Question 1

Producer surplus

Accepted Answer

A)  is the minimum amount a firm must receive to engage in trade. 
B)  is a measure of what a firm gains from trade. 
C)  represents the opportunity cost of the firm. 
D)  determines whether or not a firm will produce in the long run. 
A)  is the minimum amount a firm must receive to engage in trade. 
B)  is a measure of what a firm gains from trade. 
C)  represents the opportunity cost of the firm. 
D)  determines whether or not a firm will produce in the long run. B

Question 2

-The above figure shows the cost curves for a typical firm in a market and three possible market supply curves.If there are 100 identical firms,the market supply curve is best represented by

Accepted Answer

A)  curve A. 
B)  curve B. 
C)  curve C. 
D)  either curve A or B, but definitely not C. 
A)  curve A. 
B)  curve B. 
C)  curve C. 
D)  either curve A or B, but definitely not C. C

Question 3

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).The current price is $0.35 per minute.If the price were to increase by ten cents per minute,consumer surplus would

Accepted Answer

A)  fall to $820. 
B)  fall by $84. 
C)  fall by $58. 
D)  fall to $369. 
A)  fall to $820. 
B)  fall by $84. 
C)  fall by $58. 
D)  fall to $369. B

Question 4

If a firm operates in a perfectly competitive market,then it will most likely

Accepted Answer

A)  advertise its product on television. 
B)  take the price of its product as determined by the market. 
C)  have a difficult time obtaining information about the market price. 
D)  have an easy time keeping other firms out of the market. 
A)  advertise its product on television. 
B)  take the price of its product as determined by the market. 
C)  have a difficult time obtaining information about the market price. 
D)  have an easy time keeping other firms out of the market.

Question 5

Deadweight loss occurs when

Accepted Answer

A)  consumer surplus is greater than producer surplus. 
B)  surplus losses to one group due to intervention are not offset by surplus gains to another. 
C)  consumer surplus is reduced. 
D)  consumer surplus is negative. 
A)  consumer surplus is greater than producer surplus. 
B)  surplus losses to one group due to intervention are not offset by surplus gains to another. 
C)  consumer surplus is reduced. 
D)  consumer surplus is negative.

Question 6

Which of the following are NOT characteristics of a competitive market?

Accepted Answer

A)  There is freedom of entry and exit. 
B)  There are zero transaction costs. 
C)  There are only one or two sellers. 
D)  Buyers and sellers have complete information. 
A)  There is freedom of entry and exit. 
B)  There are zero transaction costs. 
C)  There are only one or two sellers. 
D)  Buyers and sellers have complete information.

Question 7

If market price is greater than or equal to the minimum of AVC but below the minimum of AC,then

Accepted Answer

A)  the firm will shut down. 
B)  the firm will operate because its loss is less than if it shut down. 
C)  revenue is lower than variable costs. 
D)  profit is positive and so the firm will operate. 
A)  the firm will shut down. 
B)  the firm will operate because its loss is less than if it shut down. 
C)  revenue is lower than variable costs. 
D)  profit is positive and so the firm will operate.

Question 8

Giving presents of Christmas does NOT generate a deadweight loss if

Accepted Answer

A)  all gift are money. 
B)  everybody gets exactly want she wants. 
C)  nobody can be made better off by returning the gift and purchasing a different one. 
D)  All of the above. 
A)  all gift are money. 
B)  everybody gets exactly want she wants. 
C)  nobody can be made better off by returning the gift and purchasing a different one. 
D)  All of the above.

Question 9

A profit maximizing firm selects output such that

Accepted Answer

A)  average profit is maximized. 
B)  total profit is maximized. 
C)  marginal profit is maximized. 
D)  Both A and B. 
A)  average profit is maximized. 
B)  total profit is maximized. 
C)  marginal profit is maximized. 
D)  Both A and B.

Question 10

Long-run market supply curves are upward sloping if

Accepted Answer

A)  firms are identical. 
B)  the number of firms is restricted in the long run. 
C)  input prices fall as the industry expands. 
D)  All of the above. 
A)  firms are identical. 
B)  the number of firms is restricted in the long run. 
C)  input prices fall as the industry expands. 
D)  All of the above.

Question 11

An increase in the cost of an input will result in

Accepted Answer

A)  a leftward shift in the firm's supply curve. 
B)  an upward shift of the firm's marginal cost curve. 
C)  a leftward shift of the market supply curve. 
D)  All of the above. 
A)  a leftward shift in the firm's supply curve. 
B)  an upward shift of the firm's marginal cost curve. 
C)  a leftward shift of the market supply curve. 
D)  All of the above.

Question 12

In a competitive market,if buyers did not know all the prices charged by the many firms

Accepted Answer

A)  all firms still face horizontal demand curves. 
B)  firms sell a differentiated product. 
C)  demand curves can be downward sloping for some or all firms. 
D)  the number of firms will most likely decrease. 
A)  all firms still face horizontal demand curves. 
B)  firms sell a differentiated product. 
C)  demand curves can be downward sloping for some or all firms. 
D)  the number of firms will most likely decrease.

Question 13

Which of the following products would be sold in a competitive market?

Accepted Answer

A)  smartphones 
B)  home Internet service 
C)  Brent crude oil 
D)  motorcycles 
A)  smartphones 
B)  home Internet service 
C)  Brent crude oil 
D)  motorcycles

Question 14

When is the profit a firm earns equal to the producer surplus? Explain.

Accepted Answer

Profit equals producer surplus when the

Question 15

In the long run

Accepted Answer

A)  the firm shuts down if revenue is less than its avoidable costs. 
B)  marginal profit is greater than zero. 
C)  firms shut down if economic profit is zero. 
D)  supply curves are identical to the short run supply curves. 
A)  the firm shuts down if revenue is less than its avoidable costs. 
B)  marginal profit is greater than zero. 
C)  firms shut down if economic profit is zero. 
D)  supply curves are identical to the short run supply curves.

Question 16

If firms in a competitive market are not identical,then the long-run market supply curve will be

Accepted Answer

A)  horizontal. 
B)  upward sloping. 
C)  downward sloping. 
D)  undetermined. 
A)  horizontal. 
B)  upward sloping. 
C)  downward sloping. 
D)  undetermined.

Question 17

Economists define a market to be competitive when the firms

Accepted Answer

A)  spend large amounts of money on advertising to lure customers away from the competition. 
B)  watch each other's behavior closely. 
C)  are price takers. 
D)  All of the above. 
A)  spend large amounts of money on advertising to lure customers away from the competition. 
B)  watch each other's behavior closely. 
C)  are price takers. 
D)  All of the above.

Question 18

The difference between producer surplus and profit is always the associated

Accepted Answer

A)  opportunity costs. 
B)  total costs. 
C)  variable costs. 
D)  fixed costs. 
A)  opportunity costs. 
B)  total costs. 
C)  variable costs. 
D)  fixed costs.

Question 19

If a firm happened to be the only seller of a particular product,it might behave as a price taker as long as

Accepted Answer

A)  buyers have full information about the firm's price. 
B)  the transaction costs of doing business with this firm are low. 
C)  there are many buyers. 
D)  there is free entry and exit. 
A)  buyers have full information about the firm's price. 
B)  the transaction costs of doing business with this firm are low. 
C)  there are many buyers. 
D)  there is free entry and exit.

Question 20

If market price is greater than the minimum of AVC but below the minimum of AC,then

Accepted Answer

A)  the firm will shut down. 
B)  revenue covers variable costs and some of the fixed costs and profit is positive. 
C)  revenue covers variable costs and some of the fixed costs, although profit is negative. 
D)  economic profit is zero. 
A)  the firm will shut down. 
B)  revenue covers variable costs and some of the fixed costs and profit is positive. 
C)  revenue covers variable costs and some of the fixed costs, although profit is negative. 
D)  economic profit is zero.

Producer surplus

-The above figure shows the cost curves for a typical firm in a market and three possible market supply curves.If there are 100 identical firms,the market supply curve is best represented by

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).The current price is $0.35 per minute.If the price were to increase by ten cents per minute,consumer surplus would

If a firm operates in a perfectly competitive market,then it will most likely

Deadweight loss occurs when

Which of the following are NOT characteristics of a competitive market?

If market price is greater than or equal to the minimum of AVC but below the minimum of AC,then

Giving presents of Christmas does NOT generate a deadweight loss if

A profit maximizing firm selects output such that

Long-run market supply curves are upward sloping if

An increase in the cost of an input will result in

In a competitive market,if buyers did not know all the prices charged by the many firms

Which of the following products would be sold in a competitive market?

When is the profit a firm earns equal to the producer surplus? Explain.

In the long run

If firms in a competitive market are not identical,then the long-run market supply curve will be

Economists define a market to be competitive when the firms

The difference between producer surplus and profit is always the associated

If a firm happened to be the only seller of a particular product,it might behave as a price taker as long as

If market price is greater than the minimum of AVC but below the minimum of AC,then

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 8: Competitive Firms and Markets

Producer surplus

-The above figure shows the cost curves for a typical firm in a market and three possible market supply curves.If there are 100 identical firms,the market supply curve is best represented by

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).The current price is $0.35 per minute.If the price were to increase by ten cents per minute,consumer surplus would

If a firm operates in a perfectly competitive market,then it will most likely

Deadweight loss occurs when

Which of the following are NOT characteristics of a competitive market?

If market price is greater than or equal to the minimum of AVC but below the minimum of AC,then

Giving presents of Christmas does NOT generate a deadweight loss if

A profit maximizing firm selects output such that

Long-run market supply curves are upward sloping if

An increase in the cost of an input will result in

In a competitive market,if buyers did not know all the prices charged by the many firms

Which of the following products would be sold in a competitive market?

When is the profit a firm earns equal to the producer surplus? Explain.

In the long run

If firms in a competitive market are not identical,then the long-run market supply curve will be

Economists define a market to be competitive when the firms

The difference between producer surplus and profit is always the associated

If a firm happened to be the only seller of a particular product,it might behave as a price taker as long as

If market price is greater than the minimum of AVC but below the minimum of AC,then

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters