Question 1

Price floors and price ceilings

Accepted Answer

A)  always reduce total surplus. 
B)  reduce consumer surplus and increase producer surplus. 
C)  reduce producer surplus and increase consumer surplus. 
D)  Not enough information to determine. 
A)  always reduce total surplus. 
B)  reduce consumer surplus and increase producer surplus. 
C)  reduce producer surplus and increase consumer surplus. 
D)  Not enough information to determine.

Question 2

If a firm is a price taker,then its marginal revenue will always equal

Accepted Answer

A)  price. 
B)  total cost. 
C)  zero. 
D)  one. 
A)  price. 
B)  total cost. 
C)  zero. 
D)  one.

Question 3

Suppose there are 1000 identical wheat farmers.For each,TC = 10 +   .Derive the market supply curve.

Accepted Answer

For each MC = 2q and AVC = q.T

Question 4

Government intervention in a perfectly competitive market

Accepted Answer

A)  reduces economic well-being. 
B)  is an illustration of the "invisible hand theorem." 
C)  increases economic well-being. 
D)  guarantees maximized well-being. 
A)  reduces economic well-being. 
B)  is an illustration of the "invisible hand theorem." 
C)  increases economic well-being. 
D)  guarantees maximized well-being.

Question 5

The long-run supply curve in a competitive market is upward-sloping.

Accepted Answer

A) True 
 B)False

Question 6

Like the short run

Accepted Answer

A)  the long run supply curve is the sum of the individual firms' supply curves. 
B)  the maximum number of firms in the market is fixed. 
C)  firms operate only if they make a positive profit. 
D)  All of the above. 
A)  the long run supply curve is the sum of the individual firms' supply curves. 
B)  the maximum number of firms in the market is fixed. 
C)  firms operate only if they make a positive profit. 
D)  All of the above.

Question 7

In the long run,firms in a competitive market

Accepted Answer

A)  shut down because profit goes to zero. 
B)  lose money. 
C)  are not profit maximizing. 
D)  earn zero economic profit. 
A)  shut down because profit goes to zero. 
B)  lose money. 
C)  are not profit maximizing. 
D)  earn zero economic profit.

Question 8

Producer surplus equals

Accepted Answer

A)  total revenue minus total variable cost. 
B)  total revenue minus the sum of all marginal cost. 
C)  profit plus fixed cost. 
D)  All of the above. 
A)  total revenue minus total variable cost. 
B)  total revenue minus the sum of all marginal cost. 
C)  profit plus fixed cost. 
D)  All of the above.

Question 9

A market's structure is described by

Accepted Answer

A)  the number of firms in the market. 
B)  the ease with which firms can enter and exit the market. 
C)  the ability of firms to differentiate their product. 
D)  All of the above. 
A)  the number of firms in the market. 
B)  the ease with which firms can enter and exit the market. 
C)  the ability of firms to differentiate their product. 
D)  All of the above.

Question 10

The short run is

Accepted Answer

A)  a period of time in which at least one input cannot be varied. 
B)  when firms are stuck with sunk costs, unlike the long run. 
C)  treated the same way as the long run. 
D)  a period of time when no inputs can be varied. 
A)  a period of time in which at least one input cannot be varied. 
B)  when firms are stuck with sunk costs, unlike the long run. 
C)  treated the same way as the long run. 
D)  a period of time when no inputs can be varied.

Question 11

If a market is not perfectly competitive,then government intervention

Accepted Answer

A)  is always justifiable. 
B)  will usually decrease economic well-being. 
C)  guarantees that societal well-being will be maximized. 
D)  may increase economic well-being. 
A)  is always justifiable. 
B)  will usually decrease economic well-being. 
C)  guarantees that societal well-being will be maximized. 
D)  may increase economic well-being.

Question 12

If in a market the last unit of output was sold at a price higher than marginal cost

Accepted Answer

A)  producer is better off producing more. 
B)  consumers are better off if less of the product is sold. 
C)  social welfare is not maximized. 
D)  the unit increased total profit. 
A)  producer is better off producing more. 
B)  consumers are better off if less of the product is sold. 
C)  social welfare is not maximized. 
D)  the unit increased total profit.

Question 13

If the shut down rule,p < AVC,is the same in the short run and the long run,explain why the shutdown prices may be different.

Accepted Answer

In the short run there are fix

Question 14

The perfectly competitive model makes a lot of fairly unrealistic assumptions.Why do economics text books still talk a lot about this model?

Accepted Answer

A)  Many markets are close to being perfectly competitive. 
B)  It is an important model to use as a benchmark to compare other markets structures to. 
C)  Perfectly competitive markets maximize societal welfare. 
D)  All of the above. 
A)  Many markets are close to being perfectly competitive. 
B)  It is an important model to use as a benchmark to compare other markets structures to. 
C)  Perfectly competitive markets maximize societal welfare. 
D)  All of the above.

Question 15

In a perfectly competitive market

Accepted Answer

A)  buyers are price-takers. 
B)  buyers view products from different firms as differentiated. 
C)  individual buyers have horizontal demand curves. 
D)  firms' demand curves are vertical. 
A)  buyers are price-takers. 
B)  buyers view products from different firms as differentiated. 
C)  individual buyers have horizontal demand curves. 
D)  firms' demand curves are vertical.

Question 16

If a market produces a level of output below the competitive equilibrium,then

Accepted Answer

A)  social welfare is not maximized. 
B)  consumer surplus might still be maximized. 
C)  the actual price will be below the equilibrium price. 
D)  social welfare might still be enhanced if a price ceiling keeps price below the competitive price. 
A)  social welfare is not maximized. 
B)  consumer surplus might still be maximized. 
C)  the actual price will be below the equilibrium price. 
D)  social welfare might still be enhanced if a price ceiling keeps price below the competitive price.

Question 17

If the market price is above a firm's average cost at the quantity produced

Accepted Answer

A)  the firm operates and makes a profit. 
B)  the firm operates and make zero economic profit. 
C)  the market price of the firm's inputs will rise. 
D)  total profit is maximized. 
A)  the firm operates and makes a profit. 
B)  the firm operates and make zero economic profit. 
C)  the market price of the firm's inputs will rise. 
D)  total profit is maximized.

Question 18

Firms that exhibit price-taking behavior

Accepted Answer

A)  wait for other firms to set price, take it as given, and charge a higher price. 
B)  have outputs that are too small to influence market price and thus take it as given. 
C)  take pricing behavior in their own hands. 
D)  are independently capable of setting price. 
A)  wait for other firms to set price, take it as given, and charge a higher price. 
B)  have outputs that are too small to influence market price and thus take it as given. 
C)  take pricing behavior in their own hands. 
D)  are independently capable of setting price.

Question 19

Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?

Accepted Answer

A)  perfect information 
B)  freedom of entry and exit 
C)  price taking behavior 
D)  homogeneous products 
A)  perfect information 
B)  freedom of entry and exit 
C)  price taking behavior 
D)  homogeneous products

Question 20

A "stair-like" market supply curve is the result of

Accepted Answer

A)  higher cost firms charging a higher price for their products. 
B)  firms having different costs. 
C)  firms shutting down in the long run. 
D)  average variable costs that are higher than average fixed costs. 
A)  higher cost firms charging a higher price for their products. 
B)  firms having different costs. 
C)  firms shutting down in the long run. 
D)  average variable costs that are higher than average fixed costs.

Price floors and price ceilings

If a firm is a price taker,then its marginal revenue will always equal

Suppose there are 1000 identical wheat farmers.For each,TC = 10 + .Derive the market supply curve.

Government intervention in a perfectly competitive market

The long-run supply curve in a competitive market is upward-sloping.

Like the short run

In the long run,firms in a competitive market

Producer surplus equals

A market's structure is described by

The short run is

If a market is not perfectly competitive,then government intervention

If in a market the last unit of output was sold at a price higher than marginal cost

If the shut down rule,p < AVC,is the same in the short run and the long run,explain why the shutdown prices may be different.

The perfectly competitive model makes a lot of fairly unrealistic assumptions.Why do economics text books still talk a lot about this model?

In a perfectly competitive market

If a market produces a level of output below the competitive equilibrium,then

If the market price is above a firm's average cost at the quantity produced

Firms that exhibit price-taking behavior

Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?

A "stair-like" market supply curve is the result of

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

Price floors and price ceilings

If a firm is a price taker,then its marginal revenue will always equal

Suppose there are 1000 identical wheat farmers.For each,TC = 10 + .Derive the market supply curve.

Government intervention in a perfectly competitive market

The long-run supply curve in a competitive market is upward-sloping.

Like the short run

In the long run,firms in a competitive market

Producer surplus equals

A market's structure is described by

The short run is

If a market is not perfectly competitive,then government intervention

If in a market the last unit of output was sold at a price higher than marginal cost

If the shut down rule,p < AVC,is the same in the short run and the long run,explain why the shutdown prices may be different.

The perfectly competitive model makes a lot of fairly unrealistic assumptions.Why do economics text books still talk a lot about this model?

In a perfectly competitive market

If a market produces a level of output below the competitive equilibrium,then

If the market price is above a firm's average cost at the quantity produced

Firms that exhibit price-taking behavior

Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?

A "stair-like" market supply curve is the result of

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