Question 1

For a perfectly competitive firm, marginal revenue is

Accepted Answer

A) less than the price. 
B) greater than the price. 
C) equal to the price. 
D) equal to the change in profit from selling one more unit. 
E) undefined because the firm's demand curve is horizontal. 
A) less than the price. 
B) greater than the price. 
C) equal to the price. 
D) equal to the change in profit from selling one more unit. 
E) undefined because the firm's demand curve is horizontal.

Question 2

Technological change brings a ________ to firms that adopt the new technology.

Accepted Answer

A) permanent economic profit 
B) temporary economic profit 
C) permanent economic loss 
D) temporary economic loss 
E) temporary normal profit 
A) permanent economic profit 
B) temporary economic profit 
C) permanent economic loss 
D) temporary economic loss 
E) temporary normal profit

Question 3

Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $4.00. What is Acme's most profitable amount of output?
 What is Acme's total economic profit or loss?

Accepted Answer

Acme's most profitable (which means, in

Question 4

In the short run, a perfectly competitive firm can experience which of the following?
I. an economic profit
Ii. an economic loss but it continues to stay open
Iii. an economic loss equal to its total fixed cost when it shuts down

Accepted Answer

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

Question 5

A large number of sellers all selling an identical product implies which of the following?

Accepted Answer

A) market chaos 
B) the inability of any seller to change the price of the product 
C) large losses incurred by all sellers 
D) horizontal market supply curves 
E) vertical market supply curves 
A) market chaos 
B) the inability of any seller to change the price of the product 
C) large losses incurred by all sellers 
D) horizontal market supply curves 
E) vertical market supply curves

Question 6

In the long run, perfectly competitive firms produce at the output level that has the minimum

Accepted Answer

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

Question 7

Describe how economic losses are eliminated in a perfectly competitive industry.

Accepted Answer

If firms are incurring economic losses,

Question 8

When firms in a perfectly competitive market incur economic losses, exit by some firms means the market supply will

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) become vertical. 
E) become the same as the individual producers' supplies. 
A) increase. 
B) decrease. 
C) not change. 
D) become vertical. 
E) become the same as the individual producers' supplies.

Question 9

A perfectly competitive firm maximizes its profit by producing at the point where

Accepted Answer

A) total revenue equals total cost. 
B) marginal revenue is equal to marginal cost. 
C) total revenue is equal to marginal revenue. 
D) total cost is at its minimum. 
E) total revenue is at its maximum. 
A) total revenue equals total cost. 
B) marginal revenue is equal to marginal cost. 
C) total revenue is equal to marginal revenue. 
D) total cost is at its minimum. 
E) total revenue is at its maximum.

Question 10

If demand for a seller's product is perfectly elastic, which of the following is true?
I. The firm will sell no output if it sets the price its product above the market price.
Ii. There are many perfect substitutes for the seller's product.
Iii. The firm will sell no output if it sets the price its product below the market price.

Accepted Answer

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

Question 11

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (thousands of bushels } \
\text { of corn a week) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (thousands of } \
\text { dollars per week) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (thousands of } \
\text { dollars per week) }
\end{array} \
\hline 0 & 0 & 50 \
10 & 30 & 70 \
20 & 60 & 80 \
30 & 90 & 90 \
40 & 120 & 110 \
50 & 150 & 140 \
60 & 180 & 200 \
70 & 210 & 280 \
80 & 240 & 400
\end{array}$$
-Jimmy grows corn. His total revenue and total cost are in the above table. What quantity of corn maximizes his profit and what is his profit?
 What is the marginal revenue and marginal cost at this quantity?

Accepted Answer

Jimmy's profit is greatest if he grows e

Question 12

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-Based on the figure above, what is the price of a can?

Accepted Answer

A) $0 
B) $8.00 per can 
C) $5.10 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) $8.00 per can 
C) $5.10 per can 
D) None of the above prices is correct. 
E) More information is needed to determine the price of a can.

Question 13

For a perfectly competitive firm, the price of its good is equal to the firm's marginal revenue because

Accepted Answer

A) information about price changes is hard to come by for small sellers. 
B) price and marginal revenue are the same economic concepts. 
C) individual perfectly competitive firms cannot influence the market price by changing their output. 
D) the firm's total revenue cannot be changed by anything the firms can do. 
E) there are only a small number of firms in the market. 
A) information about price changes is hard to come by for small sellers. 
B) price and marginal revenue are the same economic concepts. 
C) individual perfectly competitive firms cannot influence the market price by changing their output. 
D) the firm's total revenue cannot be changed by anything the firms can do. 
E) there are only a small number of firms in the market.

Question 14

A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4. The price of the good is $5. To maximize its profit, this firm should

Accepted Answer

A) raise its price. 
B) lower its price. 
C) increase its output. 
D) decrease its output. 
E) increase the price it charges for its product. 
A) raise its price. 
B) lower its price. 
C) increase its output. 
D) decrease its output. 
E) increase the price it charges for its product.

Question 15

The corn market is perfectly competitive, with thousands of corn farmers. In the 2000s, the price of corn soared so that new farmers entered the corn market. Initially, entry ________ the economic profit of the initial corn farmers and in the long run the initial corn farmers ________.

Accepted Answer

A) increased; made an even greater economic profit than initially 
B) decreased; made zero economic profit 
C) increased; made zero economic profit 
D) decreased; incurred an economic loss 
E) increased; made an economic profit 
A) increased; made an even greater economic profit than initially 
B) decreased; made zero economic profit 
C) increased; made zero economic profit 
D) decreased; incurred an economic loss 
E) increased; made an economic profit

Question 16

-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 ATC₁, each produce 30 units, and the market price of the good is $16 per unit, then the firms

Accepted Answer

A) make zero economic profit and firms neither enter nor exit the industry. 
B) make zero economic profit and so some firms exit the industry. 
C) incur an economic loss and so some firms exit the industry. 
D) incur an economic loss and so new firms enter the industry. 
E) make an economic profit and new firms enter the industry. 
A) make zero economic profit and firms neither enter nor exit the industry. 
B) make zero economic profit and so some firms exit the industry. 
C) incur an economic loss and so some firms exit the industry. 
D) incur an economic loss and so new firms enter the industry. 
E) make an economic profit and new firms enter the industry.

Question 17

Alice, Bud, and Celia can produce rubber bands in a perfectly competitive market. If they enter the market, the minimum average total cost for a bundle of rubber bands, for the three of them is $2, $3, and $4, respectively. If the market price is $2.10 per bundle, then

Accepted Answer

A) all three of them will enter the market. 
B) only Alice will enter the market. 
C) Alice and Bud will enter the market. 
D) Bud and Celia will enter the market. 
E) Alice and Celia will enter the market. 
A) all three of them will enter the market. 
B) only Alice will enter the market. 
C) Alice and Bud will enter the market. 
D) Bud and Celia will enter the market. 
E) Alice and Celia will enter the market.

Question 18

If the market price of a product is $14 and all sellers are price takers, then which of the following is correct?

Accepted Answer

A) Each seller's total revenue line is graphed as an upward-sloping straight line. 
B) The demand curve for each seller's product is a downward-sloping straight line. 
C) Each seller can earn more total revenue by raising the price he or she charges above $14. 
D) The demand curve for each seller's product is a downward-sloping but not necessarily a straight line. 
E) Each seller's total revenue is graphed as an upside-down U-shaped curve. 
A) Each seller's total revenue line is graphed as an upward-sloping straight line. 
B) The demand curve for each seller's product is a downward-sloping straight line. 
C) Each seller can earn more total revenue by raising the price he or she charges above $14. 
D) The demand curve for each seller's product is a downward-sloping but not necessarily a straight line. 
E) Each seller's total revenue is graphed as an upside-down U-shaped curve.

Question 19

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

Accepted Answer

A) when it is making a normal profit 
B) whenever its marginal cost is less than its marginal revenue 
C) when the price is less than its minimum average variable cost 
D) whenever its total cost is greater than its total revenue 
E) when the price is less than its minimum average total cost 
A) when it is making a normal profit 
B) whenever its marginal cost is less than its marginal revenue 
C) when the price is less than its minimum average variable cost 
D) whenever its total cost is greater than its total revenue 
E) when the price is less than its minimum average total cost

Question 20

When will new firms enter a perfectly competitive market?
 When does entry stop?

Accepted Answer

New firms will enter a perfectly competi

For a perfectly competitive firm, marginal revenue is

Technological change brings a ________ to firms that adopt the new technology.

Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $4.00. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

In the short run, a perfectly competitive firm can experience which of the following? I. an economic profit Ii. an economic loss but it continues to stay open Iii. an economic loss equal to its total fixed cost when it shuts down

A large number of sellers all selling an identical product implies which of the following?

In the long run, perfectly competitive firms produce at the output level that has the minimum

Describe how economic losses are eliminated in a perfectly competitive industry.

When firms in a perfectly competitive market incur economic losses, exit by some firms means the market supply will

A perfectly competitive firm maximizes its profit by producing at the point where

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above, what is the price of a can?

For a perfectly competitive firm, the price of its good is equal to the firm's marginal revenue because

A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4. The price of the good is $5. To maximize its profit, this firm should

The corn market is perfectly competitive, with thousands of corn farmers. In the 2000s, the price of corn soared so that new farmers entered the corn market. Initially, entry the economic profit of the initial corn farmers and in the long run the initial corn farmers .

-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 ATC₁, each produce 30 units, and the market price of the good is $16 per unit, then the firms

Alice, Bud, and Celia can produce rubber bands in a perfectly competitive market. If they enter the market, the minimum average total cost for a bundle of rubber bands, for the three of them is $2, $3, and $4, respectively. If the market price is $2.10 per bundle, then

If the market price of a product is $14 and all sellers are price takers, then which of the following is correct?

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

When will new firms enter a perfectly competitive market? When does entry stop?

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

For a perfectly competitive firm, marginal revenue is

Technological change brings a ________ to firms that adopt the new technology.

Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $4.00. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

In the short run, a perfectly competitive firm can experience which of the following? I. an economic profit Ii. an economic loss but it continues to stay open Iii. an economic loss equal to its total fixed cost when it shuts down

A large number of sellers all selling an identical product implies which of the following?

In the long run, perfectly competitive firms produce at the output level that has the minimum

Describe how economic losses are eliminated in a perfectly competitive industry.

When firms in a perfectly competitive market incur economic losses, exit by some firms means the market supply will

A perfectly competitive firm maximizes its profit by producing at the point where

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above, what is the price of a can?

For a perfectly competitive firm, the price of its good is equal to the firm's marginal revenue because

A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4. The price of the good is $5. To maximize its profit, this firm should

The corn market is perfectly competitive, with thousands of corn farmers. In the 2000s, the price of corn soared so that new farmers entered the corn market. Initially, entry ________ the economic profit of the initial corn farmers and in the long run the initial corn farmers ________.

-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 ATC₁, each produce 30 units, and the market price of the good is $16 per unit, then the firms

Alice, Bud, and Celia can produce rubber bands in a perfectly competitive market. If they enter the market, the minimum average total cost for a bundle of rubber bands, for the three of them is $2, $3, and $4, respectively. If the market price is $2.10 per bundle, then

If the market price of a product is $14 and all sellers are price takers, then which of the following is correct?

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

When will new firms enter a perfectly competitive market? When does entry stop?

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 corn market is perfectly competitive, with thousands of corn farmers. In the 2000s, the price of corn soared so that new farmers entered the corn market. Initially, entry the economic profit of the initial corn farmers and in the long run the initial corn farmers .