Question 1

-Refer to Figure 9.5.If this farmer is maximizing profits,his profit will be

Accepted Answer

A)  -$24. 
B)  $45. 
C)  $48. 
D)  $72. 
A)  -$24. 
B)  $45. 
C)  $48. 
D)  $72.

Question 2

Marginal revenue is

Accepted Answer

A)  the ratio of total revenue to quantity. 
B)  the difference between total revenue and total costs. 
C)  the added revenue that a firm takes in from selling an additional unit of output. 
D)  the additional profit the firm earns when it sells an additional unit of output. 
A)  the ratio of total revenue to quantity. 
B)  the difference between total revenue and total costs. 
C)  the added revenue that a firm takes in from selling an additional unit of output. 
D)  the additional profit the firm earns when it sells an additional unit of output.

Question 3

For a firm in a perfectly competitive market,at the profit-maximizing level of output

Accepted Answer

A)  Price = Marginal Revenue = Marginal Cost. 
B)  Price > Marginal Revenue > Marginal Cost. 
C)  Price  0 and Marginal Revenue = 0. 
A)  Price = Marginal Revenue = Marginal Cost. 
B)  Price > Marginal Revenue > Marginal Cost. 
C)  Price  0 and Marginal Revenue = 0.

Question 4

Claudia,the owner of a printing plant,is trying to decide whether to stay open for business or to shut down.She needs to decide which costs are relevant and which ones are irrelevant when making her decision.Which of the following costs are irrelevant to Claudia?

Accepted Answer

A)  machinery operation costs 
B)  paper 
C)  rent 
D)  A and C are irrelevant. 
A)  machinery operation costs 
B)  paper 
C)  rent 
D)  A and C are irrelevant.

Question 5

Is it possible for a firm to maximize profit and yet incur a loss? Explain.

Accepted Answer

Yes,sometimes the highest prof

Question 6

Lentz's,Incorporated sells paper in a perfectly competitive market at a price of $2 per ream.At the profit-maximizing (cost-minimizing)level of output,average total cost is $2.50 per ream and average variable cost is $1.95 per ream.Should the firm continue to operate in the short run? Explain.

Accepted Answer

Yes.The price of the firm's product ($2)

Question 7

Table 9.2
-Consider a competitive firm that produces tomatoes.The fixed costs are $10 per bushel and the relationship between VC and output is shown in Table 9.2.Compute AVC and MC.How much output will be supplied if P = $45 and the firm wants to maximize profits? What if P = $55? What are profits if P = $60? What is the relationship between marginal cost,average variable cost,and the firm's supply curve?

Accepted Answer

@#IMG-DLM& 
Output = 2 if P = $45.Output = 4 if P

Question 8

Why would a firm be willing to operate at a loss?

Accepted Answer

A firm would be willing to operate at a

Question 9

If a firm in a perfectly competitive market tries to raise its price above the going market price,then

Accepted Answer

A)  it will sell more output. 
B)  it will sell the same amount of output as before. 
C)  it will not be able to sell any output. 
D)  it will sell some output, but not as much as before. 
A)  it will sell more output. 
B)  it will sell the same amount of output as before. 
C)  it will not be able to sell any output. 
D)  it will sell some output, but not as much as before.

Question 10

The long-run supply curve can be used to determine the long-run price after an increase in demand.

Accepted Answer

A) True 
 B)False

Question 11

ABC company will choose to shut down rather than operate as long as

Accepted Answer

A)  it earns the same amount as its expenses. 
B)  average fixed cost is less than average variable cost. 
C)  total revenue is less than or equal to fixed cost. 
D)  total revenue is less than or equal to variable cost. 
A)  it earns the same amount as its expenses. 
B)  average fixed cost is less than average variable cost. 
C)  total revenue is less than or equal to fixed cost. 
D)  total revenue is less than or equal to variable cost.

Question 12

Assume soybeans are produced in a perfectly competitive industry.A soybean farmer is currently maximizing her profits.If the market price of soybeans falls,after the farmer adjusts to the new price,she will be producing ________ bushels of soybeans and her profit will be ________.

Accepted Answer

A)  fewer; the same 
B)  fewer; lower 
C)  more; the same 
D)  the same number of; the same 
A)  fewer; the same 
B)  fewer; lower 
C)  more; the same 
D)  the same number of; the same

Question 13

If total revenue is less than total cost,firms should shut down in the short run.

Accepted Answer

A) True 
 B)False

Question 14

Assume the market for beef is perfectly competitive.Beef producers are currently earning a zero economic profit.If consumers switch from beef to chicken,which of the following is most likely to occur?

Accepted Answer

A)  Beef producers will now incur economic losses in both the short run and the long run. 
B)  Beef producers will incur economic losses in the short run. Some producers will exit the industry until those remaining are earning a zero economic profit. 
C)  Beef producers will incur economic losses in the short run. Some producers will exit the industry until those remaining are earning an economic profit. 
D)  Beef producers will now earn economic profits in the short run and there will be no additional adjustments in the long run. 
A)  Beef producers will now incur economic losses in both the short run and the long run. 
B)  Beef producers will incur economic losses in the short run. Some producers will exit the industry until those remaining are earning a zero economic profit. 
C)  Beef producers will incur economic losses in the short run. Some producers will exit the industry until those remaining are earning an economic profit. 
D)  Beef producers will now earn economic profits in the short run and there will be no additional adjustments in the long run.

Question 15

The Whatsa Widget Company produces widgets in a perfectly competitive market.The price of a widget is $9.Whatsa is currently producing at a rate where the marginal cost of production is $15.Is this company maximizing profit at its current level of output? Explain.

Accepted Answer

No,the company is not maximizing profit

Question 16

Toothpicks are sold in a perfectly competitive market.The market price is currently $3 per box of one hundred toothpicks.At its current level of production,a representative firm in the toothpick industry is producing at a level of output such that long-run average cost is $3.25 per box of one hundred toothpicks.Given this information,is the toothpick industry in equilibrium? Explain.

Accepted Answer

No,the industry is not in equilibrium.In

Question 17

-Refer to Figure 9.6.At a market price of $15,this perfectly competitive,profit-maximizing firm should

Accepted Answer

A)  operate in the short run. 
B)  shut down in the short run. 
C)  realize a normal profit in the short run. 
D)  operate in the long run. 
A)  operate in the short run. 
B)  shut down in the short run. 
C)  realize a normal profit in the short run. 
D)  operate in the long run.

Question 18

If the prices of inputs do not increase as an industry grows,the industry is a(n)

Accepted Answer

A)  decreasing-cost industry. 
B)  constant-cost industry. 
C)  increasing-cost industry. 
D)  nonexistent industry. 
A)  decreasing-cost industry. 
B)  constant-cost industry. 
C)  increasing-cost industry. 
D)  nonexistent industry.

Question 19

Entry of new firms in an increasing-cost industry leads to an downward shift of the LRAC curve.

Accepted Answer

A) True 
 B)False

Question 20

In a decreasing-cost industry,the market price will tend to fall when there is an increase in demand.

Accepted Answer

A) True 
 B)False

-Refer to Figure 9.5.If this farmer is maximizing profits,his profit will be

Marginal revenue is

For a firm in a perfectly competitive market,at the profit-maximizing level of output

Claudia,the owner of a printing plant,is trying to decide whether to stay open for business or to shut down.She needs to decide which costs are relevant and which ones are irrelevant when making her decision.Which of the following costs are irrelevant to Claudia?

Is it possible for a firm to maximize profit and yet incur a loss? Explain.

Lentz's,Incorporated sells paper in a perfectly competitive market at a price of $2 per ream.At the profit-maximizing (cost-minimizing)level of output,average total cost is $2.50 per ream and average variable cost is $1.95 per ream.Should the firm continue to operate in the short run? Explain.

Why would a firm be willing to operate at a loss?

If a firm in a perfectly competitive market tries to raise its price above the going market price,then

The long-run supply curve can be used to determine the long-run price after an increase in demand.

ABC company will choose to shut down rather than operate as long as

Assume soybeans are produced in a perfectly competitive industry.A soybean farmer is currently maximizing her profits.If the market price of soybeans falls,after the farmer adjusts to the new price,she will be producing bushels of soybeans and her profit will be .

If total revenue is less than total cost,firms should shut down in the short run.

Assume the market for beef is perfectly competitive.Beef producers are currently earning a zero economic profit.If consumers switch from beef to chicken,which of the following is most likely to occur?

The Whatsa Widget Company produces widgets in a perfectly competitive market.The price of a widget is $9.Whatsa is currently producing at a rate where the marginal cost of production is $15.Is this company maximizing profit at its current level of output? Explain.

-Refer to Figure 9.6.At a market price of $15,this perfectly competitive,profit-maximizing firm should

If the prices of inputs do not increase as an industry grows,the industry is a(n)

Entry of new firms in an increasing-cost industry leads to an downward shift of the LRAC curve.

In a decreasing-cost industry,the market price will tend to fall when there is an increase in demand.

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 9.5.If this farmer is maximizing profits,his profit will be

Marginal revenue is

For a firm in a perfectly competitive market,at the profit-maximizing level of output

Claudia,the owner of a printing plant,is trying to decide whether to stay open for business or to shut down.She needs to decide which costs are relevant and which ones are irrelevant when making her decision.Which of the following costs are irrelevant to Claudia?

Is it possible for a firm to maximize profit and yet incur a loss? Explain.

Lentz's,Incorporated sells paper in a perfectly competitive market at a price of $2 per ream.At the profit-maximizing (cost-minimizing)level of output,average total cost is $2.50 per ream and average variable cost is $1.95 per ream.Should the firm continue to operate in the short run? Explain.

Why would a firm be willing to operate at a loss?

If a firm in a perfectly competitive market tries to raise its price above the going market price,then

The long-run supply curve can be used to determine the long-run price after an increase in demand.

ABC company will choose to shut down rather than operate as long as

Assume soybeans are produced in a perfectly competitive industry.A soybean farmer is currently maximizing her profits.If the market price of soybeans falls,after the farmer adjusts to the new price,she will be producing ________ bushels of soybeans and her profit will be ________.

If total revenue is less than total cost,firms should shut down in the short run.

Assume the market for beef is perfectly competitive.Beef producers are currently earning a zero economic profit.If consumers switch from beef to chicken,which of the following is most likely to occur?

The Whatsa Widget Company produces widgets in a perfectly competitive market.The price of a widget is $9.Whatsa is currently producing at a rate where the marginal cost of production is $15.Is this company maximizing profit at its current level of output? Explain.

-Refer to Figure 9.6.At a market price of $15,this perfectly competitive,profit-maximizing firm should

If the prices of inputs do not increase as an industry grows,the industry is a(n)

Entry of new firms in an increasing-cost industry leads to an downward shift of the LRAC curve.

In a decreasing-cost industry,the market price will tend to fall when there is an increase in demand.

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

Assume soybeans are produced in a perfectly competitive industry.A soybean farmer is currently maximizing her profits.If the market price of soybeans falls,after the farmer adjusts to the new price,she will be producing bushels of soybeans and her profit will be .