Question 1

What happens to a firm's profit-maximizing level of output if the price of the product rises? Use a graph to explain your answer.

Accepted Answer

Because the firm maximizes profit by set

Question 2

Assume that a smartphone maker operates in a perfectly competitive market producing 25,000 smartphones per day.At this output level,price is less than this firm's marginal cost.It follows that producing one more smartphone will cause this firm's

Accepted Answer

A)  total cost to decrease. 
B)  profits to increase. 
C)  profits to decrease. 
D)  profits to remain unchanged. 
A)  total cost to decrease. 
B)  profits to increase. 
C)  profits to decrease. 
D)  profits to remain unchanged.

Question 3

A pasta producer is in a perfectly competitive market.To maximize profits,the pasta producer should produce the output level where

Accepted Answer

A)  price equals fixed cost. 
B)  price equals average variable cost. 
C)  price equals average total cost. 
D)  price equals marginal cost. 
A)  price equals fixed cost. 
B)  price equals average variable cost. 
C)  price equals average total cost. 
D)  price equals marginal cost.

Question 4

UG Tech,Inc.is a perfectly competitive firm producing wireless earbuds where marginal revenue is equal to marginal cost.The current market price of wireless earbuds is $30.00.UG Tech,Inc.sells 500 wireless earbuds.Its short-run average variable cost is $10.00 and its average fixed cost is $5.00.What should UG Tech,Inc.do?

Accepted Answer

A)  Continue to produce because price exceeds short-run average variable cost. 
B)  Shut down and produce zero earbuds because price is less than short-run average variable cost. 
C)  Decrease production so that short-run average variable cost will decrease. 
D)  Increase production so that average fixed cost will decrease. 
A)  Continue to produce because price exceeds short-run average variable cost. 
B)  Shut down and produce zero earbuds because price is less than short-run average variable cost. 
C)  Decrease production so that short-run average variable cost will decrease. 
D)  Increase production so that average fixed cost will decrease.

Question 5

In a perfectly competitive market,an individual firm faces a perfectly elastic demand curve.

Accepted Answer

A) True 
 B)False

Question 6

-Refer to Figure 9.8.In the long run,

Accepted Answer

A)  existing firms in this industry will contract output. 
B)  firms will leave this industry. 
C)  existing firms will expand and new firms will enter this industry. 
D)  the industry supply curve will shift to the left. 
A)  existing firms in this industry will contract output. 
B)  firms will leave this industry. 
C)  existing firms will expand and new firms will enter this industry. 
D)  the industry supply curve will shift to the left.

Question 7

What is the shape of the marginal revenue curve for a perfectly competitive firm? Why is it that way?

Accepted Answer

The marginal revenue curve is a horizont

Question 8

A firm suffering economic losses decides whether or not to produce in the short run on the basis of

Accepted Answer

A)  whether revenues cover variable costs. 
B)  whether future profits will allow it to recover fixed costs. 
C)  whether revenues from operating are sufficient to cover fixed costs. 
D)  whether revenues from operating are sufficient to cover fixed plus variable costs. 
A)  whether revenues cover variable costs. 
B)  whether future profits will allow it to recover fixed costs. 
C)  whether revenues from operating are sufficient to cover fixed costs. 
D)  whether revenues from operating are sufficient to cover fixed plus variable costs.

Question 9

Recall the Application about the price and supply of blueberries to answer the following question(s).
-According to the Application,the blueberry industry is roughly a(n)

Accepted Answer

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

Question 10

-Refer to Table 9.1.The shut-down point for this firm is a price of

Accepted Answer

A)  $50. 
B)  $55. 
C)  $60. 
D)  $65. 
A)  $50. 
B)  $55. 
C)  $60. 
D)  $65.

Question 11

If a firm is indifferent between operating and shutting down in the short run,then it must be true that

Accepted Answer

A)  total revenue equals total cost. 
B)  total revenue equals total variable cost. 
C)  total revenue equals fixed cost. 
D)  fixed cost is zero. 
A)  total revenue equals total cost. 
B)  total revenue equals total variable cost. 
C)  total revenue equals fixed cost. 
D)  fixed cost is zero.

Question 12

-Refer to Figure 9.5.If this farmer is maximizing his profits,his total variable cost is

Accepted Answer

A)  $24. 
B)  $42. 
C)  $108. 
D)  $255. 
A)  $24. 
B)  $42. 
C)  $108. 
D)  $255.

Question 13

The long-run industry supply curve is positively sloped for a decreasing-cost industry.

Accepted Answer

A) True 
 B)False

Question 14

Explain when a firm will shut down to minimize losses.Draw a graph to illustrate this situation.

Accepted Answer

The firm will shut d

Question 15

-Refer to Figure 9.4.If the market price of hay falls to $18,then to maximize profits this farmer should produce

Accepted Answer

A)  350 bales of hay. 
B)  500 bales of hay. 
C)  750 bales of hay. 
D)  a level of output that is indeterminate from this information. 
A)  350 bales of hay. 
B)  500 bales of hay. 
C)  750 bales of hay. 
D)  a level of output that is indeterminate from this information.

Question 16

-Refer to Figure 9.6.At a market price of $20,this profit-maximizing firm would earn ________ in economic profit.

Accepted Answer

A)  $30 
B)  $25 
C)  $20 
D)  $0 
A)  $30 
B)  $25 
C)  $20 
D)  $0

Question 17

Recall the Application about the shut-down price for zinc to answer the following question(s).
-Recall the Application.What is the shut-down price for the zinc mines?

Accepted Answer

A)  The cost of mining zinc varies from one mine to another; the shut-down price varies too. 
B)  The shut-down price is $1,900 per ton for all zinc mines. 
C)  The shut-down price is $1,500 per ton for all zinc mines. 
D)  none of the above 
A)  The cost of mining zinc varies from one mine to another; the shut-down price varies too. 
B)  The shut-down price is $1,900 per ton for all zinc mines. 
C)  The shut-down price is $1,500 per ton for all zinc mines. 
D)  none of the above

Question 18

In an increasing-cost industry,firms can enter and leave in the long run.

Accepted Answer

A) True 
 B)False

Question 19

Recall the Application about the demand and price for margarine to answer the following question(s).
-Recall the Application.The margarine industry is an example of a constant-cost industry because as the total output of the industry changes,the price of the key inputs to the production of margarine don't change.As a result,

Accepted Answer

A)  the demand decreases by the same amount. 
B)  the supply increases by the same amount. 
C)  the unit of cost is unaffected by changes in total output. 
D)  the unit of cost is affected by changes in total output. 
A)  the demand decreases by the same amount. 
B)  the supply increases by the same amount. 
C)  the unit of cost is unaffected by changes in total output. 
D)  the unit of cost is affected by changes in total output.

Question 20

For oligopolistic industries,demand is more elastic than the demand facing monopolistically competitive industries.

Accepted Answer

A) True 
 B)False

What happens to a firm's profit-maximizing level of output if the price of the product rises? Use a graph to explain your answer.

Assume that a smartphone maker operates in a perfectly competitive market producing 25,000 smartphones per day.At this output level,price is less than this firm's marginal cost.It follows that producing one more smartphone will cause this firm's

A pasta producer is in a perfectly competitive market.To maximize profits,the pasta producer should produce the output level where

In a perfectly competitive market,an individual firm faces a perfectly elastic demand curve.

-Refer to Figure 9.8.In the long run,

What is the shape of the marginal revenue curve for a perfectly competitive firm? Why is it that way?

A firm suffering economic losses decides whether or not to produce in the short run on the basis of

Recall the Application about the price and supply of blueberries to answer the following question(s). -According to the Application,the blueberry industry is roughly a(n)

-Refer to Table 9.1.The shut-down point for this firm is a price of

If a firm is indifferent between operating and shutting down in the short run,then it must be true that

-Refer to Figure 9.5.If this farmer is maximizing his profits,his total variable cost is

The long-run industry supply curve is positively sloped for a decreasing-cost industry.

Explain when a firm will shut down to minimize losses.Draw a graph to illustrate this situation.

-Refer to Figure 9.4.If the market price of hay falls to $18,then to maximize profits this farmer should produce

-Refer to Figure 9.6.At a market price of $20,this profit-maximizing firm would earn ________ in economic profit.

Recall the Application about the shut-down price for zinc to answer the following question(s). -Recall the Application.What is the shut-down price for the zinc mines?

In an increasing-cost industry,firms can enter and leave in the long run.

For oligopolistic industries,demand is more elastic than the demand facing monopolistically competitive industries.

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

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Exam 9: Perfect Competition

What happens to a firm's profit-maximizing level of output if the price of the product rises? Use a graph to explain your answer.

Assume that a smartphone maker operates in a perfectly competitive market producing 25,000 smartphones per day.At this output level,price is less than this firm's marginal cost.It follows that producing one more smartphone will cause this firm's

A pasta producer is in a perfectly competitive market.To maximize profits,the pasta producer should produce the output level where

In a perfectly competitive market,an individual firm faces a perfectly elastic demand curve.

-Refer to Figure 9.8.In the long run,

What is the shape of the marginal revenue curve for a perfectly competitive firm? Why is it that way?

A firm suffering economic losses decides whether or not to produce in the short run on the basis of

Recall the Application about the price and supply of blueberries to answer the following question(s). -According to the Application,the blueberry industry is roughly a(n)

-Refer to Table 9.1.The shut-down point for this firm is a price of

If a firm is indifferent between operating and shutting down in the short run,then it must be true that

-Refer to Figure 9.5.If this farmer is maximizing his profits,his total variable cost is

The long-run industry supply curve is positively sloped for a decreasing-cost industry.

Explain when a firm will shut down to minimize losses.Draw a graph to illustrate this situation.

-Refer to Figure 9.4.If the market price of hay falls to $18,then to maximize profits this farmer should produce

-Refer to Figure 9.6.At a market price of $20,this profit-maximizing firm would earn ________ in economic profit.

Recall the Application about the shut-down price for zinc to answer the following question(s). -Recall the Application.What is the shut-down price for the zinc mines?

In an increasing-cost industry,firms can enter and leave in the long run.

For oligopolistic industries,demand is more elastic than the demand facing monopolistically competitive industries.

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