Question 1

There are currently N identical firms in a market.If it is a perfectly competitive market,the short-run market supply curve at any given price is

Accepted Answer

A)  N times the supply of an individual firm. 
B)  N - 1 times the supply of an individual firm. 
C)  N plus the supply of an individual firm. 
D)  It cannot be determined from the information provided. 
A)  N times the supply of an individual firm. 
B)  N - 1 times the supply of an individual firm. 
C)  N plus the supply of an individual firm. 
D)  It cannot be determined from the information provided.

Question 2

If a competitive firm is in short-run equilibrium,then

Accepted Answer

A)  profits equal zero. 
B)  economic profits will be positive. 
C)  economic profits will be negative. 
D)  All of the above are possible in the short-run. 
A)  profits equal zero. 
B)  economic profits will be positive. 
C)  economic profits will be negative. 
D)  All of the above are possible in the short-run.

Question 3

Suppose that once a well is dug,water flows out of it continuously without any additional effort.Customers collect their water and pay a per gallon fee when they leave the site of the well.In the short run,the competitive firm in this market

Accepted Answer

A)  will not shut down because variable costs are zero. 
B)  has no fixed costs. 
C)  faces diminishing marginal returns. 
D)  can act as a price setter. 
A)  will not shut down because variable costs are zero. 
B)  has no fixed costs. 
C)  faces diminishing marginal returns. 
D)  can act as a price setter.

Question 4

All firms in a competitive industry have the following long-run total cost curve:
C(q)= q³ - 10q² + 36q
where q is the output of the firm.
a.Compute the long run equilibrium price.What does the long-run supply curve look like if this is a constant cost industry? Explain.
b.Suppose the market demand is given by Q = 111 - p.Determine the long-run equilibrium number of firms in the industry.

Accepted Answer

a.Long run equilibrium is determined by

Question 5

For the following, please answer "True" or "False" and explain why.
-If firms in a competitive market are identical,the long-run market supply curve is horizontal.

Accepted Answer

A) True 
 B)False

Question 6

Suppose all firms in a competitive market are currently in both short-run and long-run equilibrium.What impact will a lump sum tax have on each firm in the short run? in the long run?

Accepted Answer

In the short run,the lump sum tax repres

Question 7

There are 10 identical internet service providers (ISPs)in a city serving a market demand with an elasticity of -1.5.The elasticity of supply for each firm is 3.0.The elasticity of demand faced by an individual ISP provider is

Accepted Answer

A)  -42. 
B)  -15. 
C)  -1.5. 
D)  -27. 
A)  -42. 
B)  -15. 
C)  -1.5. 
D)  -27.

Question 8

If all conditions for a perfectly competitive market are met,

Accepted Answer

A)  firms face sunk cost when entering the market. 
B)  firms demand curves are horizontal. 
C)  the market demand curve is horizontal. 
D)  the firms' demand curves are downward-sloping. 
A)  firms face sunk cost when entering the market. 
B)  firms demand curves are horizontal. 
C)  the market demand curve is horizontal. 
D)  the firms' demand curves are downward-sloping.

Question 9

The demand curve an individual competitive firm faces is known as its

Accepted Answer

A)  excess demand curve. 
B)  market demand curve. 
C)  residual demand curve. 
D)  leftover demand curve. 
A)  excess demand curve. 
B)  market demand curve. 
C)  residual demand curve. 
D)  leftover demand curve.

Question 10

Suppose TC = 10 + (0.1 ∗ q²).If there are 100 identical firms in the market,the market supply curve is

Accepted Answer

A)  Q = 1000 ∗ p. 
B)  Q = 500 ∗ p. 
C)  Q = 100 ∗ p. 
D)  Q = 10. 
A)  Q = 1000 ∗ p. 
B)  Q = 500 ∗ p. 
C)  Q = 100 ∗ p. 
D)  Q = 10.

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

Many car owners and car dealers describe their different cars for sale in the local newspapers and list their asking price.Many people shopping for a used car consider the different choices listed in the paper.The absence of which condition prohibits this market from being described as perfectly competitive?

Accepted Answer

A)  Buyers and sellers know the prices. 
B)  Firms freely enter and exit. 
C)  Transaction costs are low. 
D)  Consumers believe all firms sell identical products. 
A)  Buyers and sellers know the prices. 
B)  Firms freely enter and exit. 
C)  Transaction costs are low. 
D)  Consumers believe all firms sell identical products.

Question 13

Suppose an industry has no fixed costs.Draw two graphs side by side for the industry.In the left graph draw a U-shaped average cost curve and the corresponding marginal cost curve.In the right graph,draw a downward-sloping market demand curve.Also in the right graph,draw a short-run supply curve that would generate positive profit,and the long-run supply curve that would result.

Accepted Answer

@#IMG-DLM& See the a

Question 14

-The above figure shows the cost curves for a competitive firm.If the market price is $15 per unit,the firm will earn profits of

Accepted Answer

A)  $0. 
B)  $4. 
C)  $40. 
D)  $160. 
A)  $0. 
B)  $4. 
C)  $40. 
D)  $160.

