Question 1

Figure 9-1
  
-Refer to Figure 9-1.If the firm is producing 700 units

Accepted Answer

A)  it is making a profit. 
B)  it is making a loss. 
C)  it should cut back its output to maximize profit. 
D)  it should increase its output to maximize profit. 
A)  it is making a profit. 
B)  it is making a loss. 
C)  it should cut back its output to maximize profit. 
D)  it should increase its output to maximize profit.

Question 2

Figure 9-1
  
-Refer to Figure 9-1.If the firm is charging a price of $12 per unit

Accepted Answer

A)  it breaks even. 
B)  it is making a profit. 
C)  it is selling 700 units. 
D)  it is not selling any output. 
A)  it breaks even. 
B)  it is making a profit. 
C)  it is selling 700 units. 
D)  it is not selling any output.

Question 3

In perfect competition

Accepted Answer

A)  the market demand curve and the individual's demand curve are identical. 
B)  the market demand curve is perfectly inelastic while demand for an individual seller's product is perfectly elastic. 
C)  the market demand curve is perfectly elastic while demand for an individual seller's product is perfectly inelastic. 
D)  the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic. 
A)  the market demand curve and the individual's demand curve are identical. 
B)  the market demand curve is perfectly inelastic while demand for an individual seller's product is perfectly elastic. 
C)  the market demand curve is perfectly elastic while demand for an individual seller's product is perfectly inelastic. 
D)  the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic.

Question 4

If a firm's fixed cost exceeds its total revenue,the firm should stop production by shutting down temporarily.

Accepted Answer

A) True 
 B)False

Question 5

What is a long-run supply curve? What does a long-run supply curve look like on a perfectly competitive market graph?

Accepted Answer

A long-run supply curve shows the relati

Question 6

Figure 9-5
   Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
-Refer to Figure 9-5.What is the amount of the firm's fixed cost of production?

Accepted Answer

A)  $5,400 
B)  $6,750 
C)  $8,100 
D)  It cannot be determined. 
A)  $5,400 
B)  $6,750 
C)  $8,100 
D)  It cannot be determined.

Question 7

Suppose Veronica sells teapots in the perfectly competitive teapot market.Her output per day and her costs are as follows:
 $\begin{array}{|l|l|}
\hline \text { Output per Day } & \text { Total Cost } \
\hline 0 & \$ 20 \
\hline 1 & 32 \
\hline 2 & 37 \
\hline 3 & 48 \
\hline 4 & 61 \
\hline 5 & 75 \
\hline 5 & 92 \
\hline 7 & 113 \
\hline 8 & 136 \
\hline
\end{array}$ 
Suppose the current equilibrium price in the teapot market is $15.To maximize profit,how many teapots will Veronica produce,what price will she charge,and how much profit (or loss)will she make? Draw a graph to illustrate your answer.Your graph should include Veronica's demand,ATC,AVC,MC,and MR curves,the price she is charging,the quantity she is producing,and the area representing her profit (or loss).

Accepted Answer

Veronica will produce 5 teapot

Question 8

All of the following can be used to compute average profit except

Accepted Answer

A)  marginal profit minus marginal cost. 
B)  total profit divided by quantity. 
C)  average revenue minus average total cost 
D)  price minus average total cost. 
A)  marginal profit minus marginal cost. 
B)  total profit divided by quantity. 
C)  average revenue minus average total cost 
D)  price minus average total cost.

Question 9

If price = marginal cost at the output produced by a perfectly competitive firm and the firm is earning an economic profit,then

Accepted Answer

A)  marginal revenue is less than price. 
B)  average total cost is at a minimum. 
C)  total revenue equals total cost. 
D)  price exceeds average total cost. 
A)  marginal revenue is less than price. 
B)  average total cost is at a minimum. 
C)  total revenue equals total cost. 
D)  price exceeds average total cost.

Question 10

When firms exit a perfectly competitive industry,the market supply curve shifts to the left.

Accepted Answer

A) True 
 B)False

Question 11

The market demand curve in a perfectly competitive market is downward sloping.

Accepted Answer

A) True 
 B)False

Question 12

If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold,what should the farm do to maximize its profit?

Accepted Answer

A)  determine what the total revenue and total cost of production are 
B)  increase output 
C)  decrease output 
D)  lower its price to sell more 
A)  determine what the total revenue and total cost of production are 
B)  increase output 
C)  decrease output 
D)  lower its price to sell more

Question 13

Which of the following does not hold true for a perfectly competitive firm in long-run equilibrium?

Accepted Answer

A)  Its economic profit will be zero. 
B)  It will minimize average total cost. 
C)  It will charge a price equal to marginal cost. 
D)  Marginal cost will be minimized. 
A)  Its economic profit will be zero. 
B)  It will minimize average total cost. 
C)  It will charge a price equal to marginal cost. 
D)  Marginal cost will be minimized.

Question 14

A wheat farmer and a firm in a perfectly competitive market are similar in that

Accepted Answer

A)  both face vertical demand curves. 
B)  both have to lower their prices if a rival firm lowers its price. 
C)  both face horizontal demand curves. 
D)  both will earn an economic profit if their total revenue equals their total cost. 
A)  both face vertical demand curves. 
B)  both have to lower their prices if a rival firm lowers its price. 
C)  both face horizontal demand curves. 
D)  both will earn an economic profit if their total revenue equals their total cost.

Question 15

If,as a perfectly competitive industry expands,it can supply larger quantities at the same long-run market price,it is

Accepted Answer

A)  a constant-cost industry. 
B)  an increasing-cost industry. 
C)  a decreasing-cost industry. 
D)  a fixed-cost industry. 
A)  a constant-cost industry. 
B)  an increasing-cost industry. 
C)  a decreasing-cost industry. 
D)  a fixed-cost industry.

Question 16

Figure 9-1
  
-Refer to Figure 9-1.If the firm is producing 200 units

Accepted Answer

A)  it breaks even. 
B)  it is making a loss. 
C)  it should cut back its output to maximize profit. 
D)  it should increase its output to maximize profit. 
A)  it breaks even. 
B)  it is making a loss. 
C)  it should cut back its output to maximize profit. 
D)  it should increase its output to maximize profit.

Question 17

Figure 9-6
   Figure 9-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples.
-Refer to Figure 9-6.Which of the following statements is true?

Accepted Answer

A)  Jason should produce where MC equals $3 (point d) where he will minimize his losses. 
B)  Jason should produce where the distance between MC and his demand curve is greatest (point b). 
C)  Jason cannot earn a profit from selling any number of apples. 
D)  Jason should produce where MC equals $3 (point d) where he will maximize his profit. 
A)  Jason should produce where MC equals $3 (point d) where he will minimize his losses. 
B)  Jason should produce where the distance between MC and his demand curve is greatest (point b). 
C)  Jason cannot earn a profit from selling any number of apples. 
D)  Jason should produce where MC equals $3 (point d) where he will maximize his profit.

Question 18

Which of the following statements is correct?

Accepted Answer

A)  Economic profit takes into account all costs involved in producing a product. 
B)  Accounting profit is not relevant in preparing the firm's financial statement. 
C)  Economic profit always exceeds accounting profit. 
D)  Accounting profit is the same as economic profit. 
A)  Economic profit takes into account all costs involved in producing a product. 
B)  Accounting profit is not relevant in preparing the firm's financial statement. 
C)  Economic profit always exceeds accounting profit. 
D)  Accounting profit is the same as economic profit.

Question 19

Assume that price is greater than average variable cost.If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54,then to maximize profits the firm should

Accepted Answer

A)  continue producing at the current output. 
B)  produce a larger level of output. 
C)  produce a smaller level of output. 
D)  There is not enough information given to answer the question. 
A)  continue producing at the current output. 
B)  produce a larger level of output. 
C)  produce a smaller level of output. 
D)  There is not enough information given to answer the question.

Question 20

Figure 9-8
  
-Refer to Figure 9-8.Suppose the market price is $120.Which of the following is true?

Accepted Answer

A)  The firm earns a profit equal to the area A. 
B)  The firm earns a profit equal to the area A + B. 
C)  The firm suffers a loss equal to the area A. 
D)  The firm will break even. 
A)  The firm earns a profit equal to the area A. 
B)  The firm earns a profit equal to the area A + B. 
C)  The firm suffers a loss equal to the area A. 
D)  The firm will break even.

Figure 9-1 -Refer to Figure 9-1.If the firm is producing 700 units

Figure 9-1 -Refer to Figure 9-1.If the firm is charging a price of $12 per unit

In perfect competition

If a firm's fixed cost exceeds its total revenue,the firm should stop production by shutting down temporarily.

What is a long-run supply curve? What does a long-run supply curve look like on a perfectly competitive market graph?

Figure 9-5 Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 9-5.What is the amount of the firm's fixed cost of production?

All of the following can be used to compute average profit except

If price = marginal cost at the output produced by a perfectly competitive firm and the firm is earning an economic profit,then

When firms exit a perfectly competitive industry,the market supply curve shifts to the left.

The market demand curve in a perfectly competitive market is downward sloping.

If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold,what should the farm do to maximize its profit?

Which of the following does not hold true for a perfectly competitive firm in long-run equilibrium?

A wheat farmer and a firm in a perfectly competitive market are similar in that

If,as a perfectly competitive industry expands,it can supply larger quantities at the same long-run market price,it is

Figure 9-1 -Refer to Figure 9-1.If the firm is producing 200 units

Figure 9-6 Figure 9-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 9-6.Which of the following statements is true?

Which of the following statements is correct?

Assume that price is greater than average variable cost.If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54,then to maximize profits the firm should

Figure 9-8 -Refer to Figure 9-8.Suppose the market price is $120.Which of the following is true?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

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Exam 9: Firms in Perfectly Competitive Markets

Figure 9-1 -Refer to Figure 9-1.If the firm is producing 700 units

Figure 9-1 -Refer to Figure 9-1.If the firm is charging a price of $12 per unit

In perfect competition

If a firm's fixed cost exceeds its total revenue,the firm should stop production by shutting down temporarily.

What is a long-run supply curve? What does a long-run supply curve look like on a perfectly competitive market graph?

Figure 9-5 Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 9-5.What is the amount of the firm's fixed cost of production?

All of the following can be used to compute average profit except

If price = marginal cost at the output produced by a perfectly competitive firm and the firm is earning an economic profit,then

When firms exit a perfectly competitive industry,the market supply curve shifts to the left.

The market demand curve in a perfectly competitive market is downward sloping.

If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold,what should the farm do to maximize its profit?

Which of the following does not hold true for a perfectly competitive firm in long-run equilibrium?

A wheat farmer and a firm in a perfectly competitive market are similar in that

If,as a perfectly competitive industry expands,it can supply larger quantities at the same long-run market price,it is

Figure 9-1 -Refer to Figure 9-1.If the firm is producing 200 units

Figure 9-6 Figure 9-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 9-6.Which of the following statements is true?

Which of the following statements is correct?

Assume that price is greater than average variable cost.If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54,then to maximize profits the firm should

Figure 9-8 -Refer to Figure 9-8.Suppose the market price is $120.Which of the following is true?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters