

Question 13

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm.
-Based on the figure above, what is the price of a can?

Accepted Answer

A) $0. 
B) $3.00 per can 
C) $5.14 per can 
D) None of the above prices is correct. 
E) More information is needed to determine the price of a can. 
A) $0. 
B) $3.00 per can 
C) $5.14 per can 
D) None of the above prices is correct. 
E) More information is needed to determine the price of a can.

Question 14

When firms in a perfectly competitive market incur economic losses, exit by some firms means the market supply will

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) become vertical. 
E) become the same as the individual producers' supplies. 
A) increase. 
B) decrease. 
C) not change. 
D) become vertical. 
E) become the same as the individual producers' supplies.

Question 15

In a perfectly competitive market, the market price is $23.At the current level of output, a firm has a marginal cost of $28.What should the firm do?

Accepted Answer

A) produce a larger output to make more profit 
B) nothing, it is currently maximizing profit 
C) produce less output to make more profit 
D) shut down 
E) raise the price of its product 
A) produce a larger output to make more profit 
B) nothing, it is currently maximizing profit 
C) produce less output to make more profit 
D) shut down 
E) raise the price of its product

Question 16

In which market structure are there a small number of firms competing?

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 17

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit, Jennifer should

Accepted Answer

A) not produce this additional batch. 
B) produce this batch of cookies because they will help lower her average fixed cost. 
C) charge $120 for this batch. 
D) shut down. 
E) produce this batch of cookies because their MR exceeds their MC. 
A) not produce this additional batch. 
B) produce this batch of cookies because they will help lower her average fixed cost. 
C) charge $120 for this batch. 
D) shut down. 
E) produce this batch of cookies because their MR exceeds their MC.

Question 18

A perfectly competitive firm maximizes its profit by producing at the point where

Accepted Answer

A) total revenue equals total cost. 
B) marginal revenue is equal to marginal cost. 
C) total revenue is equal to marginal revenue. 
D) total cost is at its minimum. 
E) total revenue is at its maximum. 
A) total revenue equals total cost. 
B) marginal revenue is equal to marginal cost. 
C) total revenue is equal to marginal revenue. 
D) total cost is at its minimum. 
E) total revenue is at its maximum.

Question 19

In the long run, new firms enter a perfectly competitive market when

Accepted Answer

A) normal profit is greater than zero. 
B) economic profit is equal to zero. 
C) normal profit is equal to zero. 
D) economic profit is greater than zero. 
E) the existing firms are weak because they are incurring economic losses. 
A) normal profit is greater than zero. 
B) economic profit is equal to zero. 
C) normal profit is equal to zero. 
D) economic profit is greater than zero. 
E) the existing firms are weak because they are incurring economic losses.

Question 20

In the long run, a perfectly competitive firm

Accepted Answer

A) can make either an economic profit or a normal profit. 
B) incurs an economic loss. 
C) makes zero economic profit. 
D) can make an economic profit, zero economic profit, or incur an economic loss. 
E) makes an economic profit. 
A) can make either an economic profit or a normal profit. 
B) incurs an economic loss. 
C) makes zero economic profit. 
D) can make an economic profit, zero economic profit, or incur an economic loss. 
E) makes an economic profit.

If a perfectly competitive firm manufacturing chairs produces 100 more chairs, what happens to the market price of a chair?

If the market price is $50 for a unit of a good produced in a perfectly competitive market and the firm's minimum average variable cost is $52, then to maximize its profit (or minimize its loss)the firm should

Technological change brings a ________ to firms that adopt the new technology.

Each firm in a perfectly competitive industry

-The above figure shows a perfectly competitive firm.If the market price is $10, the firm

In part, perfect competition arises if I∙each firm's minimum efficient scale is large relative to demand. Ii∙each firm produces a good or service identical to those produced by its many competitors. Iii∙there are significant barriers to entry.

If concerns about mad-cow disease impose economic losses on the perfectly competitive cattle ranchers, exit by the ranchers combined with no further changes in the demand for beef will force the price of beef to

In the long run, a perfectly competitive firm makes

Which of the following is the best example of a perfectly competitive market?

If firms in a perfectly competitive industry are earning an economic profit, then in the firms will the industry.

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm. -Based on the figure above, what is the price of a can?

When firms in a perfectly competitive market incur economic losses, exit by some firms means the market supply will

In a perfectly competitive market, the market price is $23.At the current level of output, a firm has a marginal cost of $28.What should the firm do?

In which market structure are there a small number of firms competing?

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit, Jennifer should

A perfectly competitive firm maximizes its profit by producing at the point where

In the long run, new firms enter a perfectly competitive market when

In the long run, a perfectly competitive firm

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

If a perfectly competitive firm manufacturing chairs produces 100 more chairs, what happens to the market price of a chair?

If the market price is $50 for a unit of a good produced in a perfectly competitive market and the firm's minimum average variable cost is $52, then to maximize its profit (or minimize its loss)the firm should

Technological change brings a ________ to firms that adopt the new technology.

Each firm in a perfectly competitive industry

-The above figure shows a perfectly competitive firm.If the market price is $10, the firm

In part, perfect competition arises if I∙each firm's minimum efficient scale is large relative to demand. Ii∙each firm produces a good or service identical to those produced by its many competitors. Iii∙there are significant barriers to entry.

If concerns about mad-cow disease impose economic losses on the perfectly competitive cattle ranchers, exit by the ranchers combined with no further changes in the demand for beef will force the price of beef to

In the long run, a perfectly competitive firm makes

Which of the following is the best example of a perfectly competitive market?

If firms in a perfectly competitive industry are earning an economic profit, then in the ________ firms will ________ the industry.

The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm. -Based on the figure above, what is the price of a can?

When firms in a perfectly competitive market incur economic losses, exit by some firms means the market supply will

In a perfectly competitive market, the market price is $23.At the current level of output, a firm has a marginal cost of $28.What should the firm do?

In which market structure are there a small number of firms competing?

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit, Jennifer should

A perfectly competitive firm maximizes its profit by producing at the point where

In the long run, new firms enter a perfectly competitive market when

In the long run, a perfectly competitive firm

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

If firms in a perfectly competitive industry are earning an economic profit, then in the firms will the industry.