Question 15

Gift shops in a small town sell identical mugs to tourists.However,tourists don't have enough time to check out the prices one by one and don't have brochures listing prices of mugs.We can conclude

Accepted Answer

A)  the market for mugs is perfectly competitive. 
B)  buyers have full information. 
C)  sellers are price takers. 
D)  the market is not perfectly competitive. 
A)  the market for mugs is perfectly competitive. 
B)  buyers have full information. 
C)  sellers are price takers. 
D)  the market is not perfectly competitive.

Question 16

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 17

-The above figure shows the cost curves for a typical firm in a competitive market.Note that if p = 10,then MC = p at both q = 5 and q = 60.Can they both yield maximum profit? Explain.

Accepted Answer

No,at q = 5,p = MC,but this is not profi

Question 18

Draw a graph that shows how the short-run shut-down price changes when an input price increases.

Accepted Answer

@#IMG-DLM& See the a

Question 19

Explain why shutting down and going out-of-business are different concepts.

Accepted Answer

Shutting down means that the firm seizes

Question 20

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at 20¢ per pound when 500 pounds are grown.The demand for potatoes is Q = 10,000/p.If the long-run supply curve is horizontal,then how much will consumers spend,in total,on potatoes?

Accepted Answer

A)  $0 
B)  $500 
C)  $10,000 
D)  $50,000 
A)  $0 
B)  $500 
C)  $10,000 
D)  $50,000

There are currently N identical firms in a market.If it is a perfectly competitive market,the short-run market supply curve at any given price is

If a competitive firm is in short-run equilibrium,then

Suppose that once a well is dug,water flows out of it continuously without any additional effort.Customers collect their water and pay a per gallon fee when they leave the site of the well.In the short run,the competitive firm in this market

For the following, please answer "True" or "False" and explain why. -If firms in a competitive market are identical,the long-run market supply curve is horizontal.

Suppose all firms in a competitive market are currently in both short-run and long-run equilibrium.What impact will a lump sum tax have on each firm in the short run? in the long run?

There are 10 identical internet service providers (ISPs)in a city serving a market demand with an elasticity of -1.5.The elasticity of supply for each firm is 3.0.The elasticity of demand faced by an individual ISP provider is

If all conditions for a perfectly competitive market are met,

The demand curve an individual competitive firm faces is known as its

Suppose TC = 10 + (0.1 ∗ q²).If there are 100 identical firms in the market,the market supply curve is

An increase in the cost of an input will result in

-The above figure shows the cost curves for a competitive firm.If the market price is $15 per unit,the firm will earn profits of

Gift shops in a small town sell identical mugs to tourists.However,tourists don't have enough time to check out the prices one by one and don't have brochures listing prices of mugs.We can conclude

Economists define a market to be competitive when the firms

-The above figure shows the cost curves for a typical firm in a competitive market.Note that if p = 10,then MC = p at both q = 5 and q = 60.Can they both yield maximum profit? Explain.

Draw a graph that shows how the short-run shut-down price changes when an input price increases.

Explain why shutting down and going out-of-business are different concepts.

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at 20¢ per pound when 500 pounds are grown.The demand for potatoes is Q = 10,000/p.If the long-run supply curve is horizontal,then how much will consumers spend,in total,on potatoes?

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 8: Competitive Firms and Markets

There are currently N identical firms in a market.If it is a perfectly competitive market,the short-run market supply curve at any given price is

If a competitive firm is in short-run equilibrium,then

Suppose that once a well is dug,water flows out of it continuously without any additional effort.Customers collect their water and pay a per gallon fee when they leave the site of the well.In the short run,the competitive firm in this market

For the following, please answer "True" or "False" and explain why. -If firms in a competitive market are identical,the long-run market supply curve is horizontal.

Suppose all firms in a competitive market are currently in both short-run and long-run equilibrium.What impact will a lump sum tax have on each firm in the short run? in the long run?

There are 10 identical internet service providers (ISPs)in a city serving a market demand with an elasticity of -1.5.The elasticity of supply for each firm is 3.0.The elasticity of demand faced by an individual ISP provider is

If all conditions for a perfectly competitive market are met,

The demand curve an individual competitive firm faces is known as its

Suppose TC = 10 + (0.1 ∗ q²).If there are 100 identical firms in the market,the market supply curve is

An increase in the cost of an input will result in

-The above figure shows the cost curves for a competitive firm.If the market price is $15 per unit,the firm will earn profits of

Gift shops in a small town sell identical mugs to tourists.However,tourists don't have enough time to check out the prices one by one and don't have brochures listing prices of mugs.We can conclude

Economists define a market to be competitive when the firms

-The above figure shows the cost curves for a typical firm in a competitive market.Note that if p = 10,then MC = p at both q = 5 and q = 60.Can they both yield maximum profit? Explain.

Draw a graph that shows how the short-run shut-down price changes when an input price increases.

Explain why shutting down and going out-of-business are different concepts.

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at 20¢ per pound when 500 pounds are grown.The demand for potatoes is Q = 10,000/p.If the long-run supply curve is horizontal,then how much will consumers spend,in total,on potatoes?

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters