Question 1

Based on the figure above, if the firm produces 7 cans per day, the firm ________ maximizing its profit and is ________.

Accepted Answer

A) is; incurring an economic loss 
B) is; making zero economic profit 
C) is; making an economic profit 
D) is not; incurring an economic loss 
E) is not; making zero economic profit 
A) is; incurring an economic loss 
B) is; making zero economic profit 
C) is; making an economic profit 
D) is not; incurring an economic loss 
E) is not; making zero economic profit

Question 2

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 3

A perfectly competitive firm should shut down in the short-run if price falls below the minimum of

Accepted Answer

A) marginal cost. 
B) marginal revenue. 
C) average total cost. 
D) fixed costs. 
E) average variable costs. 
A) marginal cost. 
B) marginal revenue. 
C) average total cost. 
D) fixed costs. 
E) average variable costs.

Question 4

-Bill owns a lawn-care company in Windermere, Florida, whose cost curves are illustrated in the above figure. The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed. At this price, how many lawns will Bill mow per week?

Accepted Answer

A) 30 
B) 40 
C) 50 
D) 0 
E) more than 10 and less than 30 
A) 30 
B) 40 
C) 50 
D) 0 
E) more than 10 and less than 30

Question 5

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 6

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12. Then there is a permanent increase in demand. As a result, in the short run the market price ________ and in the long run the number of firms ________ and the price is ________ the price was in the short run.

Accepted Answer

A) rises; does not change; is equal to 
B) rises; increases; higher than 
C) rises; does not change; lower than 
D) falls; decreases; is equal to 
E) rises; increases; lower than 
A) rises; does not change; is equal to 
B) rises; increases; higher than 
C) rises; does not change; lower than 
D) falls; decreases; is equal to 
E) rises; increases; lower than

Question 7

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (wafers per hour) }
\end{array} & \begin{array} { c } 
\text { Average variable cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Average total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 0 & \
1 & 1900 & 7900 \
2 & 1400 & 4400 \
3 & 1300 & 3300 \
4 & 1400 & 2900 \
5 & 1600 & 2800 \
6 & 2000 & 3000 \
\hline
\end{array}$$
-Computer memory chips are produced on wafers, each wafer having many separate chips that are separated and sold. The above table shows costs for a perfectly competitive producer of computer memory chips. This firm will produce as long as the market price of a wafer is above

Accepted Answer

A) $1,300. 
B) $1,400. 
C) $7,900. 
D) $2,800. 
E) $9,800. 
A) $1,300. 
B) $1,400. 
C) $7,900. 
D) $2,800. 
E) $9,800.

Question 8

A perfectly competitive market arises when

Accepted Answer

A) the market demand is small relative to the output of a firm. 
B) there are many buyers but few sellers. 
C) the market demand is very large relative to the output of one seller. 
D) a firm has control over a unique resource. 
E) each of the many firms produces a slightly different product. 
A) the market demand is small relative to the output of a firm. 
B) there are many buyers but few sellers. 
C) the market demand is very large relative to the output of one seller. 
D) a firm has control over a unique resource. 
E) each of the many firms produces a slightly different product.

Question 9

What is a perfectly competitive firm's short-run supply curve?

Accepted Answer

A perfectly competitive firm's

Question 10

$$\begin{array}{l}
\text { Quantity }\
\begin{array} { c c c } 
\begin{array} { c } 
\text { (bushels of } \
\text { rutabagas) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 0 & 12 \
1 & 10 & 22 \
2 & 20 & 28 \
3 & 30 & 30 \
4 & 40 & 31 \
5 & 50 & 34 \
6 & 60 & 45 \
7 & 70 & 59 \
8 & 80 & 80
\end{array}
\end{array}$$
-The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas. Omar's total profit is maximized when he produces ________ bushels of rutabagas.

Accepted Answer

A) 3 
B) 5 
C) 6 
D) 8 
E) 7 
A) 3 
B) 5 
C) 6 
D) 8 
E) 7

Question 11

-The above figure shows a perfectly competitive firm. If the market price is $15, 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 12

The firm in the figure above has a total revenue equal to ________.

Accepted Answer

A) $5.10 × 10 
B) $8.00 × 10 
C) ($5.10 - $8.00)× 10 
D) ($8.00 - $5.10)× 10 
E) None of the above answers are correct because more information is needed. 
A) $5.10 × 10 
B) $8.00 × 10 
C) ($5.10 - $8.00)× 10 
D) ($8.00 - $5.10)× 10 
E) None of the above answers are correct because more information is needed.

Question 13

When new firms enter the perfectly competitive Miami bagel market, the market

Accepted Answer

A) supply curve shifts leftward. 
B) supply curve does not change. 
C) demand curve shifts rightward. 
D) supply curve shifts rightward. 
E) demand curve shifts leftward. 
A) supply curve shifts leftward. 
B) supply curve does not change. 
C) demand curve shifts rightward. 
D) supply curve shifts rightward. 
E) demand curve shifts leftward.

Question 14

11.4 Chapter Figures
   
The figure above shows a firm's total revenue and total cost curves.
-To maximize its profit, the firm in the figure above produces ________ cans per day and ________.

Accepted Answer

A) 0; incurs an economic loss of less than $20 
B) between 3 to 5 cans; earns a normal profit 
C) 10; earns an economic profit of $2.90 
D) 10; earns an economic profit of $29 
E) more than 10; earns an economic profit 
A) 0; incurs an economic loss of less than $20 
B) between 3 to 5 cans; earns a normal profit 
C) 10; earns an economic profit of $2.90 
D) 10; earns an economic profit of $29 
E) more than 10; earns an economic profit

Question 15

If there are 1,000 identical rice farmers who are each willing to supply 200 bushels of rice at $2 per bushel, what price and quantity combination is a point on the market supply curve for rice?

Accepted Answer

A) $2 and 200 bushels 
B) $2 and 200,000 bushels 
C) $2,000 and 200,000 bushels 
D) $2,000 and 1,000 bushels 
E) $2 and 1,000 farmers 
A) $2 and 200 bushels 
B) $2 and 200,000 bushels 
C) $2,000 and 200,000 bushels 
D) $2,000 and 1,000 bushels 
E) $2 and 1,000 farmers

Question 16

The rutabaga market is perfectly competitive. Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases. The permanent decrease in demand results in a

Accepted Answer

A) lower price, economic losses by rutabaga farmers, and entry into the market. 
B) lower price, economic losses by rutabaga farmers, and exit from the market. 
C) higher price, economic profits for rutabaga farmers, and entry into the market. 
D) higher price, economic losses by rutabaga farmers, and exit from the market. 
E) lower price, economic profits for rutabaga farmers, and entry into the market. 
A) lower price, economic losses by rutabaga farmers, and entry into the market. 
B) lower price, economic losses by rutabaga farmers, and exit from the market. 
C) higher price, economic profits for rutabaga farmers, and entry into the market. 
D) higher price, economic losses by rutabaga farmers, and exit from the market. 
E) lower price, economic profits for rutabaga farmers, and entry into the market.

Question 17

A monopoly occurs when

Accepted Answer

A) each of many firms produces a product that is slightly different from that of the other firms. 
B) one firm sells a good that has no close substitutes and a barrier blocks entry for other firms. 
C) there are many firms producing the same product. 
D) a few firms control the market. 
E) one firm is larger than the many other firms that make an identical product. 
A) each of many firms produces a product that is slightly different from that of the other firms. 
B) one firm sells a good that has no close substitutes and a barrier blocks entry for other firms. 
C) there are many firms producing the same product. 
D) a few firms control the market. 
E) one firm is larger than the many other firms that make an identical product.

Question 18

-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 19

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (wafers per hour) }
\end{array} & \begin{array} { c } 
\text { Average variable cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Average total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 0 & \
1 & 1900 & 7900 \
2 & 1400 & 4400 \
3 & 1300 & 3300 \
4 & 1400 & 2900 \
5 & 1600 & 2800 \
6 & 2000 & 3000 \
\hline
\end{array}$$
-Computer memory chips are produced on wafers, each wafer having many separate chips that are separated and sold. The above table shows costs for a perfectly competitive producer of computer memory chips. If the market price of a wafer is $2,400 dollars, how many wafers will the firm produce?

Accepted Answer

A) 0 
B) 4 or 5 
C) 3 or 4 
D) 1 or 2 
E) 6 
A) 0 
B) 4 or 5 
C) 3 or 4 
D) 1 or 2 
E) 6

Question 20

In the short run, a perfectly competitive firm

Accepted Answer

A) must make an economic profit. 
B) must incur an economic loss. 
C) must make zero economic profit. 
D) might make an economic profit, zero economic profit, or incur an economic loss. 
E) None of the above answers is correct. 
A) must make an economic profit. 
B) must incur an economic loss. 
C) must make zero economic profit. 
D) might make an economic profit, zero economic profit, or incur an economic loss. 
E) None of the above answers is correct.

Based on the figure above, if the firm produces 7 cans per day, the firm maximizing its profit and is .

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

A perfectly competitive firm should shut down in the short-run if price falls below the minimum of

-Bill owns a lawn-care company in Windermere, Florida, whose cost curves are illustrated in the above figure. The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed. At this price, how many lawns will Bill mow per week?

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?

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12. Then there is a permanent increase in demand. As a result, in the short run the market price and in the long run the number of firms and the price is the price was in the short run.

A perfectly competitive market arises when

What is a perfectly competitive firm's short-run supply curve?

-The above figure shows a perfectly competitive firm. If the market price is $15, the firm

The firm in the figure above has a total revenue equal to ________.

When new firms enter the perfectly competitive Miami bagel market, the market

11.4 Chapter Figures The figure above shows a firm's total revenue and total cost curves. -To maximize its profit, the firm in the figure above produces cans per day and .

If there are 1,000 identical rice farmers who are each willing to supply 200 bushels of rice at $2 per bushel, what price and quantity combination is a point on the market supply curve for rice?

The rutabaga market is perfectly competitive. Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases. The permanent decrease in demand results in a

A monopoly occurs when

In the short run, a perfectly competitive firm

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

Based on the figure above, if the firm produces 7 cans per day, the firm ________ maximizing its profit and is ________.

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

A perfectly competitive firm should shut down in the short-run if price falls below the minimum of

-Bill owns a lawn-care company in Windermere, Florida, whose cost curves are illustrated in the above figure. The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed. At this price, how many lawns will Bill mow per week?

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?

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12. Then there is a permanent increase in demand. As a result, in the short run the market price ________ and in the long run the number of firms ________ and the price is ________ the price was in the short run.

A perfectly competitive market arises when

What is a perfectly competitive firm's short-run supply curve?

-The above figure shows a perfectly competitive firm. If the market price is $15, the firm

The firm in the figure above has a total revenue equal to ________.

When new firms enter the perfectly competitive Miami bagel market, the market

11.4 Chapter Figures The figure above shows a firm's total revenue and total cost curves. -To maximize its profit, the firm in the figure above produces ________ cans per day and ________.

If there are 1,000 identical rice farmers who are each willing to supply 200 bushels of rice at $2 per bushel, what price and quantity combination is a point on the market supply curve for rice?

The rutabaga market is perfectly competitive. Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases. The permanent decrease in demand results in a

A monopoly occurs when

In the short run, a perfectly competitive firm

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

Based on the figure above, if the firm produces 7 cans per day, the firm maximizing its profit and is .

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12. Then there is a permanent increase in demand. As a result, in the short run the market price and in the long run the number of firms and the price is the price was in the short run.

11.4 Chapter Figures The figure above shows a firm's total revenue and total cost curves. -To maximize its profit, the firm in the figure above produces cans per day and .