Question 1

-Refer to Figure 9.3.If the market price of soybeans falls to $8,then to maximize profits this farmer should produce

Accepted Answer

A)  200 bushels of soybeans. 
B)  700 bushels of soybeans. 
C)  1,000 bushels of soybeans. 
D)  a level of output that is indeterminate from this information. 
A)  200 bushels of soybeans. 
B)  700 bushels of soybeans. 
C)  1,000 bushels of soybeans. 
D)  a level of output that is indeterminate from this information.

Question 2

Scenario 9.1: 21st Century Pen, Inc. produces 2,000 pens per day, and hires 20 workers at a cost of $200 per day per worker. The price of each pen is $5 each. 21st Century Pen, Inc. pays a daily rental rate of $60 on its factory and a daily insurance rate of $20. 21st Century Pen, Inc. has a ten year lease on the factory, an insurance contract for a year, and the company has no other expenses.
-Refer to Scenario 9.1.21st Century Pen,Inc.'s average total cost at an output of 2,000 pens per day is approximately

Accepted Answer

A)  $2.00 per unit. 
B)  $2.01 per unit. 
C)  $2.03 per unit. 
D)  $2.04 per unit. 
A)  $2.00 per unit. 
B)  $2.01 per unit. 
C)  $2.03 per unit. 
D)  $2.04 per unit.

Question 3

List the three conditions that must be met when a perfectly competitive industry is in long-run equilibrium.

Accepted Answer

The quantity demanded must equal the qua

Question 4

How much economic profit does a firm make in the long-run equilibrium when the price equals the average cost of production?

Accepted Answer

A)  more than the average cost 
B)  zero 
C)  less than the average cost 
D)  It cannot be determined. 
A)  more than the average cost 
B)  zero 
C)  less than the average cost 
D)  It cannot be determined.

Question 5

-Refer to Table 9.1.If the market price is $40,which of the following would you recommend to this firm?

Accepted Answer

A)  Continue producing 4 units of output, because the firm is able to make an economic profit. 
B)  Increase output to 5 units, so that marginal cost equals marginal revenue. 
C)  Reduce price to $35, so that marginal cost will be less marginal revenue. 
D)  Shut down production to insure loss minimization. 
A)  Continue producing 4 units of output, because the firm is able to make an economic profit. 
B)  Increase output to 5 units, so that marginal cost equals marginal revenue. 
C)  Reduce price to $35, so that marginal cost will be less marginal revenue. 
D)  Shut down production to insure loss minimization.

Question 6

For firms in perfect competition,price is equal to marginal revenue at all levels of output.

Accepted Answer

A) True 
 B)False

Question 7

In all four types of markets,a firm's main objective is to

Accepted Answer

A)  maximize revenue. 
B)  maximize output. 
C)  maximize economic profit. 
D)  minimize fixed cost. 
A)  maximize revenue. 
B)  maximize output. 
C)  maximize economic profit. 
D)  minimize fixed cost.

Question 8

-Refer to Figure 9.6.At a market price of $20,this perfectly competitive,profit-maximizing firm should produce approximately ________ units.

Accepted Answer

A)  30 
B)  35 
C)  40 
D)  45 
A)  30 
B)  35 
C)  40 
D)  45

Question 9

-Refer to Figure 9.2.If Buffy gives 17 perms per day,her daily profit is

Accepted Answer

A)  $3. 
B)  $10. 
C)  $45. 
D)  $51. 
A)  $3. 
B)  $10. 
C)  $45. 
D)  $51.

Question 10

In the short run,individual firms want to maximize their

Accepted Answer

A)  marginal cost. 
B)  marginal revenue. 
C)  total revenue. 
D)  profit. 
A)  marginal cost. 
B)  marginal revenue. 
C)  total revenue. 
D)  profit.

Question 11

Monopolistic competition is characterized by barriers to entry.

Accepted Answer

A) True 
 B)False

Question 12

In the short run,after Hurricane Andrew struck the southeastern United States,the price of ice

Accepted Answer

A)  rose. 
B)  did not change. 
C)  fell. 
D)  became negative. 
A)  rose. 
B)  did not change. 
C)  fell. 
D)  became negative.

Question 13

Explain why,for all firms,profits are maximized where marginal revenue equals marginal cost.

Accepted Answer

At the point where MR = MC,the differenc

Question 14

An individual firm faces the market demand curve in a monopolistic competition industry.

Accepted Answer

A) True 
 B)False

Question 15

In the long run,after Hurricane Andrew struck the southeastern United States,the price of ice

Accepted Answer

A)  rose. 
B)  did not change. 
C)  fell. 
D)  became negative. 
A)  rose. 
B)  did not change. 
C)  fell. 
D)  became negative.

Question 16

To maximize total profits,a firm should produce at the level of output at which there is the greatest difference between marginal revenue and marginal cost.

Accepted Answer

A) True 
 B)False

Question 17

-Refer to Table 9.1.If the market price is $90,then for this firm to maximize profits it should produce ________ units of output.

Accepted Answer

A)  3 
B)  4 
C)  5 
D)  6 
A)  3 
B)  4 
C)  5 
D)  6

Question 18

Recall the Application about the break-even price for growing switchgrass, a perennial grass that is native to the U.S. plains states and is used to create biofuel, to answer the following question(s).
-Recall the Application.If the minimum average variable cost for switchgrass farmers is $30 per ton and the current price is $35 per ton,in the long run the switchgrass farmer will

Accepted Answer

A)  exit the industry. 
B)  operate and lose money. 
C)  make a positive economic profit. 
D)  make a zero economic profit. 
A)  exit the industry. 
B)  operate and lose money. 
C)  make a positive economic profit. 
D)  make a zero economic profit.

Question 19

Suppose that Carol is the owner of a candle factory.What will happen if the price of the candles being sold drops below the shut-down price?

Accepted Answer

A)  Carol's total revenue will be equal to total fixed costs. 
B)  Carol's total revenue will exceed total variable costs. 
C)  Carol's total revenue will be less than total variable costs. 
D)  Carol's total revenue will be maximized. 
A)  Carol's total revenue will be equal to total fixed costs. 
B)  Carol's total revenue will exceed total variable costs. 
C)  Carol's total revenue will be less than total variable costs. 
D)  Carol's total revenue will be maximized.

Question 20

-Refer to Figure 9.7.This firm's short-run supply curve is the firm's

Accepted Answer

A)  AVC curve to the left of Point B. 
B)  marginal cost curve above Point A. 
C)  marginal cost curve above Point B. 
D)  marginal cost curve above Point D. 
A)  AVC curve to the left of Point B. 
B)  marginal cost curve above Point A. 
C)  marginal cost curve above Point B. 
D)  marginal cost curve above Point D.

-Refer to Figure 9.3.If the market price of soybeans falls to $8,then to maximize profits this farmer should produce

List the three conditions that must be met when a perfectly competitive industry is in long-run equilibrium.

How much economic profit does a firm make in the long-run equilibrium when the price equals the average cost of production?

-Refer to Table 9.1.If the market price is $40,which of the following would you recommend to this firm?

For firms in perfect competition,price is equal to marginal revenue at all levels of output.

In all four types of markets,a firm's main objective is to

-Refer to Figure 9.6.At a market price of $20,this perfectly competitive,profit-maximizing firm should produce approximately ________ units.

-Refer to Figure 9.2.If Buffy gives 17 perms per day,her daily profit is

In the short run,individual firms want to maximize their

Monopolistic competition is characterized by barriers to entry.

In the short run,after Hurricane Andrew struck the southeastern United States,the price of ice

Explain why,for all firms,profits are maximized where marginal revenue equals marginal cost.

An individual firm faces the market demand curve in a monopolistic competition industry.

In the long run,after Hurricane Andrew struck the southeastern United States,the price of ice

To maximize total profits,a firm should produce at the level of output at which there is the greatest difference between marginal revenue and marginal cost.

-Refer to Table 9.1.If the market price is $90,then for this firm to maximize profits it should produce ________ units of output.

Suppose that Carol is the owner of a candle factory.What will happen if the price of the candles being sold drops below the shut-down price?

-Refer to Figure 9.7.This firm's short-run supply curve is the firm's

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 9: Perfect Competition

-Refer to Figure 9.3.If the market price of soybeans falls to $8,then to maximize profits this farmer should produce

List the three conditions that must be met when a perfectly competitive industry is in long-run equilibrium.

How much economic profit does a firm make in the long-run equilibrium when the price equals the average cost of production?

-Refer to Table 9.1.If the market price is $40,which of the following would you recommend to this firm?

For firms in perfect competition,price is equal to marginal revenue at all levels of output.

In all four types of markets,a firm's main objective is to

-Refer to Figure 9.6.At a market price of $20,this perfectly competitive,profit-maximizing firm should produce approximately ________ units.

-Refer to Figure 9.2.If Buffy gives 17 perms per day,her daily profit is

In the short run,individual firms want to maximize their

Monopolistic competition is characterized by barriers to entry.

In the short run,after Hurricane Andrew struck the southeastern United States,the price of ice

Explain why,for all firms,profits are maximized where marginal revenue equals marginal cost.

An individual firm faces the market demand curve in a monopolistic competition industry.

In the long run,after Hurricane Andrew struck the southeastern United States,the price of ice

To maximize total profits,a firm should produce at the level of output at which there is the greatest difference between marginal revenue and marginal cost.

-Refer to Table 9.1.If the market price is $90,then for this firm to maximize profits it should produce ________ units of output.

Suppose that Carol is the owner of a candle factory.What will happen if the price of the candles being sold drops below the shut-down price?

-Refer to Figure 9.7.This firm's short-run supply curve is the firm's

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters