Question 1

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

Accepted Answer

A) $5.14 × 7 
B) $3.00 × 7 
C) ($5.14 - $3.00)× 7 
D) ($3.00 - $5.14)× 7 
E) None of the above answers are correct because more information is needed. 
A) $5.14 × 7 
B) $3.00 × 7 
C) ($5.14 - $3.00)× 7 
D) ($3.00 - $5.14)× 7 
E) None of the above answers are correct because more information is needed.

Question 2

Does a perfectly competitive producer have any incentive to lower its price so it is below the current market price?
 Explain your answer

Accepted Answer

A perfectly competitive producer has no

Question 3

If the market price is $50 per unit for a good produced in a perfectly competitive market and the firm's average total cost is $52, then the firm

Accepted Answer

A) incurs an economic loss of $2 per unit. 
B) makes an economic profit of $2 per unit. 
C) makes zero economic profit. 
D) incurs a total economic loss of $52. 
E) More information is needed to determine the firm's economic profit or loss per unit. 
A) incurs an economic loss of $2 per unit. 
B) makes an economic profit of $2 per unit. 
C) makes zero economic profit. 
D) incurs a total economic loss of $52. 
E) More information is needed to determine the firm's economic profit or loss per unit.

Question 4

During the middle of the 2000s, the price of gasoline soared and there was a movement to switch to fuels made from a mixture of gasoline and ethanol. Ethanol can be made from corn. The price of corn skyrocketed and then, after a couple of years, the price decreased. What might have led to these price changes in the corn market?

Accepted Answer

There are thousands upon thousands of co

Question 5

In part, perfect competition arises if i. each firm's minimum efficient scale is large relative to demand.
Ii. each firm produces a good or service identical to those produced by its many competitors.
Iii. there are significant barriers to entry.

Accepted Answer

A) i only 
B) ii only 
C) i and ii 
D) iii only 
E) ii and iii 
A) i only 
B) ii only 
C) i and ii 
D) iii only 
E) ii and iii

Question 6

One requirement for an industry to be perfectly competitive is that in the industry there

Accepted Answer

A) are a few firms who control the market. 
B) are many firms for whom the efficient scale of production is small. 
C) is one firm that sells a product with no close substitutes. 
D) are many firms selling different products. 
E) is a barrier to entry that makes the entry of new firms difficult. 
A) are a few firms who control the market. 
B) are many firms for whom the efficient scale of production is small. 
C) is one firm that sells a product with no close substitutes. 
D) are many firms selling different products. 
E) is a barrier to entry that makes the entry of new firms difficult.

Question 7

The firm's supply curve is its

Accepted Answer

A) marginal cost curve above the average variable cost curve. 
B) marginal cost curve below the average variable cost curve. 
C) average variable cost curve above the marginal cost curve. 
D) average total cost curve above the marginal cost curve. 
E) marginal revenue curve above the average total cost curve. 
A) marginal cost curve above the average variable cost curve. 
B) marginal cost curve below the average variable cost curve. 
C) average variable cost curve above the marginal cost curve. 
D) average total cost curve above the marginal cost curve. 
E) marginal revenue curve above the average total cost curve.

Question 8

-The above figure shows three possible average total cost curves. If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₀, each produces 20 units, and the market price of the good is $16 per unit, then

Accepted Answer

A) the firms make an economic profit of $8 per unit. 
B) firms will enter the industry and the number of firms increases. 
C) the firms' ATC curves will eventually shift to become the same as ATC₁. 
D) firms will exit the industry and the number of firms decreases. 
E) Both answer A and answer B are correct. 
A) the firms make an economic profit of $8 per unit. 
B) firms will enter the industry and the number of firms increases. 
C) the firms' ATC curves will eventually shift to become the same as ATC₁. 
D) firms will exit the industry and the number of firms decreases. 
E) Both answer A and answer B are correct.

Question 9

What is the relationship between the price, P, and the average total cost, ATC, for a firm in perfect competition that makes an economic profit?
 That makes zero economic profit?
 That incurs an economic loss?

Accepted Answer

If the price is greater than the average

Question 10

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry, then

Accepted Answer

A) consumer surplus decreases. 
B) the existing firms' economic profit decreases. 
C) there must be external benefits to consumption of the good. 
D) the new firms must incur an economic loss. 
E) Both answer A and answer B are correct. 
A) consumer surplus decreases. 
B) the existing firms' economic profit decreases. 
C) there must be external benefits to consumption of the good. 
D) the new firms must incur an economic loss. 
E) Both answer A and answer B are correct.

Question 11

A firm's marginal revenue is

Accepted Answer

A) the change in total revenue that results from a one-unit increase in the quantity sold. 
B) total revenue minus total cost. 
C) the change in total revenue minus the change in total cost. 
D) the change in total revenue that results from an increase in the demand for the good or service. 
E) less than the market price for a perfectly competitive firm. 
A) the change in total revenue that results from a one-unit increase in the quantity sold. 
B) total revenue minus total cost. 
C) the change in total revenue minus the change in total cost. 
D) the change in total revenue that results from an increase in the demand for the good or service. 
E) less than the market price for a perfectly competitive firm.

Question 12

A market in which many firms sell identical products is

Accepted Answer

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

Question 13

For a perfectly competitive firm, the market price of a good is

Accepted Answer

A) a given which the firm cannot change. 
B) determined by the firm in order to maximize its profit. 
C) equal to the firm's marginal revenue. 
D) Answer A and answer B are correct. 
E) Answer A and answer C are correct. 
A) a given which the firm cannot change. 
B) determined by the firm in order to maximize its profit. 
C) equal to the firm's marginal revenue. 
D) Answer A and answer B are correct. 
E) Answer A and answer C are correct.

Question 14

In the long run, existing firms exit a perfectly competitive market

Accepted Answer

A) only if economic profits are zero. 
B) if they make a positive economic profit. 
C) if normal profits are greater than zero. 
D) only if they incur an economic loss. 
E) if they either make a normal profit or if they incur an economic loss. 
A) only if economic profits are zero. 
B) if they make a positive economic profit. 
C) if normal profits are greater than zero. 
D) only if they incur an economic loss. 
E) if they either make a normal profit or if they incur an economic loss.

Question 15

Jerry's Jellybean Factory produces 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market. The marginal cost is $3 per pound, the average variable cost is $2 per pound, and the beans sell for $4 per pound. Jerry

Accepted Answer

A) is maximizing profit. 
B) is incurring an economic loss and should shut down. 
C) could increase his profit by producing more beans. 
D) could increase his profit by producing fewer beans. 
E) could increase his profit by raising the price of his beans. 
A) is maximizing profit. 
B) is incurring an economic loss and should shut down. 
C) could increase his profit by producing more beans. 
D) could increase his profit by producing fewer beans. 
E) could increase his profit by raising the price of his beans.

Question 16

During the winter, theme parks in Orlando close earlier than in the summer. The reason the theme parks close early during the winter is because during that season the marginal revenue from staying open later is ________ the marginal cost.

Accepted Answer

A) greater than 
B) less than 
C) equal to 
D) zero compared to 
E) not comparable to 
A) greater than 
B) less than 
C) equal to 
D) zero compared to 
E) not comparable to

Question 17

"For a perfectly competitive market, an economic profit attracts new firms. But when these firms enter the market, the price falls and the economic profit is eliminated." Are the previous statements correct or incorrect?
 What is the long-run profit or loss outcome for firms in a perfectly competitive market?

Accepted Answer

The statements are correct. As the state

Question 18

If the market supply curve and market demand curve for a good intersect at 600,000 units and there are 10,000 identical firms in the market, then each firm is producing

Accepted Answer

A) 600,000 units. 
B) 60,000,000,000 units. 
C) 60,000 units. 
D) 60 units. 
E) 10,000 units. 
A) 600,000 units. 
B) 60,000,000,000 units. 
C) 60,000 units. 
D) 60 units. 
E) 10,000 units.

Question 19

In the short run, a perfectly competitive firm ________ make an economic profit and ________ incur an economic loss.

Accepted Answer

A) might; will never 
B) will never; might 
C) might; might 
D) will never; will never 
E) will definitely; will never 
A) might; will never 
B) will never; might 
C) might; might 
D) will never; will never 
E) will definitely; will never

Question 20

When new firms enter a perfectly competitive market, the market supply curve shifts ________ and the price ________.

Accepted Answer

A) rightward; falls 
B) rightward; rises 
C) leftward; falls 
D) leftward; rises 
E) rightward; does not change 
A) rightward; falls 
B) rightward; rises 
C) leftward; falls 
D) leftward; rises 
E) rightward; does not change

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

Does a perfectly competitive producer have any incentive to lower its price so it is below the current market price? Explain your answer

If the market price is $50 per unit for a good produced in a perfectly competitive market and the firm's average total cost is $52, then the firm

In part, perfect competition arises if i. each firm's minimum efficient scale is large relative to demand. Ii. each firm produces a good or service identical to those produced by its many competitors. Iii. there are significant barriers to entry.

One requirement for an industry to be perfectly competitive is that in the industry there

The firm's supply curve is its

-The above figure shows three possible average total cost curves. If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₀, each produces 20 units, and the market price of the good is $16 per unit, then

What is the relationship between the price, P, and the average total cost, ATC, for a firm in perfect competition that makes an economic profit? That makes zero economic profit? That incurs an economic loss?

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry, then

A firm's marginal revenue is

A market in which many firms sell identical products is

For a perfectly competitive firm, the market price of a good is

In the long run, existing firms exit a perfectly competitive market

Jerry's Jellybean Factory produces 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market. The marginal cost is $3 per pound, the average variable cost is $2 per pound, and the beans sell for $4 per pound. Jerry

During the winter, theme parks in Orlando close earlier than in the summer. The reason the theme parks close early during the winter is because during that season the marginal revenue from staying open later is ________ the marginal cost.

If the market supply curve and market demand curve for a good intersect at 600,000 units and there are 10,000 identical firms in the market, then each firm is producing

In the short run, a perfectly competitive firm make an economic profit and incur an economic loss.

When new firms enter a perfectly competitive market, the market supply curve shifts and the price .

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 has a total cost equal to ________.

Does a perfectly competitive producer have any incentive to lower its price so it is below the current market price? Explain your answer

If the market price is $50 per unit for a good produced in a perfectly competitive market and the firm's average total cost is $52, then the firm

In part, perfect competition arises if i. each firm's minimum efficient scale is large relative to demand. Ii. each firm produces a good or service identical to those produced by its many competitors. Iii. there are significant barriers to entry.

One requirement for an industry to be perfectly competitive is that in the industry there

The firm's supply curve is its

-The above figure shows three possible average total cost curves. If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC₀, each produces 20 units, and the market price of the good is $16 per unit, then

What is the relationship between the price, P, and the average total cost, ATC, for a firm in perfect competition that makes an economic profit? That makes zero economic profit? That incurs an economic loss?

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry, then

A firm's marginal revenue is

A market in which many firms sell identical products is

For a perfectly competitive firm, the market price of a good is

In the long run, existing firms exit a perfectly competitive market

Jerry's Jellybean Factory produces 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market. The marginal cost is $3 per pound, the average variable cost is $2 per pound, and the beans sell for $4 per pound. Jerry

During the winter, theme parks in Orlando close earlier than in the summer. The reason the theme parks close early during the winter is because during that season the marginal revenue from staying open later is ________ the marginal cost.

If the market supply curve and market demand curve for a good intersect at 600,000 units and there are 10,000 identical firms in the market, then each firm is producing

In the short run, a perfectly competitive firm ________ make an economic profit and ________ incur an economic loss.

When new firms enter a perfectly competitive market, the market supply curve shifts ________ and the price ________.

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

In the short run, a perfectly competitive firm make an economic profit and incur an economic loss.

When new firms enter a perfectly competitive market, the market supply curve shifts and the price .