Question 1

Markets with hit-and-run entry and exit experience

Accepted Answer

A)  barriers to entry. 
B)  firms entering whenever they can make a profit and exiting when they cannot make a profit. 
C)  steady long-run economic profit. 
D)  a very steady number of firms. 
A)  barriers to entry. 
B)  firms entering whenever they can make a profit and exiting when they cannot make a profit. 
C)  steady long-run economic profit. 
D)  a very steady number of firms.

Question 2

-The above figure shows the cost curves for a typical firm in a competitive market.From the graph,estimate the firm's profits when price equals $10 per unit.

Accepted Answer

When price = 10,p = MC when q

Question 3

Firms in long-run perfect competition produce at

Accepted Answer

A)  increasing returns to scale. 
B)  decreasing returns to scale. 
C)  constant returns to scale. 
D)  no returns to scale. 
A)  increasing returns to scale. 
B)  decreasing returns to scale. 
C)  constant returns to scale. 
D)  no returns to scale.

Question 4

All else equal,a smaller elasticity of the supply curve to the other firms leads to a ________ individual firm's residual elasticity of demand.

Accepted Answer

A)  less elastic 
B)  unit elastic 
C)  more elastic 
D)  zero 
A)  less elastic 
B)  unit elastic 
C)  more elastic 
D)  zero

Question 5

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 6

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 7

-The above figure shows the cost curves for a competitive firm.If the firm is to earn economic profit,price must exceed

Accepted Answer

A)  $0. 
B)  $5. 
C)  $10. 
D)  $11. 
A)  $0. 
B)  $5. 
C)  $10. 
D)  $11.

Question 8

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 9

If a competitive firm maximizes short-run profits by producing some quantity of output,which of the following must be TRUE at that level of output?

Accepted Answer

A)  p > MC 
B)  MR > MC 
C)  p ≥ AVC 
D)  All of the above. 
A)  p > MC 
B)  MR > MC 
C)  p ≥ AVC 
D)  All of the above.

Question 10

If the long-run supply curve in a perfectly competitive industry is upward sloping,this is because

Accepted Answer

A)  firms are different. 
B)  firms are identical. 
C)  input prices rise as the industry expands. 
D)  Either A or C. 
A)  firms are different. 
B)  firms are identical. 
C)  input prices rise as the industry expands. 
D)  Either A or C.

Question 11

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

Accepted Answer

A)  economic 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)  economic 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 12

Many auction sites,such as eBay,provide a reputation score by which previous customers can rate a seller.Which of the following characteristics of a competitive market is this policy trying to emulate?

Accepted Answer

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

Question 13

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

Accepted Answer

@#IMG-DLM& See the a

Question 14

-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 15

The "Got Milk?" advertising campaign is a good example of

Accepted Answer

A)  advertising in a competitive market. 
B)  how advertising in a competitive market does not pay off for a single firm. 
C)  interest groups financed by the industry advertise for the whole industry. 
D)  All of the above. 
A)  advertising in a competitive market. 
B)  how advertising in a competitive market does not pay off for a single firm. 
C)  interest groups financed by the industry advertise for the whole industry. 
D)  All of the above.

Question 16

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 17

The competitive firm's supply curve is equal to

Accepted Answer

A)  its marginal cost curve. 
B)  the portion of its marginal cost curve that lies above AC. 
C)  the portion of its marginal cost curve that lies above AVC. 
D)  the portion of its marginal cost curve that lies above AFC. 
A)  its marginal cost curve. 
B)  the portion of its marginal cost curve that lies above AC. 
C)  the portion of its marginal cost curve that lies above AVC. 
D)  the portion of its marginal cost curve that lies above AFC.

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

-The above figure shows the cost curves for a competitive firm.The firm will incur economic losses if the price is less than

Accepted Answer

A)  $0. 
B)  $5. 
C)  $10. 
D)  $11. 
A)  $0. 
B)  $5. 
C)  $10. 
D)  $11.

Question 20

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

Accepted Answer

A)  profits equal zero. 
B)  it will not operate at a loss. 
C)  an increase in its fixed cost will have no effect on profit. 
D)  an increase in its fixed cost will have no effect on output. 
A)  profits equal zero. 
B)  it will not operate at a loss. 
C)  an increase in its fixed cost will have no effect on profit. 
D)  an increase in its fixed cost will have no effect on output.

Markets with hit-and-run entry and exit experience

-The above figure shows the cost curves for a typical firm in a competitive market.From the graph,estimate the firm's profits when price equals $10 per unit.

Firms in long-run perfect competition produce at

All else equal,a smaller elasticity of the supply curve to the other firms leads to a ________ individual firm's residual elasticity of demand.

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

-The above figure shows the cost curves for a competitive firm.If the firm is to earn economic profit,price must exceed

An increase in the cost of an input will result in

If a competitive firm maximizes short-run profits by producing some quantity of output,which of the following must be TRUE at that level of output?

If the long-run supply curve in a perfectly competitive industry is upward sloping,this is because

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

Many auction sites,such as eBay,provide a reputation score by which previous customers can rate a seller.Which of the following characteristics of a competitive market is this policy trying to emulate?

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

-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.

The "Got Milk?" advertising campaign is a good example of

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

The competitive firm's supply curve is equal to

Firms that exhibit price-taking behavior

-The above figure shows the cost curves for a competitive firm.The firm will incur economic losses if the price is less than

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

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 8: Competitive Firms and Markets

Markets with hit-and-run entry and exit experience

-The above figure shows the cost curves for a typical firm in a competitive market.From the graph,estimate the firm's profits when price equals $10 per unit.

Firms in long-run perfect competition produce at

All else equal,a smaller elasticity of the supply curve to the other firms leads to a ________ individual firm's residual elasticity of demand.

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

-The above figure shows the cost curves for a competitive firm.If the firm is to earn economic profit,price must exceed

An increase in the cost of an input will result in

If a competitive firm maximizes short-run profits by producing some quantity of output,which of the following must be TRUE at that level of output?

If the long-run supply curve in a perfectly competitive industry is upward sloping,this is because

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

Many auction sites,such as eBay,provide a reputation score by which previous customers can rate a seller.Which of the following characteristics of a competitive market is this policy trying to emulate?

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

-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.

The "Got Milk?" advertising campaign is a good example of

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

The competitive firm's supply curve is equal to

Firms that exhibit price-taking behavior

-The above figure shows the cost curves for a competitive firm.The firm will incur economic losses if the price is less than

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

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters