Question 1

A consumer's marginal willingness to pay

Accepted Answer

A) changes with price. 
B) is equal to the marginal value to the consumer of the last unit of output. 
C) is the minimum price a consumer will pay for the last unit of output. 
D) is the first derivative of the demand curve. 
A) changes with price. 
B) is equal to the marginal value to the consumer of the last unit of output. 
C) is the minimum price a consumer will pay for the last unit of output. 
D) is the first derivative of the demand curve. B

Question 2

In a perfectly competitive market with 100 identical firms producing at market price p1

Accepted Answer

A) the supply curve is flatter than if there were only 50 identical firms. 
B) the supply curve is more elastic than if there were only 50 identical firms. 
C) the firms have identical marginal costs. 
D) All of the above. 
A) the supply curve is flatter than if there were only 50 identical firms. 
B) the supply curve is more elastic than if there were only 50 identical firms. 
C) the firms have identical marginal costs. 
D) All of the above. D

Question 3

Economists define a market to be competitive when the firms

Accepted Answer

A) spend large amounts of money on advertising to lure customers away from the competition. 
B) watch each other's behavior closely. 
C) are price takers. 
D) All of the above. 
A) spend large amounts of money on advertising to lure customers away from the competition. 
B) watch each other's behavior closely. 
C) are price takers. 
D) All of the above. C

Question 4

If the shut down rule, p < AVC, is the same in the short run and the long run, explain why the shutdown prices may be different.

Accepted Answer

In the short run there are fix

Question 5

If firms in a competitive market are identical, then the long-run market supply curve will be

Accepted Answer

A) horizontal. 
B) upward sloping. 
C) downward sloping. 
D) undetermined. 
A) horizontal. 
B) upward sloping. 
C) downward sloping. 
D) undetermined.

Question 6

In deciding whether to operate in the short run, the firm must be concerned with the relationship between price of the output and

Accepted Answer

A) total cost. 
B) average variable cost. 
C) total fixed cost. 
D) the number of buyers. 
A) total cost. 
B) average variable cost. 
C) total fixed cost. 
D) the number of buyers.

Question 7

A firm will enter a competitive market when

Accepted Answer

A) it can gather market share at the expense of incumbent firms. 
B) it would not be the last firm entering. 
C) it can earn a positive long-run profit. 
D) the long-run supply curve is upward sloping. 
A) it can gather market share at the expense of incumbent firms. 
B) it would not be the last firm entering. 
C) it can earn a positive long-run profit. 
D) the long-run supply curve is upward sloping.

Question 8

-The above figure shows the market demand curve for mobile telecommunications (time spent on a mobile phone). If the price were $2.50, consumer surplus equals

Accepted Answer

A) $301.00. 
B) $924.50. 
C) $1,225.50. 
D) $0 
A) $301.00. 
B) $924.50. 
C) $1,225.50. 
D) $0

Question 9

What is one reason activists might lobby the government to force firms to produce more output than they normally would in a perfectly competitive market?

Accepted Answer

A) They value consumer surplus more than producer surplus. 
B) They value producer surplus more than consumer surplus. 
C) They seek to avoid future regulation. 
D) They seek to minimize total surplus. 
A) They value consumer surplus more than producer surplus. 
B) They value producer surplus more than consumer surplus. 
C) They seek to avoid future regulation. 
D) They seek to minimize total surplus.

Question 10

Suppose the market supply curve is p = 5Q. At a price of 10, producer surplus equals

Accepted Answer

A) 50. 
B) 25. 
C) 12.50. 
D) 10. 
A) 50. 
B) 25. 
C) 12.50. 
D) 10.

Question 11

If firms in a competitive market have different cost functions, then

Accepted Answer

A) there is no short run market supply curve. 
B) the market supply curve reflects those firms' operating envelopes, even in the short run. 
C) some of the firms will shut down because their costs are too high to compete. 
D) the firms' marginal costs will be different at the market price. 
A) there is no short run market supply curve. 
B) the market supply curve reflects those firms' operating envelopes, even in the short run. 
C) some of the firms will shut down because their costs are too high to compete. 
D) the firms' marginal costs will be different at the market price.

Question 12

Which of the following products would be sold in a competitive market?

Accepted Answer

A) smartphones 
B) shoes 
C) Brent crude oil 
D) motorcycles 
A) smartphones 
B) shoes 
C) Brent crude oil 
D) motorcycles

Question 13

If a firm cannot earn profits in the short run, it will shut down.

Accepted Answer

A) True 
 B)False

Question 14

A firm will exit a competitive market when

Accepted Answer

A) costs force the marginal cost curve to shift to the left. 
B) the long-run profit would be negative. 
C) it can earn only earn a zero long-run profit. 
D) Both B and C. 
A) costs force the marginal cost curve to shift to the left. 
B) the long-run profit would be negative. 
C) it can earn only earn a zero long-run profit. 
D) Both B and C.

Question 15

A firm should always shut down if its revenue is

Accepted Answer

A) declining. 
B) less than its average fixed costs. 
C) less than its total costs. 
D) less than its avoidable costs. 
A) declining. 
B) less than its average fixed costs. 
C) less than its total costs. 
D) less than its avoidable costs.

Question 16

Giving presents at Christmas does NOT generate a deadweight loss if

Accepted Answer

A) all gifts are money. 
B) everybody gets exactly want she wants. 
C) nobody can be made better off by returning the gift and purchasing a different one. 
D) All of the above. 
A) all gifts are money. 
B) everybody gets exactly want she wants. 
C) nobody can be made better off by returning the gift and purchasing a different one. 
D) All of the above.

Question 17

If a firm operates in a perfectly competitive market, then it will most likely

Accepted Answer

A) advertise its product on television. 
B) take the price of its product as determined by the market. 
C) have a difficult time obtaining information about the market price. 
D) have an easy time keeping other firms out of the market. 
A) advertise its product on television. 
B) take the price of its product as determined by the market. 
C) have a difficult time obtaining information about the market price. 
D) have an easy time keeping other firms out of the market.

Question 18

In the long run

Accepted Answer

A) the firm shuts down if revenue is less than its avoidable costs. 
B) marginal profit is greater than zero. 
C) if economic profit is zero. 
D) supply curves are identical to the short run supply curves. 
A) the firm shuts down if revenue is less than its avoidable costs. 
B) marginal profit is greater than zero. 
C) if economic profit is zero. 
D) supply curves are identical to the short run supply curves.

Question 19

An increase in the cost of an input will result in

Accepted Answer

A) a leftward shift in the firm's supply curve. 
B) an upward shift of the firm's marginal cost curve. 
C) a leftward shift of the market supply curve. 
D) All of the above. 
A) a leftward shift in the firm's supply curve. 
B) an upward shift of the firm's marginal cost curve. 
C) a leftward shift of the market supply curve. 
D) All of the above.

Question 20

If a specific tax is implemented

Accepted Answer

A) the firm's average cost curve shifts up, resulting in lower profits. 
B) the after-tax marginal cost curve shifts, resulting in lower quantity produced. 
C) there is less profit per unit sold. 
D) All of the above. 
A) the firm's average cost curve shifts up, resulting in lower profits. 
B) the after-tax marginal cost curve shifts, resulting in lower quantity produced. 
C) there is less profit per unit sold. 
D) All of the above.

A consumer's marginal willingness to pay

In a perfectly competitive market with 100 identical firms producing at market price p1

Economists define a market to be competitive when the firms

If the shut down rule, p < AVC, is the same in the short run and the long run, explain why the shutdown prices may be different.

If firms in a competitive market are identical, then the long-run market supply curve will be

In deciding whether to operate in the short run, the firm must be concerned with the relationship between price of the output and

A firm will enter a competitive market when

-The above figure shows the market demand curve for mobile telecommunications (time spent on a mobile phone). If the price were $2.50, consumer surplus equals

What is one reason activists might lobby the government to force firms to produce more output than they normally would in a perfectly competitive market?

Suppose the market supply curve is p = 5Q. At a price of 10, producer surplus equals

If firms in a competitive market have different cost functions, then

Which of the following products would be sold in a competitive market?

If a firm cannot earn profits in the short run, it will shut down.

A firm will exit a competitive market when

A firm should always shut down if its revenue is

Giving presents at Christmas does NOT generate a deadweight loss if

If a firm operates in a perfectly competitive market, then it will most likely

In the long run

An increase in the cost of an input will result in

If a specific tax is implemented

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 8: Competitive Firms and Markets

A consumer's marginal willingness to pay

In a perfectly competitive market with 100 identical firms producing at market price p1

Economists define a market to be competitive when the firms

If the shut down rule, p < AVC, is the same in the short run and the long run, explain why the shutdown prices may be different.

If firms in a competitive market are identical, then the long-run market supply curve will be

In deciding whether to operate in the short run, the firm must be concerned with the relationship between price of the output and

A firm will enter a competitive market when

-The above figure shows the market demand curve for mobile telecommunications (time spent on a mobile phone). If the price were $2.50, consumer surplus equals

What is one reason activists might lobby the government to force firms to produce more output than they normally would in a perfectly competitive market?

Suppose the market supply curve is p = 5Q. At a price of 10, producer surplus equals

If firms in a competitive market have different cost functions, then

Which of the following products would be sold in a competitive market?

If a firm cannot earn profits in the short run, it will shut down.

A firm will exit a competitive market when

A firm should always shut down if its revenue is

Giving presents at Christmas does NOT generate a deadweight loss if

If a firm operates in a perfectly competitive market, then it will most likely

In the long run

An increase in the cost of an input will result in

If a specific tax is implemented

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters