Question 1

Will a perfectly competitive firm ever produce in the short run even though it is suffering an economic loss?

Accepted Answer

Yes, a perfectly competitive firm will c

Question 2

The figure above shows a firm's marginal revenue and marginal cost curves.
-The price of a can is $8; if the price increased to $12, then the firm would

Accepted Answer

A) produce zero cans. 
B) decrease the amount of cans produces it but not to zero. 
C) not change the amount of cans it produces. 
D) increase the amount of cans it produces. 
E) More information is needed to determine what action the firm will take. 
A) produce zero cans. 
B) decrease the amount of cans produces it but not to zero. 
C) not change the amount of cans it produces. 
D) increase the amount of cans it produces. 
E) More information is needed to determine what action the firm will take.

Question 3

If the price received by a perfectly competitive firm is less than its average variable cost, what will the firm do in the short run?
 Why?

Accepted Answer

If the price is less than the average va

Question 4

The firm's over-riding objective is to

Accepted Answer

A) earn a normal profit. 
B) maximize normal profit. 
C) maximize economic profit. 
D) maximize total revenue. 
E) avoid an economic loss. 
A) earn a normal profit. 
B) maximize normal profit. 
C) maximize economic profit. 
D) maximize total revenue. 
E) avoid an economic loss.

Question 5

If a perfectly competitive seller is maximizing profit and is making zero economic profit, which of the following will this seller do?

Accepted Answer

A) go to work in the next-best earning opportunity 
B) shut down, with a loss equal to total fixed cost 
C) continue at the current output, making zero economic profit 
D) increase production in order to make an economic profit 
E) remain open but decrease production in order to make an economic profit 
A) go to work in the next-best earning opportunity 
B) shut down, with a loss equal to total fixed cost 
C) continue at the current output, making zero economic profit 
D) increase production in order to make an economic profit 
E) remain open but decrease production in order to make an economic profit

Question 6

In a perfectly competitive industry, when a firm is producing so that its total revenue equals its total cost, the firm is

Accepted Answer

A) making an economic profit. 
B) incurring an economic loss. 
C) making zero economic profit. 
D) definitely not maximizing its profit. 
E) None of the above answers is correct because the relationship between total revenue and total cost has nothing to do with the firm's profit or loss. 
A) making an economic profit. 
B) incurring an economic loss. 
C) making zero economic profit. 
D) definitely not maximizing its profit. 
E) None of the above answers is correct because the relationship between total revenue and total cost has nothing to do with the firm's profit or loss.

Question 7

How does a decrease in the demand for wheat ultimately lead to normal profits for wheat growers in the long run?

Accepted Answer

If the demand for wheat decreases, the p

Question 8

With regard to its profits and losses, how is the short run different from the long run for a perfectly competitive firm?

Accepted Answer

The firm can make an economic profit, in

Question 9

To maximize its profit, in the short run a perfectly competitive firm decides

Accepted Answer

A) what price to charge for its product. 
B) what quantity of output to produce. 
C) whether to exit the market. 
D) whether to increase the size of its plant. 
E) how much advertising it should undertake. 
A) what price to charge for its product. 
B) what quantity of output to produce. 
C) whether to exit the market. 
D) whether to increase the size of its plant. 
E) how much advertising it should undertake.

Question 10

In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy?

Accepted Answer

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

Question 11

Which of the following is true if a firm shuts down?
I. The price is less than minimum average variable cost.
Ii. The firm is able to avoid an economic loss.
Iii. The firm incurs a loss equal to its total variable cost.

Accepted Answer

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

Question 12

A perfectly competitive firm

Accepted Answer

A) sells a product that has perfect substitutes. 
B) has a perfectly inelastic demand. 
C) has a perfectly elastic supply. 
D) Answer A and answer B are correct. 
E) Answer A and answer C are correct. 
A) sells a product that has perfect substitutes. 
B) has a perfectly inelastic demand. 
C) has a perfectly elastic supply. 
D) Answer A and answer B are correct. 
E) Answer A and answer C are correct.

Question 13

Catfish farming is a perfectly competitive industry. Catfish farmers suffered tremendous economic losses in the late 2000s. As a result,

Accepted Answer

A) some new catfish farmers entered the market. 
B) some catfish farmers exited the market. 
C) no catfish farmers entered or exited this market. 
D) the supply of catfish increased in 2010. 
E) new demanders entered the market after some firms had exited. 
A) some new catfish farmers entered the market. 
B) some catfish farmers exited the market. 
C) no catfish farmers entered or exited this market. 
D) the supply of catfish increased in 2010. 
E) new demanders entered the market after some firms had exited.

Question 14

A requirement of perfect competition is that i. many firms sell an identical product to many buyers.
Ii. there are no restrictions on entry into (or exit from)the market, and established firms have no advantage over new firms
Iii. sellers and buyers are well informed about prices.

Accepted Answer

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

Question 15

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market. If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120. She can sell this batch of cookies at a market price of $110. To maximize her profit, Jennifer should

Accepted Answer

A) not produce this additional batch. 
B) produce this batch of cookies because they will help lower her average fixed cost. 
C) charge $120 for this batch. 
D) shut down. 
E) produce this batch of cookies because their MR exceeds their MC. 
A) not produce this additional batch. 
B) produce this batch of cookies because they will help lower her average fixed cost. 
C) charge $120 for this batch. 
D) shut down. 
E) produce this batch of cookies because their MR exceeds their MC.

Question 16

For a perfectly competitive rancher in Wyoming, if the price does not change, an economic profit could turn into an economic loss if the

Accepted Answer

A) average total cost curve shifts downward. 
B) average total cost curve does not change. 
C) average total cost curve shifts upward. 
D) marginal cost curve shifts downward. 
E) average fixed cost decreases. 
A) average total cost curve shifts downward. 
B) average total cost curve does not change. 
C) average total cost curve shifts upward. 
D) marginal cost curve shifts downward. 
E) average fixed cost decreases.

Question 17

When firms in a perfectly competitive market are earning an economic profit, in the long run

Accepted Answer

A) no new firms will enter the market. 
B) new firms will enter the market. 
C) firms will exit the market. 
D) the long-run average cost curve shifts downward. 
E) the initial firms continue to earn an economic profit. 
A) no new firms will enter the market. 
B) new firms will enter the market. 
C) firms will exit the market. 
D) the long-run average cost curve shifts downward. 
E) the initial firms continue to earn an economic profit.

Question 18

The table below gives Amy's total cost schedule for producing holiday wreaths. Amy is a perfect competitor and can sell each wreath for $9.
a. Complete the table by calculating Amy's total revenue and her profit or loss schedule.
   
b. When Amy is producing 4 wreaths, what is her total cost?
 What is her total revenue?
 What is her economic profit or economic loss?
c. What number of wreaths maximizes Amy's profit?

Accepted Answer

\[\begin{array} { c c c c } 
\begin{arra

Question 19

If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel, how many bushels would Farmer Brown sell?

Accepted Answer

A) some, but fewer than he would at a price of $4 
B) more than he would at a price of $4 
C) just as many as he would at a price of $4 
D) none 
E) More information is needed about the prices charged by the other wheat farmers. 
A) some, but fewer than he would at a price of $4 
B) more than he would at a price of $4 
C) just as many as he would at a price of $4 
D) none 
E) More information is needed about the prices charged by the other wheat farmers.

Question 20

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure.
a. What is Farmer Brown's total revenue?
b. What is Farmer Brown's marginal revenue?

Accepted Answer

a. Total revenue = price × quantity. The

Will a perfectly competitive firm ever produce in the short run even though it is suffering an economic loss?

The figure above shows a firm's marginal revenue and marginal cost curves. -The price of a can is $8; if the price increased to $12, then the firm would

If the price received by a perfectly competitive firm is less than its average variable cost, what will the firm do in the short run? Why?

The firm's over-riding objective is to

If a perfectly competitive seller is maximizing profit and is making zero economic profit, which of the following will this seller do?

In a perfectly competitive industry, when a firm is producing so that its total revenue equals its total cost, the firm is

How does a decrease in the demand for wheat ultimately lead to normal profits for wheat growers in the long run?

With regard to its profits and losses, how is the short run different from the long run for a perfectly competitive firm?

To maximize its profit, in the short run a perfectly competitive firm decides

In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy?

Which of the following is true if a firm shuts down? I. The price is less than minimum average variable cost. Ii. The firm is able to avoid an economic loss. Iii. The firm incurs a loss equal to its total variable cost.

A perfectly competitive firm

Catfish farming is a perfectly competitive industry. Catfish farmers suffered tremendous economic losses in the late 2000s. As a result,

A requirement of perfect competition is that i. many firms sell an identical product to many buyers. Ii. there are no restrictions on entry into (or exit from)the market, and established firms have no advantage over new firms Iii. sellers and buyers are well informed about prices.

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market. If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120. She can sell this batch of cookies at a market price of $110. To maximize her profit, Jennifer should

For a perfectly competitive rancher in Wyoming, if the price does not change, an economic profit could turn into an economic loss if the

When firms in a perfectly competitive market are earning an economic profit, in the long run

If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel, how many bushels would Farmer Brown sell?

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure. a. What is Farmer Brown's total revenue? b. What is Farmer Brown's marginal revenue?

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

Will a perfectly competitive firm ever produce in the short run even though it is suffering an economic loss?

The figure above shows a firm's marginal revenue and marginal cost curves. -The price of a can is $8; if the price increased to $12, then the firm would

If the price received by a perfectly competitive firm is less than its average variable cost, what will the firm do in the short run? Why?

The firm's over-riding objective is to

If a perfectly competitive seller is maximizing profit and is making zero economic profit, which of the following will this seller do?

In a perfectly competitive industry, when a firm is producing so that its total revenue equals its total cost, the firm is

How does a decrease in the demand for wheat ultimately lead to normal profits for wheat growers in the long run?

With regard to its profits and losses, how is the short run different from the long run for a perfectly competitive firm?

To maximize its profit, in the short run a perfectly competitive firm decides

In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy?

Which of the following is true if a firm shuts down? I. The price is less than minimum average variable cost. Ii. The firm is able to avoid an economic loss. Iii. The firm incurs a loss equal to its total variable cost.

A perfectly competitive firm

Catfish farming is a perfectly competitive industry. Catfish farmers suffered tremendous economic losses in the late 2000s. As a result,

A requirement of perfect competition is that i. many firms sell an identical product to many buyers. Ii. there are no restrictions on entry into (or exit from)the market, and established firms have no advantage over new firms Iii. sellers and buyers are well informed about prices.

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market. If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120. She can sell this batch of cookies at a market price of $110. To maximize her profit, Jennifer should

For a perfectly competitive rancher in Wyoming, if the price does not change, an economic profit could turn into an economic loss if the

When firms in a perfectly competitive market are earning an economic profit, in the long run

If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel, how many bushels would Farmer Brown sell?

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure. a. What is Farmer Brown's total revenue? b. What is Farmer Brown's marginal revenue?

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