Question 1

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 2

-The above figure shows the cost curves for a typical firm in a competitive market.If there are 200 identical firms,estimate the market quantity supplied when p = 4,8,and 10.

Accepted Answer

When p = 4,p < AVC so no firms

Question 3

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at $0.20 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

Question 4

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 5

-In the figure above,what is the profit-maximizing level of output when the market price is $8?

Accepted Answer

A)  10 
B)  40 
C)  50 
D)  60 
A)  10 
B)  40 
C)  50 
D)  60

Question 6

The reasons why a competitive firm's short-run supply curve is upward sloping are

Accepted Answer

A)  the law of diminishing marginal returns and profit maximization. 
B)  constant returns to scale and profit maximization. 
C)  decreasing returns to scale and profit maximization. 
D)  Both B and C. 
A)  the law of diminishing marginal returns and profit maximization. 
B)  constant returns to scale and profit maximization. 
C)  decreasing returns to scale and profit maximization. 
D)  Both B and C.

Question 7

Suppose market demand is Q = 1000 - 4p.If all firms have LRAC = 50 - 5q + q2,how many identical firms will there be when this industry is in long-run equilibrium?

Accepted Answer

The long-run market supply curve is hori

Question 8

A small business owner earns $60,000 in revenue annually.The explicit annual costs equal $10,000.The owner could work for someone else and earn $25,000 annually.The owner's accounting profit is ________ and owner's economic profit is ________.

Accepted Answer

A)  $20,000; $5,000 
B)  $50,000; $25,000 
C)  $25,000; -$5,000 
D)  $45,000; -$5,000 
A)  $20,000; $5,000 
B)  $50,000; $25,000 
C)  $25,000; -$5,000 
D)  $45,000; -$5,000

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

If a firm sets marginal revenue equal to marginal cost,it will make an economic profit.

Accepted Answer

A) True 
 B)False

Question 11

-In the figure above,what is the maximum profit and the profit-maximizing level of output of the firm when the market price is $8.50?

Accepted Answer

A)  Q = 50; Profit = $100 
B)  Q = 55; Profit = $50 
C)  Q = 55; Profit = $0 
D)  Q = 60; Profit = $0 
A)  Q = 50; Profit = $100 
B)  Q = 55; Profit = $50 
C)  Q = 55; Profit = $0 
D)  Q = 60; Profit = $0

Question 12

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 13

Suppose a firm has the following total cost function: TC = 50 + 2q2.What is the minimum price necessary for the firm to earn profit?

Accepted Answer

A)  p = $20 
B)  p = $30 
C)  p = $35 
D)  p = $40 
A)  p = $20 
B)  p = $30 
C)  p = $35 
D)  p = $40

Question 14

If a firm operates in a perfectly competitive market,then

Accepted Answer

A)  all firms will advertise. 
B)  no firms will advertise. 
C)  the market leader will advertise. 
D)  new firms will advertise. 
A)  all firms will advertise. 
B)  no firms will advertise. 
C)  the market leader will advertise. 
D)  new firms will advertise.

Question 15

In the absence of any government regulation on price,if a firm has no power to set price on its own,one can safely conclude

Accepted Answer

A)  the demand curve for the firm's product is horizontal. 
B)  there aren't many firms in the industry. 
C)  the market is in long-run equilibrium. 
D)  the firms in this industry are not profitable. 
A)  the demand curve for the firm's product is horizontal. 
B)  there aren't many firms in the industry. 
C)  the market is in long-run equilibrium. 
D)  the firms in this industry are not profitable.

Question 16

If a firm happened to be the only seller of a particular product,it might behave as a price taker as long as

Accepted Answer

A)  buyers have full information about the firm's price. 
B)  the transaction costs of doing business with this firm are low. 
C)  there are many buyers. 
D)  there is free entry and exit. 
A)  buyers have full information about the firm's price. 
B)  the transaction costs of doing business with this firm are low. 
C)  there are many buyers. 
D)  there is free entry and exit.

Question 17

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 18

-The above figure shows the long-run cost curves for a competitive firm that produces widgets.All firms in the widget industry are identical.If the firm is to operate in the short run,price must be at least

Accepted Answer

A)  $ 0. 
B)  $ 8. 
C)  $10. 
D)  $ 50. 
A)  $ 0. 
B)  $ 8. 
C)  $10. 
D)  $ 50.

Question 19

In a competitive market where the elasticity of the market demand curve is -0.5,there are 100 identical firms,and the elasticity of the supply curve to the other 99 firms is 4.What is the elasticity of the demand curve of the 100th firm?

