Question 1

Graphically,consumer surplus is the area:

Accepted Answer

A) above the equilibrium price and below the demand curve. 
B) below the equilibrium price and above the supply curve. 
C) above the equilibrium price and below the supply curve. 
D) below the equilibrium price and above the demand curve. 
E) above the equilibrium price and above the supply curve. 
A) above the equilibrium price and below the demand curve. 
B) below the equilibrium price and above the supply curve. 
C) above the equilibrium price and below the supply curve. 
D) below the equilibrium price and above the demand curve. 
E) above the equilibrium price and above the supply curve.

Question 2

The following figure shows equilibrium at the industry and firm level. Figure 9.6   
In the figure,
SS1U1B11S1U1B0,SS1U1B12S1U1B0,SS1U1B13 S1U1B0are the market supply curves.
DS1U1B11S1U1B0 and DS1U1B12S1U1B0 are the market demand curves.
MC is the marginal cost curve of the firm.
MRS1U1B11S1U1B0 and MRS1U1B12 S1U1B0are the marginal revenue curves of the firm.
ATC is the average-total-cost curve of the firm.
-According to Figure 9.6,if the market price was $1.50,the individual firm would:

Accepted Answer

A) be earning a negative economic profit of about $5. 
B) be earning a positive economic profit of about $5. 
C) be earning a positive economic profit of about $0.87. 
D) be earning a negative economic profit of about $4.50. 
E) be earning a positive economic profit of about $0.50. 
A) be earning a negative economic profit of about $5. 
B) be earning a positive economic profit of about $5. 
C) be earning a positive economic profit of about $0.87. 
D) be earning a negative economic profit of about $4.50. 
E) be earning a positive economic profit of about $0.50.

Question 3

If market demand increases,a perfectly competitive firm will find:

Accepted Answer

A) its cost curves shifting up. 
B) its profit-maximizing output level increasing. 
C) the demand curve facing the firm shifting down. 
D) its marginal cost falling. 
E) its profits decreasing. 
A) its cost curves shifting up. 
B) its profit-maximizing output level increasing. 
C) the demand curve facing the firm shifting down. 
D) its marginal cost falling. 
E) its profits decreasing.

Question 4

Which of the following is true of the model of perfect competition?

Accepted Answer

A) There is a high degree of product differentiation. 
B) Consumers do not have adequate information concerning the prices and quality of products in the market. 
C) There are significant barriers to entry and exit. 
D) There are only a few,large firms in the market. 
E) An individual firm cannot affect the market price. 
A) There is a high degree of product differentiation. 
B) Consumers do not have adequate information concerning the prices and quality of products in the market. 
C) There are significant barriers to entry and exit. 
D) There are only a few,large firms in the market. 
E) An individual firm cannot affect the market price.

Question 5

The theory of the long run in perfect competition helps to provide a rationale for the belief in a limited role for government in society.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements characterizes perfect competition?

Accepted Answer

A) Producers enjoy complete freedom of entry and exit from the industry. 
B) Producers sell differentiated products. 
C) Producers are price makers. 
D) Consumers are price makers. 
E) The firm is not free to choose the quantity that it wishes to produce. 
A) Producers enjoy complete freedom of entry and exit from the industry. 
B) Producers sell differentiated products. 
C) Producers are price makers. 
D) Consumers are price makers. 
E) The firm is not free to choose the quantity that it wishes to produce.

Question 7

A firm should not necessarily shut down if:

Accepted Answer

A) total revenue is less than total variable cost. 
B) losses are greater than fixed costs. 
C) the demand curve facing the firm lies below its average variable cost curve. 
D) price is less than average variable cost. 
E) losses exceed variable costs. 
A) total revenue is less than total variable cost. 
B) losses are greater than fixed costs. 
C) the demand curve facing the firm lies below its average variable cost curve. 
D) price is less than average variable cost. 
E) losses exceed variable costs.

Question 8

A perfectly competitive firm decides to shut down if:

Accepted Answer

A) the price falls below the average-total-cost. 
B) average revenue falls below the average-variable-cost. 
C) the price falls below the marginal cost. 
D) the average revenue curve lies below the marginal cost curve. 
E) the total revenue is less than total cost. 
A) the price falls below the average-total-cost. 
B) average revenue falls below the average-variable-cost. 
C) the price falls below the marginal cost. 
D) the average revenue curve lies below the marginal cost curve. 
E) the total revenue is less than total cost.

Question 9

In the short run a firm continues to produce only if it can cover the:

Accepted Answer

A) fixed costs. 
B) sunk costs. 
C) explicit costs. 
D) variable costs. 
E) implicit costs. 
A) fixed costs. 
B) sunk costs. 
C) explicit costs. 
D) variable costs. 
E) implicit costs.

Question 10

At the profit-maximizing output level for a perfectly competitive firm,if the firm increases its price,it will:

Accepted Answer

A) increase profits. 
B) reduce total cost more than total revenue. 
C) increase total revenue more than total cost. 
D) increase total cost more than total revenue. 
E) cause the firm to lose all of its sales. 
A) increase profits. 
B) reduce total cost more than total revenue. 
C) increase total revenue more than total cost. 
D) increase total cost more than total revenue. 
E) cause the firm to lose all of its sales.

Question 11

Many agricultural products,such as wheat,are produced by thousands of different producers that grow essentially the same product.The market structure model that would best characterize such a market is:

Accepted Answer

A) perfect competition. 
B) monopoly. 
C) monopolistic competition. 
D) oligopoly. 
E) perfect oligopoly. 
A) perfect competition. 
B) monopoly. 
C) monopolistic competition. 
D) oligopoly. 
E) perfect oligopoly.

Question 12

Suppose that in a perfectly competitive market,the market supply of a good increases.As a result,the individual firm's:

Accepted Answer

A) supply curve would shift outward and the firm would increase output. 
B) supply curve would shift inward and the firm would decrease output. 
C) average-total-cost curve would shift upward and the firm would increase output. 
D) marginal-revenue curve would shift upward and the firm would increase output. 
E) marginal-revenue curve would shift downward and the firm would decrease output. 
A) supply curve would shift outward and the firm would increase output. 
B) supply curve would shift inward and the firm would decrease output. 
C) average-total-cost curve would shift upward and the firm would increase output. 
D) marginal-revenue curve would shift upward and the firm would increase output. 
E) marginal-revenue curve would shift downward and the firm would decrease output.

Question 13

If at the profit maximizing level of output,the AR curve lies below the ATC curve in the short run,the firm is earning positive economic profit.

Accepted Answer

A) True 
 B)False

Question 14

One assumption of the model of perfect competition is that entry into the market is easy.This implies that:

Accepted Answer

A) there are government licensing requirements for a firm to enter the market. 
B) there are not significant economies of scale relative to the size of the market. 
C) one firm has gained a patent in the industry. 
D) significant economies of scale do exist in the industry. 
E) there is no government intervention. 
A) there are government licensing requirements for a firm to enter the market. 
B) there are not significant economies of scale relative to the size of the market. 
C) one firm has gained a patent in the industry. 
D) significant economies of scale do exist in the industry. 
E) there is no government intervention.

Question 15

The figure given below shows the revenue and the cost curves of a perfectly competitive firm. Figure 9.3  
- In Figure 9.3,the profit maximizing output of the firm is _____ units.

Accepted Answer

A) 4 
B) 16 
C) 11 
D) 7 
E) 14 
A) 4 
B) 16 
C) 11 
D) 7 
E) 14

Graphically,consumer surplus is the area:

If market demand increases,a perfectly competitive firm will find:

Which of the following is true of the model of perfect competition?

The theory of the long run in perfect competition helps to provide a rationale for the belief in a limited role for government in society.

Which of the following statements characterizes perfect competition?

A firm should not necessarily shut down if:

A perfectly competitive firm decides to shut down if:

In the short run a firm continues to produce only if it can cover the:

At the profit-maximizing output level for a perfectly competitive firm,if the firm increases its price,it will:

Many agricultural products,such as wheat,are produced by thousands of different producers that grow essentially the same product.The market structure model that would best characterize such a market is:

Suppose that in a perfectly competitive market,the market supply of a good increases.As a result,the individual firm's:

If at the profit maximizing level of output,the AR curve lies below the ATC curve in the short run,the firm is earning positive economic profit.

One assumption of the model of perfect competition is that entry into the market is easy.This implies that:

The figure given below shows the revenue and the cost curves of a perfectly competitive firm. Figure 9.3 - In Figure 9.3,the profit maximizing output of the firm is _____ units.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 9: Perfect Competition

Graphically,consumer surplus is the area:

If market demand increases,a perfectly competitive firm will find:

Which of the following is true of the model of perfect competition?

The theory of the long run in perfect competition helps to provide a rationale for the belief in a limited role for government in society.

Which of the following statements characterizes perfect competition?

A firm should not necessarily shut down if:

A perfectly competitive firm decides to shut down if:

In the short run a firm continues to produce only if it can cover the:

At the profit-maximizing output level for a perfectly competitive firm,if the firm increases its price,it will:

Many agricultural products,such as wheat,are produced by thousands of different producers that grow essentially the same product.The market structure model that would best characterize such a market is:

Suppose that in a perfectly competitive market,the market supply of a good increases.As a result,the individual firm's:

If at the profit maximizing level of output,the AR curve lies below the ATC curve in the short run,the firm is earning positive economic profit.

One assumption of the model of perfect competition is that entry into the market is easy.This implies that:

The figure given below shows the revenue and the cost curves of a perfectly competitive firm. Figure 9.3 - In Figure 9.3,the profit maximizing output of the firm is _____ units.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters