Question 1

In the long run, firms in a competitive market

Accepted Answer

A) shut down because profit goes to zero. 
B) lose money. 
C) are not profit maximizing. 
D) earn zero economic profit. 
A) shut down because profit goes to zero. 
B) lose money. 
C) are not profit maximizing. 
D) earn zero economic profit.

Question 2

Consumer surplus

Accepted Answer

A) is the difference between what a consumer pays for a good and the producer's cost. 
B) is the extra money a consumer pays above the minimum necessary price for the producer to produce it. 
C) is the difference between what a consumer would willingly pay for a good and the price actually paid. 
D) equals zero in the long run. 
A) is the difference between what a consumer pays for a good and the producer's cost. 
B) is the extra money a consumer pays above the minimum necessary price for the producer to produce it. 
C) is the difference between what a consumer would willingly pay for a good and the price actually paid. 
D) equals zero in the long run.

Question 3

Producer surplus equals

Accepted Answer

A) total revenue minus total variable cost. 
B) total revenue minus the sum of all marginal cost. 
C) profit plus fixed cost. 
D) All of the above. 
A) total revenue minus total variable cost. 
B) total revenue minus the sum of all marginal cost. 
C) profit plus fixed cost. 
D) All of the above.

Question 4

As the quantity produced of a good increases, the social welfare generated by that good increases.

Accepted Answer

A) True 
 B)False

Question 5

Consumers seek to

Accepted Answer

A) maximize profits. 
B) maximize expected consumer surplus. 
C) maximize expenditures. 
D) maximize choice. 
A) maximize profits. 
B) maximize expected consumer surplus. 
C) maximize expenditures. 
D) maximize choice.

Question 6

Assuming a horizontal long-run market supply curve, which of the following statements is (are)TRUE about competitive firms in the long run?

Accepted Answer

A) p = MC 
B) p = AC 
C) profit = 0 
D) All of the above. 
A) p = MC 
B) p = AC 
C) profit = 0 
D) All of the above.

Question 7

The difference between producer surplus and profit is always the associated

Accepted Answer

A) opportunity costs. 
B) total costs. 
C) variable costs. 
D) fixed costs. 
A) opportunity costs. 
B) total costs. 
C) variable costs. 
D) fixed costs.

Question 8

Price floors and price ceilings

Accepted Answer

A) always reduce total surplus. 
B) reduce consumer surplus and increase producer surplus. 
C) reduce producer surplus and increase consumer surplus. 
D) Not enough information to determine. 
A) always reduce total surplus. 
B) reduce consumer surplus and increase producer surplus. 
C) reduce producer surplus and increase consumer surplus. 
D) Not enough information to determine.

Question 9

If a market is NOT perfectly competitive, then government intervention

Accepted Answer

A) is always justifiable. 
B) will usually decrease economic well-being. 
C) guarantees that societal well-being will be maximized. 
D) may increase economic well-being. 
A) is always justifiable. 
B) will usually decrease economic well-being. 
C) guarantees that societal well-being will be maximized. 
D) may increase economic well-being.

Question 10

Government intervention in a perfectly competitive market

Accepted Answer

A) reduces economic well-being. 
B) is an illustration of the "invisible hand theorem." 
C) increases economic well-being. 
D) guarantees maximized well-being. 
A) reduces economic well-being. 
B) is an illustration of the "invisible hand theorem." 
C) increases economic well-being. 
D) guarantees maximized well-being.

Question 11

Which of the following statements about profit maximizing firms in a competitive market is FALSE?

Accepted Answer

A) Firms earn no economic profit in the long run. 
B) Marginal revenue does not have to equal marginal cost. 
C) p - MC = 0. 
D) Price equals marginal revenue. 
A) Firms earn no economic profit in the long run. 
B) Marginal revenue does not have to equal marginal cost. 
C) p - MC = 0. 
D) Price equals marginal revenue.

