Question 1

The competitive firm's supply curve is equal to

Accepted Answer

A) its marginal cost curve. 
B) the portion of its marginal cost curve that lies above AC. 
C) the portion of its marginal cost curve that lies above AVC. 
D) the portion of its marginal cost curve that lies above AFC. 
A) its marginal cost curve. 
B) the portion of its marginal cost curve that lies above AC. 
C) the portion of its marginal cost curve that lies above AVC. 
D) the portion of its marginal cost curve that lies above AFC.

Question 2

If all conditions for a perfectly competitive market are met

Accepted Answer

A) firms face sunk cost when entering the market. 
B) firms' demand curves are horizontal. 
C) the market demand curve is horizontal. 
D) the firms' demand curves are downward-sloping. 
A) firms face sunk cost when entering the market. 
B) firms' demand curves are horizontal. 
C) the market demand curve is horizontal. 
D) the firms' demand curves are downward-sloping.

Question 3

Deadweight loss occurs when

Accepted Answer

A) producer surplus is greater than consumer surplus. 
B) the maximum level of total welfare is not achieved. 
C) consumer surplus is reduced. 
D) an inferior good is consumed. 
A) producer surplus is greater than consumer surplus. 
B) the maximum level of total welfare is not achieved. 
C) consumer surplus is reduced. 
D) an inferior good is consumed.

Question 4

In the long run, profits will equal zero in a competitive market because of

Accepted Answer

A) constant returns to scale. 
B) identical products being produced by all firms. 
C) the availability of information. 
D) free entry and exit. 
A) constant returns to scale. 
B) identical products being produced by all firms. 
C) the availability of information. 
D) free entry and exit.

Question 5

Which of the following are NOT characteristics of a competitive market?

Accepted Answer

A) There is freedom of entry and exit. 
B) There are zero transaction costs. 
C) There are only one or two sellers. 
D) Buyers and sellers have complete information. 
A) There is freedom of entry and exit. 
B) There are zero transaction costs. 
C) There are only one or two sellers. 
D) Buyers and sellers have complete information.

Question 6

If a market produces a level of output that exceeds the competitive equilibrium output, then

Accepted Answer

A) social welfare will be higher. 
B) producer surplus will be higher. 
C) marginal cost will exceed price. 
D) All of the above. 
A) social welfare will be higher. 
B) producer surplus will be higher. 
C) marginal cost will exceed price. 
D) All of the above.

Question 7

-The above figure shows the cost curves for a typical firm in a market and three possible market supply curves. If there are 100 identical firms, the market supply curve is best represented by

Accepted Answer

A) curve A. 
B) curve B. 
C) curve C. 
D) either curve A or B, but definitely not C. 
A) curve A. 
B) curve B. 
C) curve C. 
D) either curve A or B, but definitely not C.

Question 8

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

Accepted Answer

A) $301.00. 
B) $924.50. 
C) $1,225.50. 
D) $1,250.00. 
A) $301.00. 
B) $924.50. 
C) $1,225.50. 
D) $1,250.00.

Question 9

If consumers view the output of any firm in a market to be identical to the output of any other firm in the market, the demand curve for the output of any given firm

Accepted Answer

A) will be identical to the market demand curve. 
B) will be horizontal. 
C) will be vertical. 
D) cannot be determined from the information given. 
A) will be identical to the market demand curve. 
B) will be horizontal. 
C) will be vertical. 
D) cannot be determined from the information given.

Question 10

If a market produces a level of output below the competitive equilibrium, then

Accepted Answer

A) social welfare is not maximized. 
B) consumer surplus might still be maximized. 
C) the actual price will be below the equilibrium price. 
D) social welfare might still be enhanced if a price ceiling keeps price below the competitive price. 
A) social welfare is not maximized. 
B) consumer surplus might still be maximized. 
C) the actual price will be below the equilibrium price. 
D) social welfare might still be enhanced if a price ceiling keeps price below the competitive price.

Question 11

If the market price is above a firm's average cost at the quantity produced

Accepted Answer

A) the firm operates and makes a profit. 
B) the firm operates and make zero economic profit. 
C) the market price of the firm's inputs will rise. 
D) total profit is maximized. 
A) the firm operates and makes a profit. 
B) the firm operates and make zero economic profit. 
C) the market price of the firm's inputs will rise. 
D) total profit is maximized.

Question 12

Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. If the long-run supply curve is horizontal, then

Accepted Answer

A) some firms will enjoy long-run profits because they operate at minimum average cost. 
B) the long-run price will be $0.20 per pound. 
C) each consumer will purchase $100 worth of potatoes. 
D) the long-run price will be set just above $0.20 per pound. 
A) some firms will enjoy long-run profits because they operate at minimum average cost. 
B) the long-run price will be $0.20 per pound. 
C) each consumer will purchase $100 worth of potatoes. 
D) the long-run price will be set just above $0.20 per pound.