Accepted Answer

A)  -446 
B)  -489 
C)  -50 
D)  -0.5 
A)  -446 
B)  -489 
C)  -50 
D)  -0.5

Question 20

If a profit-maximizing firm finds that,at its current level of production,MR < MC,it will

Accepted Answer

A)  decrease output. 
B)  increase output. 
C)  shut down. 
D)  operate at a loss. 
A)  decrease output. 
B)  increase output. 
C)  shut down. 
D)  operate at a loss.

In a perfectly competitive market,

-The above figure shows the cost curves for a typical firm in a competitive market.If there are 200 identical firms,estimate the market quantity supplied when p = 4,8,and 10.

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at $0.20 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?

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

-In the figure above,what is the profit-maximizing level of output when the market price is $8?

The reasons why a competitive firm's short-run supply curve is upward sloping are

Suppose market demand is Q = 1000 - 4p.If all firms have LRAC = 50 - 5q + q²,how many identical firms will there be when this industry is in long-run equilibrium?

A small business owner earns $60,000 in revenue annually.The explicit annual costs equal $10,000.The owner could work for someone else and earn $25,000 annually.The owner's accounting profit is and owner's economic profit is .

A market's structure is described by

If a firm sets marginal revenue equal to marginal cost,it will make an economic profit.

-In the figure above,what is the maximum profit and the profit-maximizing level of output of the firm when the market price is $8.50?

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

Suppose a firm has the following total cost function: TC = 50 + 2q².What is the minimum price necessary for the firm to earn profit?

If a firm operates in a perfectly competitive market,then

In the absence of any government regulation on price,if a firm has no power to set price on its own,one can safely conclude

If a firm happened to be the only seller of a particular product,it might behave as a price taker as long as

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

-The above figure shows the long-run cost curves for a competitive firm that produces widgets.All firms in the widget industry are identical.If the firm is to operate in the short run,price must be at least

In a competitive market where the elasticity of the market demand curve is -0.5,there are 100 identical firms,and the elasticity of the supply curve to the other 99 firms is 4.What is the elasticity of the demand curve of the 100^th firm?

If a profit-maximizing firm finds that,at its current level of production,MR < MC,it will

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

In a perfectly competitive market,

-The above figure shows the cost curves for a typical firm in a competitive market.If there are 200 identical firms,estimate the market quantity supplied when p = 4,8,and 10.

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at $0.20 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?

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

-In the figure above,what is the profit-maximizing level of output when the market price is $8?

The reasons why a competitive firm's short-run supply curve is upward sloping are

Suppose market demand is Q = 1000 - 4p.If all firms have LRAC = 50 - 5q + q2,how many identical firms will there be when this industry is in long-run equilibrium?

A small business owner earns $60,000 in revenue annually.The explicit annual costs equal $10,000.The owner could work for someone else and earn $25,000 annually.The owner's accounting profit is ________ and owner's economic profit is ________.

A market's structure is described by

If a firm sets marginal revenue equal to marginal cost,it will make an economic profit.

-In the figure above,what is the maximum profit and the profit-maximizing level of output of the firm when the market price is $8.50?

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

Suppose a firm has the following total cost function: TC = 50 + 2q2.What is the minimum price necessary for the firm to earn profit?

If a firm operates in a perfectly competitive market,then

In the absence of any government regulation on price,if a firm has no power to set price on its own,one can safely conclude

If a firm happened to be the only seller of a particular product,it might behave as a price taker as long as

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

-The above figure shows the long-run cost curves for a competitive firm that produces widgets.All firms in the widget industry are identical.If the firm is to operate in the short run,price must be at least

In a competitive market where the elasticity of the market demand curve is -0.5,there are 100 identical firms,and the elasticity of the supply curve to the other 99 firms is 4.What is the elasticity of the demand curve of the 100th firm?

If a profit-maximizing firm finds that,at its current level of production,MR < MC,it will

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

Suppose market demand is Q = 1000 - 4p.If all firms have LRAC = 50 - 5q + q²,how many identical firms will there be when this industry is in long-run equilibrium?

A small business owner earns $60,000 in revenue annually.The explicit annual costs equal $10,000.The owner could work for someone else and earn $25,000 annually.The owner's accounting profit is and owner's economic profit is .

Suppose a firm has the following total cost function: TC = 50 + 2q².What is the minimum price necessary for the firm to earn profit?

In a competitive market where the elasticity of the market demand curve is -0.5,there are 100 identical firms,and the elasticity of the supply curve to the other 99 firms is 4.What is the elasticity of the demand curve of the 100^th firm?