Question 12

In a competitive market, if buyers did not know all the prices charged by the many firms

Accepted Answer

A) all firms still face horizontal demand curves. 
B) firms sell a differentiated product. 
C) demand curves can be downward sloping for some or all firms. 
D) the number of firms will most likely decrease. 
A) all firms still face horizontal demand curves. 
B) firms sell a differentiated product. 
C) demand curves can be downward sloping for some or all firms. 
D) the number of firms will most likely decrease.

Question 13

-The above figure shows the market demand curve for mobile telecommunications (time spent on a mobile phone). At the current price of $0.35 per minute, 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 14

In the absence of any government regulation on price, if a firm has no power to set price on its own, one can safely conclude

Accepted Answer

A) the demand curve for the firm's product is horizontal. 
B) there aren't many firms in the industry. 
C) the market is in long-run equilibrium. 
D) the firms in this industry are not profitable. 
A) the demand curve for the firm's product is horizontal. 
B) there aren't many firms in the industry. 
C) the market is in long-run equilibrium. 
D) the firms in this industry are not profitable.

Question 15

A market's structure is described by

Accepted Answer

A) the number of firms in the market. 
B) the ease with which firms can enter and exit the market. 
C) the ability of firms to differentiate their product. 
D) All of the above. 
A) the number of firms in the market. 
B) the ease with which firms can enter and exit the market. 
C) the ability of firms to differentiate their product. 
D) All of the above.

Question 16

Deadweight loss occurs when

Accepted Answer

A) consumer surplus is greater than producer surplus. 
B) surplus losses to one group due to intervention are not offset by surplus gains to another. 
C) consumer surplus is reduced. 
D) consumer surplus is negative. 
A) consumer surplus is greater than producer surplus. 
B) surplus losses to one group due to intervention are not offset by surplus gains to another. 
C) consumer surplus is reduced. 
D) consumer surplus is negative.

Question 17

Producer surplus is equal to

Accepted Answer

A) the area under the supply curve. 
B) the difference between price and average cost for all units sold. 
C) the difference between price and marginal cost for all units sold. 
D) the firm's profit when fixed costs exist. 
A) the area under the supply curve. 
B) the difference between price and average cost for all units sold. 
C) the difference between price and marginal cost for all units sold. 
D) the firm's profit when fixed costs exist.

In the long run, firms in a competitive market

Consumer surplus

Producer surplus equals

As the quantity produced of a good increases, the social welfare generated by that good increases.

Consumers seek to

Assuming a horizontal long-run market supply curve, which of the following statements is (are)TRUE about competitive firms in the long run?

The difference between producer surplus and profit is always the associated

Price floors and price ceilings

If a market is NOT perfectly competitive, then government intervention

Government intervention in a perfectly competitive market

Which of the following statements about profit maximizing firms in a competitive market is FALSE?

In a competitive market, if buyers did not know all the prices charged by the many firms

-The above figure shows the market demand curve for mobile telecommunications (time spent on a mobile phone). At the current price of $0.35 per minute, consumer surplus equals

In the absence of any government regulation on price, if a firm has no power to set price on its own, one can safely conclude

A market's structure is described by

Deadweight loss occurs when

Producer surplus is equal to

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

In the long run, firms in a competitive market

Consumer surplus

Producer surplus equals

As the quantity produced of a good increases, the social welfare generated by that good increases.

Consumers seek to

Assuming a horizontal long-run market supply curve, which of the following statements is (are)TRUE about competitive firms in the long run?

The difference between producer surplus and profit is always the associated

Price floors and price ceilings

If a market is NOT perfectly competitive, then government intervention

Government intervention in a perfectly competitive market

Which of the following statements about profit maximizing firms in a competitive market is FALSE?

In a competitive market, if buyers did not know all the prices charged by the many firms

-The above figure shows the market demand curve for mobile telecommunications (time spent on a mobile phone). At the current price of $0.35 per minute, consumer surplus equals

In the absence of any government regulation on price, if a firm has no power to set price on its own, one can safely conclude

A market's structure is described by

Deadweight loss occurs when

Producer surplus is equal to

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