Question 13

Assume a consumer has a horizontal demand curve for a product. His consumer surplus from buying the product

Accepted Answer

A) is maximized. 
B) can't be calculated. 
C) equals zero. 
D) Need more information. 
A) is maximized. 
B) can't be calculated. 
C) equals zero. 
D) Need more information.

Question 14

Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. The demand for potatoes is Q = 10,000/p. If the long-run supply curve is horizontal, then how many pounds of potatoes will be consumed in total?

Accepted Answer

A) 0 
B) 500 
C) 10,000 
D) 50,000 
A) 0 
B) 500 
C) 10,000 
D) 50,000

Question 15

In a perfectly competitive market

Accepted Answer

A) buyers are price-takers. 
B) buyers view products from different firms as differentiated. 
C) individual buyers have horizontal demand curves. 
D) firms' demand curves are vertical. 
A) buyers are price-takers. 
B) buyers view products from different firms as differentiated. 
C) individual buyers have horizontal demand curves. 
D) firms' demand curves are vertical.

Question 16

When is the profit a firm earns equal to the producer surplus? Explain.

Accepted Answer

Profit equals producer surplus when the

Question 17

If a firm happened to be the only seller of a particular product, it might behave as a price taker as long as

Accepted Answer

A) buyers have full information about the firm's price. 
B) the transaction costs of doing business with this firm are low. 
C) there are many buyers. 
D) there is free entry and exit. 
A) buyers have full information about the firm's price. 
B) the transaction costs of doing business with this firm are low. 
C) there are many buyers. 
D) there is free entry and exit.

Question 18

Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?

Accepted Answer

A) perfect information 
B) freedom of entry and exit 
C) price taking behavior 
D) homogeneous products 
A) perfect information 
B) freedom of entry and exit 
C) price taking behavior 
D) homogeneous products

Question 19

Like the short run

Accepted Answer

A) the long run supply curve is the sum of the individual firms' supply curves. 
B) the maximum number of firms in the market is fixed. 
C) firms operate only if they make a positive profit. 
D) All of the above. 
A) the long run supply curve is the sum of the individual firms' supply curves. 
B) the maximum number of firms in the market is fixed. 
C) firms operate only if they make a positive profit. 
D) All of the above.

Question 20

Mary purchased a stuffed animal toy for $5. After a few weeks, someone offered her $100 for the toy. Mary refused. One can conclude that Mary's consumer surplus from the toy is

Accepted Answer

A) less than $5. 
B) at least $95. 
C) at least $100. 
D) $105. 
A) less than $5. 
B) at least $95. 
C) at least $100. 
D) $105.

The competitive firm's supply curve is equal to

If all conditions for a perfectly competitive market are met

Deadweight loss occurs when

In the long run, profits will equal zero in a competitive market because of

Which of the following are NOT characteristics of a competitive market?

If a market produces a level of output that exceeds the competitive equilibrium output, then

-The above figure shows the cost curves for a typical firm in a market and three possible market supply curves. If there are 100 identical firms, the market supply curve is best represented by

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

If consumers view the output of any firm in a market to be identical to the output of any other firm in the market, the demand curve for the output of any given firm

If a market produces a level of output below the competitive equilibrium, then

If the market price is above a firm's average cost at the quantity produced

Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. If the long-run supply curve is horizontal, then

Assume a consumer has a horizontal demand curve for a product. His consumer surplus from buying the product

Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. The demand for potatoes is Q = 10,000/p. If the long-run supply curve is horizontal, then how many pounds of potatoes will be consumed in total?

In a perfectly competitive market

When is the profit a firm earns equal to the producer surplus? Explain.

If a firm happened to be the only seller of a particular product, it might behave as a price taker as long as

Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?

Like the short run

Mary purchased a stuffed animal toy for $5. After a few weeks, someone offered her $100 for the toy. Mary refused. One can conclude that Mary's consumer surplus from the toy is

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

The competitive firm's supply curve is equal to

If all conditions for a perfectly competitive market are met

Deadweight loss occurs when

In the long run, profits will equal zero in a competitive market because of

Which of the following are NOT characteristics of a competitive market?

If a market produces a level of output that exceeds the competitive equilibrium output, then

-The above figure shows the cost curves for a typical firm in a market and three possible market supply curves. If there are 100 identical firms, the market supply curve is best represented by

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

If consumers view the output of any firm in a market to be identical to the output of any other firm in the market, the demand curve for the output of any given firm

If a market produces a level of output below the competitive equilibrium, then

If the market price is above a firm's average cost at the quantity produced

Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. If the long-run supply curve is horizontal, then

Assume a consumer has a horizontal demand curve for a product. His consumer surplus from buying the product

Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. The demand for potatoes is Q = 10,000/p. If the long-run supply curve is horizontal, then how many pounds of potatoes will be consumed in total?

In a perfectly competitive market

When is the profit a firm earns equal to the producer surplus? Explain.

If a firm happened to be the only seller of a particular product, it might behave as a price taker as long as

Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?

Like the short run

Mary purchased a stuffed animal toy for $5. After a few weeks, someone offered her $100 for the toy. Mary refused. One can conclude that Mary's consumer surplus from the toy is

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