Question 1

Which of the following is a good example of an increasing-cost industry?

Accepted Answer

A)  apartments 
B)  sugar 
C)  mining 
D)  all of the above 
A)  apartments 
B)  sugar 
C)  mining 
D)  all of the above

Question 2

Accounting profit is equal to

Accepted Answer

A)  total revenue minus economic cost. 
B)  total revenue minus accounting cost. 
C)  total revenue minus explicit costs. 
D)  total revenue minus implicit costs. 
A)  total revenue minus economic cost. 
B)  total revenue minus accounting cost. 
C)  total revenue minus explicit costs. 
D)  total revenue minus implicit costs.

Question 3

-Refer to Figure 9.7.This firm will earn an economic profit of zero if the price is

Accepted Answer

A)  $0. 
B)  $4. 
C)  $7. 
D)  $13. 
A)  $0. 
B)  $4. 
C)  $7. 
D)  $13.

Question 4

With respect to price,in a perfectly competitive market,firms can

Accepted Answer

A)  affect the market price. 
B)  set the market price. 
C)  take the market price. 
D)  negotiate the market price, to a certain extent. 
A)  affect the market price. 
B)  set the market price. 
C)  take the market price. 
D)  negotiate the market price, to a certain extent.

Question 5

Maxine's Cookie Shop sells chocolate chip cookies in a perfectly competitive market for $2 per dozen.Maxine currently produces 200 dozen cookies per day and average total cost at this level of production is $1.75.What level of profit is this firm earning? Explain.

Accepted Answer

Maxine's Cookie Shop is earnin

Question 6

-Refer to Figure 9.3.If this farmer is producing the profit-maximizing level of output,his profit is

Accepted Answer

A)  $0. 
B)  $2,800. 
C)  $3,000. 
D)  $12,000. 
A)  $0. 
B)  $2,800. 
C)  $3,000. 
D)  $12,000.

Question 7

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

Accepted Answer

A)  $90. 
B)  $135. 
C)  $180. 
D)  $240. 
A)  $90. 
B)  $135. 
C)  $180. 
D)  $240.

Question 8

Define marginal revenue.For a perfectly competitive firm,why are price and marginal revenue equal?

Accepted Answer

Marginal revenue is the additional reven

Question 9

Johan's Shoe Sole Inc.is producing at the level at which marginal revenue is equal to marginal cost.Johan's Shoe Sole Inc.must be

Accepted Answer

A)  earning a zero economic profit. 
B)  incurring a loss. 
C)  maximizing profits. 
D)  maximizing revenue but not maximizing profits. 
A)  earning a zero economic profit. 
B)  incurring a loss. 
C)  maximizing profits. 
D)  maximizing revenue but not maximizing profits.

Question 10

-Refer to Figure 9.1.A farmer earns a total revenue of $900.Each bushel of corn is sold for $5.This farmer must be selling ________ bushels of corn.

Accepted Answer

A)  180 
B)  450 
C)  900 
D)  4,500 
A)  180 
B)  450 
C)  900 
D)  4,500

Question 11

A firm's marginal cost curve below its AVC is also its short-run supply curve.

Accepted Answer

A) True 
 B)False

Question 12

The short-run industry supply curve for a perfectly competitive industry is the

Accepted Answer

A)  horizontal sum of the individual firms' marginal cost curves above short run average variable cost. 
B)  vertical sum of the individual firms' marginal cost curves above short run average variable cost. 
C)  horizontal sum of the individual firms' marginal cost curves above short run average total cost. 
D)  vertical sum of the individual firms' marginal cost curves above short run average total cost. 
A)  horizontal sum of the individual firms' marginal cost curves above short run average variable cost. 
B)  vertical sum of the individual firms' marginal cost curves above short run average variable cost. 
C)  horizontal sum of the individual firms' marginal cost curves above short run average total cost. 
D)  vertical sum of the individual firms' marginal cost curves above short run average total cost.

Question 13

-Refer to Figure 9.3.At the market price of $8 per bushel,if this farmer produces at the profit-maximizing level of output,his total revenue would be

Accepted Answer

A)  $1,200. 
B)  $2,800. 
C)  $5,600. 
D)  $8,400. 
A)  $1,200. 
B)  $2,800. 
C)  $5,600. 
D)  $8,400.

Question 14

Recall the Application about the wireless phone service provided by thousands of entrepreneurial women in Pakistan to answer the following question(s).
-Recall the Application.Why is the market for phone service perfectly competitive?

Accepted Answer

A)  Thousands of entrepreneurial women in Pakistan sell phone service to neighbors who each take the market price as given. 
B)  The market for phone service has significant barriers to entry, and many women in Pakistan have trouble getting service due to the shortage in supply. 
C)  The initial investment would be millions for entering the phone business in Pakistan and will keep the numbers of suppliers low. 
D)  none of the above 
A)  Thousands of entrepreneurial women in Pakistan sell phone service to neighbors who each take the market price as given. 
B)  The market for phone service has significant barriers to entry, and many women in Pakistan have trouble getting service due to the shortage in supply. 
C)  The initial investment would be millions for entering the phone business in Pakistan and will keep the numbers of suppliers low. 
D)  none of the above

Question 15

Explain how a competitive industry's long-run supply curve can be positively sloped.

Accepted Answer

The competitive market's long-

Question 16

What does it mean for a firm to be suffering an economic loss? Does this imply that the firm is incurring a loss in the accounting sense? Explain.

Accepted Answer

When a firm is suffering an economic los

Question 17

In a perfectly competitive market

Accepted Answer

A)  the government imposes price ceilings on the products produced and buyers and sellers are price takers. 
B)  buyers set the price and sellers take the price. 
C)  both buyers and sellers are price takers. 
D)  the market demand for products produced is perfectly elastic. 
A)  the government imposes price ceilings on the products produced and buyers and sellers are price takers. 
B)  buyers set the price and sellers take the price. 
C)  both buyers and sellers are price takers. 
D)  the market demand for products produced is perfectly elastic.

Question 18

Assume a perfectly competitive industry is in long-run equilibrium at a price of $50.If this industry is a constant-cost industry and the demand for the product increases,long-run equilibrium will be reestablished at a price

Accepted Answer

A)  greater than $50. 
B)  less than $50. 
C)  of $50. 
D)  either greater than or less than $50 depending on the magnitude of the decrease in demand. 
A)  greater than $50. 
B)  less than $50. 
C)  of $50. 
D)  either greater than or less than $50 depending on the magnitude of the decrease in demand.

Question 19

The vertical sum of the marginal cost curves (above minimum AVC)of all the firms in an industry is the long-run industry supply curve.

Accepted Answer

A) True 
 B)False

Question 20

Assume firms in an increasing-cost industry are currently making profits.Which of the following statements describes what will happen in the long run?

Accepted Answer

A)  More firms will enter this industry, causing the industry supply schedule to shift to the right and the firms' LRAC to shift down. 
B)  More firms will enter this industry, causing the industry supply schedule to shift to the right and the firms' LRAC curve to shift up. 
C)  Firms will exit this industry, causing the industry supply schedule to shift to the right and the firms' LRAC curve to shift down. 
D)  Firms will exit this industry, causing the industry supply schedule to shift to the left and the firms' LRAC curve to shift down. 
A)  More firms will enter this industry, causing the industry supply schedule to shift to the right and the firms' LRAC to shift down. 
B)  More firms will enter this industry, causing the industry supply schedule to shift to the right and the firms' LRAC curve to shift up. 
C)  Firms will exit this industry, causing the industry supply schedule to shift to the right and the firms' LRAC curve to shift down. 
D)  Firms will exit this industry, causing the industry supply schedule to shift to the left and the firms' LRAC curve to shift down.

Which of the following is a good example of an increasing-cost industry?

Accounting profit is equal to

-Refer to Figure 9.7.This firm will earn an economic profit of zero if the price is

With respect to price,in a perfectly competitive market,firms can

Maxine's Cookie Shop sells chocolate chip cookies in a perfectly competitive market for $2 per dozen.Maxine currently produces 200 dozen cookies per day and average total cost at this level of production is $1.75.What level of profit is this firm earning? Explain.

-Refer to Figure 9.3.If this farmer is producing the profit-maximizing level of output,his profit is

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

Define marginal revenue.For a perfectly competitive firm,why are price and marginal revenue equal?

Johan's Shoe Sole Inc.is producing at the level at which marginal revenue is equal to marginal cost.Johan's Shoe Sole Inc.must be

-Refer to Figure 9.1.A farmer earns a total revenue of $900.Each bushel of corn is sold for $5.This farmer must be selling ________ bushels of corn.

A firm's marginal cost curve below its AVC is also its short-run supply curve.

The short-run industry supply curve for a perfectly competitive industry is the

-Refer to Figure 9.3.At the market price of $8 per bushel,if this farmer produces at the profit-maximizing level of output,his total revenue would be

Recall the Application about the wireless phone service provided by thousands of entrepreneurial women in Pakistan to answer the following question(s). -Recall the Application.Why is the market for phone service perfectly competitive?

Explain how a competitive industry's long-run supply curve can be positively sloped.

What does it mean for a firm to be suffering an economic loss? Does this imply that the firm is incurring a loss in the accounting sense? Explain.

In a perfectly competitive market

Assume a perfectly competitive industry is in long-run equilibrium at a price of $50.If this industry is a constant-cost industry and the demand for the product increases,long-run equilibrium will be reestablished at a price

The vertical sum of the marginal cost curves (above minimum AVC)of all the firms in an industry is the long-run industry supply curve.

Assume firms in an increasing-cost industry are currently making profits.Which of the following statements describes what will happen in the long run?

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

Which of the following is a good example of an increasing-cost industry?

Accounting profit is equal to

-Refer to Figure 9.7.This firm will earn an economic profit of zero if the price is

With respect to price,in a perfectly competitive market,firms can

Maxine's Cookie Shop sells chocolate chip cookies in a perfectly competitive market for $2 per dozen.Maxine currently produces 200 dozen cookies per day and average total cost at this level of production is $1.75.What level of profit is this firm earning? Explain.

-Refer to Figure 9.3.If this farmer is producing the profit-maximizing level of output,his profit is

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

Define marginal revenue.For a perfectly competitive firm,why are price and marginal revenue equal?

Johan's Shoe Sole Inc.is producing at the level at which marginal revenue is equal to marginal cost.Johan's Shoe Sole Inc.must be

-Refer to Figure 9.1.A farmer earns a total revenue of $900.Each bushel of corn is sold for $5.This farmer must be selling ________ bushels of corn.

A firm's marginal cost curve below its AVC is also its short-run supply curve.

The short-run industry supply curve for a perfectly competitive industry is the

-Refer to Figure 9.3.At the market price of $8 per bushel,if this farmer produces at the profit-maximizing level of output,his total revenue would be

Recall the Application about the wireless phone service provided by thousands of entrepreneurial women in Pakistan to answer the following question(s). -Recall the Application.Why is the market for phone service perfectly competitive?

Explain how a competitive industry's long-run supply curve can be positively sloped.

What does it mean for a firm to be suffering an economic loss? Does this imply that the firm is incurring a loss in the accounting sense? Explain.

In a perfectly competitive market

Assume a perfectly competitive industry is in long-run equilibrium at a price of $50.If this industry is a constant-cost industry and the demand for the product increases,long-run equilibrium will be reestablished at a price

The vertical sum of the marginal cost curves (above minimum AVC)of all the firms in an industry is the long-run industry supply curve.

Assume firms in an increasing-cost industry are currently making profits.Which of the following statements describes what will happen in the long run?

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