Question 1

The firm in the figure above is ________ that is equal to ________.

Accepted Answer

A) making an economic profit; $5.14 × 7 
B) making an economic profit; $3.00 × 7 
C) incurring an economic loss; $5.14 × 7 
D) incurring an economic loss; ($5.14 - $3.00)× 7 
E) making an economic profit; ($5.14 - $3.00)× 7 
A) making an economic profit; $5.14 × 7 
B) making an economic profit; $3.00 × 7 
C) incurring an economic loss; $5.14 × 7 
D) incurring an economic loss; ($5.14 - $3.00)× 7 
E) making an economic profit; ($5.14 - $3.00)× 7

Question 2

-The above figure shows a perfectly competitive firm. If the market price is $20 per unit, the firm

Accepted Answer

A) will definitely shut down to minimize its losses. 
B) will stay open to produce and will make zero economic profit. 
C) will stay open to produce and will incur an economic loss. 
D) will stay open to produce and will make an economic profit. 
E) might shut down but more information is needed about the fixed cost. 
A) will definitely shut down to minimize its losses. 
B) will stay open to produce and will make zero economic profit. 
C) will stay open to produce and will incur an economic loss. 
D) will stay open to produce and will make an economic profit. 
E) might shut down but more information is needed about the fixed cost.

Question 3

Elsie is a perfectly competitive dairy farmer. The market price of milk was $2.40 but just fell to $2.20 a gallon. Elsie

Accepted Answer

A) can sell as much milk as she wants at $2.20 a gallon. 
B) will have to charge some customers $2.40 a gallon to stay in business. 
C) will produce the same amount of milk at both prices. 
D) can sell more at the lower price because the quantity demanded is higher at lower prices. 
E) will be able to charge her initial customers $2.40 a gallon. 
A) can sell as much milk as she wants at $2.20 a gallon. 
B) will have to charge some customers $2.40 a gallon to stay in business. 
C) will produce the same amount of milk at both prices. 
D) can sell more at the lower price because the quantity demanded is higher at lower prices. 
E) will be able to charge her initial customers $2.40 a gallon.

Question 4

In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

Accepted Answer

A) monopoly 
B) oligopoly 
C) only perfect competition 
D) only monopolistic competition 
E) both perfect competition and monopolistic competition 
A) monopoly 
B) oligopoly 
C) only perfect competition 
D) only monopolistic competition 
E) both perfect competition and monopolistic competition

Question 5

The U.S. oil industry has only a few firms in it, so an economist 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 6

Juan's Software Service Company is in a perfectly competitive market. Juan has total fixed cost of $25,000, average variable cost for 1,000 service calls is $45, and marginal revenue is $75. Juan's makes 1,000 service calls a month. What is his economic profit?

Accepted Answer

A) $5,000 
B) $25,000 
C) $45,000 
D) $75,000 
E) $50,000 
A) $5,000 
B) $25,000 
C) $45,000 
D) $75,000 
E) $50,000

Question 7

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect?
 Briefly explain your answer.

Accepted Answer

The statement is false. A perfectly comp

Question 8

In the long run, perfectly competitive firms will exit the market if the price is

Accepted Answer

A) higher than average variable cost. 
B) equal to average total cost. 
C) less than average total cost. 
D) equal to average fixed cost. 
E) equal to marginal revenue. 
A) higher than average variable cost. 
B) equal to average total cost. 
C) less than average total cost. 
D) equal to average fixed cost. 
E) equal to marginal revenue.

Question 9

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

Accepted Answer

A) greater than the marginal revenue of each rental. 
B) less than the marginal revenue of each rental. 
C) equal to the marginal revenue of each rental. 
D) equal to the price of each rental. 
E) greater than the average variable cost of each rental. 
A) greater than the marginal revenue of each rental. 
B) less than the marginal revenue of each rental. 
C) equal to the marginal revenue of each rental. 
D) equal to the price of each rental. 
E) greater than the average variable cost of each rental.

Question 10

A perfectly competitive firm is a price taker because

Accepted Answer

A) many other firms produce the same product. 
B) only one firm produces the product. 
C) many firms produce a slightly differentiated product. 
D) a few firms compete. 
E) it faces a vertical demand curve. 
A) many other firms produce the same product. 
B) only one firm produces the product. 
C) many firms produce a slightly differentiated product. 
D) a few firms compete. 
E) it faces a vertical demand curve.

Question 11

-The above figure illustrates a perfectly competitive firm. If the market price is $10 a unit, to maximize its profit (or minimize its loss)the firm should

Accepted Answer

A) shut down. 
B) produce between 10 and less than 30 units. 
C) produce 30 units. 
D) produce more than 30 units and less than 40 units. 
E) produce 40 units. 
A) shut down. 
B) produce between 10 and less than 30 units. 
C) produce 30 units. 
D) produce more than 30 units and less than 40 units. 
E) produce 40 units.

Question 12

If it does not shut down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

Accepted Answer

A) only in the short run. 
B) only in the long run. 
C) always to maximize its profit. 
D) only if it is not possible to produce where price equals average variable cost. 
E) only if it is not possible to produce where price is greater than average total cost. 
A) only in the short run. 
B) only in the long run. 
C) always to maximize its profit. 
D) only if it is not possible to produce where price equals average variable cost. 
E) only if it is not possible to produce where price is greater than average total cost.

Question 13

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

Accepted Answer

An economic profit attracts entry by new

Question 14

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 15

The four market types are

Accepted Answer

A) perfect competition, imperfect competition, monopoly, and oligopoly. 
B) oligopoly, monopsony, monopoly, and imperfect competition. 
C) perfect competition, monopoly, monopolistic competition, and oligopoly. 
D) oligopoly, oligopolistic competition, monopoly, and perfect competition. 
E) perfect competition, imperfect competition, monopoly, and duopoly. 
A) perfect competition, imperfect competition, monopoly, and oligopoly. 
B) oligopoly, monopsony, monopoly, and imperfect competition. 
C) perfect competition, monopoly, monopolistic competition, and oligopoly. 
D) oligopoly, oligopolistic competition, monopoly, and perfect competition. 
E) perfect competition, imperfect competition, monopoly, and duopoly.

Question 16

-The figure above shows a perfectly competitive firm. If the market price is $40 per unit, then the firm produces ________ units and makes an economic profit that is ________.

Accepted Answer

A) more than 45; more than $400 
B) 40; more than $400 
C) 40; less than $400 
D) 30; equal to zero 
E) 30; more than $250 
A) more than 45; more than $400 
B) 40; more than $400 
C) 40; less than $400 
D) 30; equal to zero 
E) 30; more than $250

Question 17

What must be the case if a perfectly competitive firm's economic loss is less by shutting down rather than by producing and selling some output?

Accepted Answer

If a firm's economic loss is greater whe

Question 18

Henry, a perfectly competitive lime grower in Southern California, notices that the market price of limes is greater than his marginal cost. What should Henry do?

Accepted Answer

A) expand his output to increase profits 
B) shut down and incur a loss equal to his total fixed cost 
C) advertise his limes to be able to sell more output 
D) look for the output level where marginal revenue minus marginal cost is maximized 
E) shut down and earn no profit but also incur no loss 
A) expand his output to increase profits 
B) shut down and incur a loss equal to his total fixed cost 
C) advertise his limes to be able to sell more output 
D) look for the output level where marginal revenue minus marginal cost is maximized 
E) shut down and earn no profit but also incur no loss

Question 19

In a market undergoing technological change, firms that

Accepted Answer

A) adopt the new technology temporarily incur an economic loss. 
B) adopt the new technology temporarily make an economic profit. 
C) do not adopt the new technology temporarily make an economic profit. 
D) do not adopt the new technology increase their market share. 
E) do not adopt the new technology continue to make a normal profit. 
A) adopt the new technology temporarily incur an economic loss. 
B) adopt the new technology temporarily make an economic profit. 
C) do not adopt the new technology temporarily make an economic profit. 
D) do not adopt the new technology increase their market share. 
E) do not adopt the new technology continue to make a normal profit.

Question 20

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.

The firm in the figure above is that is equal to .

-The above figure shows a perfectly competitive firm. If the market price is $20 per unit, the firm

Elsie is a perfectly competitive dairy farmer. The market price of milk was $2.40 but just fell to $2.20 a gallon. Elsie

In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

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

Juan's Software Service Company is in a perfectly competitive market. Juan has total fixed cost of $25,000, average variable cost for 1,000 service calls is $45, and marginal revenue is $75. Juan's makes 1,000 service calls a month. What is his economic profit?

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

In the long run, perfectly competitive firms will exit the market if the price is

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

A perfectly competitive firm is a price taker because

-The above figure illustrates a perfectly competitive firm. If the market price is $10 a unit, to maximize its profit (or minimize its loss)the firm should

If it does not shut down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

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

In the long run, a perfectly competitive firm makes

The four market types are

-The figure above shows a perfectly competitive firm. If the market price is $40 per unit, then the firm produces units and makes an economic profit that is .

What must be the case if a perfectly competitive firm's economic loss is less by shutting down rather than by producing and selling some output?

Henry, a perfectly competitive lime grower in Southern California, notices that the market price of limes is greater than his marginal cost. What should Henry do?

In a market undergoing technological change, firms that

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

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 11: Perfect Competition

The firm in the figure above is ________ that is equal to ________.

-The above figure shows a perfectly competitive firm. If the market price is $20 per unit, the firm

Elsie is a perfectly competitive dairy farmer. The market price of milk was $2.40 but just fell to $2.20 a gallon. Elsie

In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

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

Juan's Software Service Company is in a perfectly competitive market. Juan has total fixed cost of $25,000, average variable cost for 1,000 service calls is $45, and marginal revenue is $75. Juan's makes 1,000 service calls a month. What is his economic profit?

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

In the long run, perfectly competitive firms will exit the market if the price is

A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is

A perfectly competitive firm is a price taker because

-The above figure illustrates a perfectly competitive firm. If the market price is $10 a unit, to maximize its profit (or minimize its loss)the firm should

If it does not shut down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

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

In the long run, a perfectly competitive firm makes

The four market types are

-The figure above shows a perfectly competitive firm. If the market price is $40 per unit, then the firm produces ________ units and makes an economic profit that is ________.

What must be the case if a perfectly competitive firm's economic loss is less by shutting down rather than by producing and selling some output?

Henry, a perfectly competitive lime grower in Southern California, notices that the market price of limes is greater than his marginal cost. What should Henry do?

In a market undergoing technological change, firms that

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

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

The firm in the figure above is that is equal to .

-The figure above shows a perfectly competitive firm. If the market price is $40 per unit, then the firm produces units and makes an economic profit that is .