Question 1

In a perfectly competitive market with 75 non-identical firms producing at market price p₁

Accepted Answer

A)  the supply curve is flatter than if there were only 35 identical firms. 
B)  the supply curve is more elastic than if there were only 25 identical firms. 
C)  the supply curve is more inelastic than if the firms were identical. 
D)  All of the above. 
A)  the supply curve is flatter than if there were only 35 identical firms. 
B)  the supply curve is more elastic than if there were only 25 identical firms. 
C)  the supply curve is more inelastic than if the firms were identical. 
D)  All of the above.

Question 2

The model of perfect competition is valuable for

Accepted Answer

A)  prediction. 
B)  comparison to other markets. 
C)  Either A or B. 
D)  None of the above. 
A)  prediction. 
B)  comparison to other markets. 
C)  Either A or B. 
D)  None of the above.

Question 3

As the quantity produced of a good increases,the social welfare generated by that good increases.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  social welfare will be higher. 
B)  producer surplus will be higher. 
C)  marginal cost will exceed price. 
D)  All of the above. 
A)  social welfare will be higher. 
B)  producer surplus will be higher. 
C)  marginal cost will exceed price. 
D)  All of the above.

Question 5

Consumers seek to

Accepted Answer

A)  maximize profits. 
B)  maximize expected consumer surplus. 
C)  maximize expenditures. 
D)  maximize choice. 
A)  maximize profits. 
B)  maximize expected consumer surplus. 
C)  maximize expenditures. 
D)  maximize choice.

Question 6

Suppose the market supply curve is p = 5 + Q.At a price of 10,producer surplus equals

Accepted Answer

A)  50. 
B)  25. 
C)  12.50. 
D)  10. 
A)  50. 
B)  25. 
C)  12.50. 
D)  10.

Question 7

If a firm cannot earn profits in the short run,it will shut down.

Accepted Answer

A) True 
 B)False

Question 8

A firm should always shut down if its revenue is

Accepted Answer

A)  declining. 
B)  less than its average fixed costs. 
C)  less than its total costs. 
D)  less than its avoidable costs. 
A)  declining. 
B)  less than its average fixed costs. 
C)  less than its total costs. 
D)  less than its avoidable costs.

Question 9

If consumers view the output of any firm in a market to be identical to the output of any other firm in the market,the demand curve for the output of any given firm

Accepted Answer

A)  will be identical to the market demand curve. 
B)  will be horizontal. 
C)  will be vertical. 
D)  cannot be determined from the information given. 
A)  will be identical to the market demand curve. 
B)  will be horizontal. 
C)  will be vertical. 
D)  cannot be determined from the information given.

Question 10

If a competitive firm finds that it maximizes short-run profits by shutting down,which of the following must be true?

Accepted Answer

A)  p < AVC for all levels of output. 
B)  p < AVC only for the level of output at which p = MC. 
C)  p < AVC only if the firm has no fixed costs. 
D)  The firm will earn zero profit. 
A)  p < AVC for all levels of output. 
B)  p < AVC only for the level of output at which p = MC. 
C)  p < AVC only if the firm has no fixed costs. 
D)  The firm will earn zero profit.

Question 11

A horizontal demand curve for a firm implies that

Accepted Answer

A)  the firm is a monopoly. 
B)  the market the firm is operating in is not competitive. 
C)  the firm is selling in a competitive market. 
D)  the products of that firm are very different from other firms' products. 
A)  the firm is a monopoly. 
B)  the market the firm is operating in is not competitive. 
C)  the firm is selling in a competitive market. 
D)  the products of that firm are very different from other firms' products.

Question 12

If a competitive firm cannot earn profit at any level of output during a given short-run period,then which of the following is LEAST likely to occur?

Accepted Answer

A)  It will shut down in the short run and wait until the price increases sufficiently. 
B)  It will exit the industry in the long run. 
C)  It will operate at a loss in the short run. 
D)  It will minimize its loss by decreasing output so that price exceeds marginal cost. 
A)  It will shut down in the short run and wait until the price increases sufficiently. 
B)  It will exit the industry in the long run. 
C)  It will operate at a loss in the short run. 
D)  It will minimize its loss by decreasing output so that price exceeds marginal cost.

Question 13

Currently,when a consumer purchases a "green" automobile,the U.S.government gives the consumer a rebate.When the rebate program expires,we would expect

Accepted Answer

A)  producer surplus to increase. 
B)  consumer surplus to drop. 
C)  consumer surplus to remain unchanged, since they pay the price and only get the rebate later. 
D)  producers to stop making "green" automobiles. 
A)  producer surplus to increase. 
B)  consumer surplus to drop. 
C)  consumer surplus to remain unchanged, since they pay the price and only get the rebate later. 
D)  producers to stop making "green" automobiles.

Question 14

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).At the current price of $0.35 per minute,consumer surplus equals

Accepted Answer

A)  $301.00. 
B)  $924.50. 
C)  $1,225.50. 
D)  $1,250.00. 
A)  $301.00. 
B)  $924.50. 
C)  $1,225.50. 
D)  $1,250.00.

Question 15

The short run is

Accepted Answer

A)  usually 3 - 6 months. 
B)  dependent on the characteristics of the industry. 
C)  when a firm has to decide whether or not to exit. 
D)  identical to the long run for most firms. 
A)  usually 3 - 6 months. 
B)  dependent on the characteristics of the industry. 
C)  when a firm has to decide whether or not to exit. 
D)  identical to the long run for most firms.

Question 16

In a perfectly competitive market

Accepted Answer

A)  firms can freely enter and exit. 
B)  firms sell a differentiated product. 
C)  transaction costs are high. 
D)  All of the above. 
A)  firms can freely enter and exit. 
B)  firms sell a differentiated product. 
C)  transaction costs are high. 
D)  All of the above.

Question 17

Mary purchased a stuffed animal toy for $5.After a few weeks,someone offered her $100 for the toy.Mary refused.One can conclude that Mary's consumer surplus from the toy is

Accepted Answer

A)  less than $5. 
B)  at least $95. 
C)  at least $100. 
D)  $105. 
A)  less than $5. 
B)  at least $95. 
C)  at least $100. 
D)  $105.

In a perfectly competitive market with 75 non-identical firms producing at market price p₁

The model of perfect competition is valuable for

As the quantity produced of a good increases,the social welfare generated by that good increases.

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

Consumers seek to

Suppose the market supply curve is p = 5 + Q.At a price of 10,producer surplus equals

If a firm cannot earn profits in the short run,it will shut down.

A firm should always shut down if its revenue is

If consumers view the output of any firm in a market to be identical to the output of any other firm in the market,the demand curve for the output of any given firm

If a competitive firm finds that it maximizes short-run profits by shutting down,which of the following must be true?

A horizontal demand curve for a firm implies that

If a competitive firm cannot earn profit at any level of output during a given short-run period,then which of the following is LEAST likely to occur?

Currently,when a consumer purchases a "green" automobile,the U.S.government gives the consumer a rebate.When the rebate program expires,we would expect

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).At the current price of $0.35 per minute,consumer surplus equals

The short run is

In a perfectly competitive market

Mary purchased a stuffed animal toy for $5.After a few weeks,someone offered her $100 for the toy.Mary refused.One can conclude that Mary's consumer surplus from the toy is

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

In a perfectly competitive market with 75 non-identical firms producing at market price p₁

The model of perfect competition is valuable for

As the quantity produced of a good increases,the social welfare generated by that good increases.

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

Consumers seek to

Suppose the market supply curve is p = 5 + Q.At a price of 10,producer surplus equals

If a firm cannot earn profits in the short run,it will shut down.

A firm should always shut down if its revenue is

If consumers view the output of any firm in a market to be identical to the output of any other firm in the market,the demand curve for the output of any given firm

If a competitive firm finds that it maximizes short-run profits by shutting down,which of the following must be true?

A horizontal demand curve for a firm implies that

If a competitive firm cannot earn profit at any level of output during a given short-run period,then which of the following is LEAST likely to occur?

Currently,when a consumer purchases a "green" automobile,the U.S.government gives the consumer a rebate.When the rebate program expires,we would expect

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).At the current price of $0.35 per minute,consumer surplus equals

The short run is

In a perfectly competitive market

Mary purchased a stuffed animal toy for $5.After a few weeks,someone offered her $100 for the toy.Mary refused.One can conclude that Mary's consumer surplus from the toy is

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