Question 1

If a firm is maximizing profits, the extra revenue it receives from selling its last unit of output exceeds the extra cost of producing that unit.

Accepted Answer

A) True 
 B)False

Question 2

-Suppose the cost curves in the above figure apply to all firms in the market. If the initial price is P1, firms are ________ and some firms will ________ the industry.

Accepted Answer

A)  making an economic profit; leave 
B)  making an economic profit; enter 
C)  incurring an economic loss; leave 
D)  incurring an economic loss; enter 
A)  making an economic profit; leave 
B)  making an economic profit; enter 
C)  incurring an economic loss; leave 
D)  incurring an economic loss; enter

Question 3

In perfect competition, the elasticity of demand for the product of a single firm is

Accepted Answer

A)  0. 
B)  between 0 and 1. 
C)  1. 
D)  infinite. 
A)  0. 
B)  between 0 and 1. 
C)  1. 
D)  infinite.

Question 4

-In the above figure, at a price of $8, a perfectly competitive firm produces ________ and it ________.

Accepted Answer

A)  0; incurs an economic loss 
B)  0; makes zero economic profit 
C)  some output; makes zero economic profit 
D)  some output; makes an economic profit 
A)  0; incurs an economic loss 
B)  0; makes zero economic profit 
C)  some output; makes zero economic profit 
D)  some output; makes an economic profit

Question 5

As long as it does not shut down, a perfectly competitive firm earns the maximum profit as long as it operates so that

Accepted Answer

A)  its price exceeds its average total cost. 
B)  market demand is inelastic. 
C)  its price exceeds its marginal revenue. 
D)  its marginal revenue equals its marginal cost. 
A)  its price exceeds its average total cost. 
B)  market demand is inelastic. 
C)  its price exceeds its marginal revenue. 
D)  its marginal revenue equals its marginal cost.

Question 6

In a perfectly competitive market, a permanent increase in demand initially brings a higher price, economic

Accepted Answer

A)  loss, and entry into the market. 
B)  loss, and exit from the market. 
C)  profit, and entry into the market. 
D)  profit, and exit from the market. 
A)  loss, and entry into the market. 
B)  loss, and exit from the market. 
C)  profit, and entry into the market. 
D)  profit, and exit from the market.

Question 7

Perfect competition exists in a market if

Accepted Answer

A)  there are many firms producing an identical product. 
B)  there are many firms producing a similar product, each of which may have unique features. 
C)  the firm is protected by a barrier to entry. 
D)  the firm is always at the break-even point where it is earning only a normal profit. 
A)  there are many firms producing an identical product. 
B)  there are many firms producing a similar product, each of which may have unique features. 
C)  the firm is protected by a barrier to entry. 
D)  the firm is always at the break-even point where it is earning only a normal profit.

Question 8

-The above table shows the total cost schedule for a perfectly competitive firm. The market price is $250 per unit. Complete the table.

Accepted Answer

@#IMG-DLM& The compl

Question 9

In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?

Accepted Answer

A)  a decrease in market demand 
B)  an increase in market demand 
C)  an increase in labor costs 
D)  an increase in the number of firms 
A)  a decrease in market demand 
B)  an increase in market demand 
C)  an increase in labor costs 
D)  an increase in the number of firms

Question 10

Because each perfectly competitive firm sells a product identical to that of the other firms

Accepted Answer

A)  each firm tries to cut prices to increase its market share. 
B)  each firm's output is a perfect substitute for the output of any other firm. 
C)  each firm expects to earn some economic profit. 
D)  the demand for each firm's product is perfectly inelastic. 
A)  each firm tries to cut prices to increase its market share. 
B)  each firm's output is a perfect substitute for the output of any other firm. 
C)  each firm expects to earn some economic profit. 
D)  the demand for each firm's product is perfectly inelastic.

Question 11

The U-pick berry market is perfectly competitive. Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit. What happens as time passes? What is the long-run equilibrium outcome?

Accepted Answer

The presence of economic profit attracts

Question 12

In perfect competition, a firm that maximizes its economic profit will sell its good at a price that is

Accepted Answer

A)  below the market price. 
B)  at the market price. 
C)  above the market price. 
D)  below the market price if its supply curve is inelastic and above the market price if its supply curve is elastic. 
A)  below the market price. 
B)  at the market price. 
C)  above the market price. 
D)  below the market price if its supply curve is inelastic and above the market price if its supply curve is elastic.

Question 13

-In the long run, perfectly competitive firms make zero economic profit. This result is due mainly to the point that a perfectly competitive market has

Accepted Answer

A)  few buyers and sellers. 
B)  no barriers to entry and exit. 
C)  price taking by the firms. 
D)  firms with perfectly elastic market demand. 
A)  few buyers and sellers. 
B)  no barriers to entry and exit. 
C)  price taking by the firms. 
D)  firms with perfectly elastic market demand.

Question 14

-In the above figure, if the milk industry is perfectly competitive, then the firm's marginal revenue curve is represented by

Accepted Answer

A)  curve F. 
B)  curve G. 
C)  curve H. 
D)  curve I. 
A)  curve F. 
B)  curve G. 
C)  curve H. 
D)  curve I.

Question 15

The difference between a firm's total revenue and its total opportunity cost is the firm's

Accepted Answer

A)  normal profit. 
B)  economic profit. 
C)  marginal profit. 
D)  marginal revenue. 
A)  normal profit. 
B)  economic profit. 
C)  marginal profit. 
D)  marginal revenue.

Question 16

Perfect competition implies that

Accepted Answer

A)  there are many firms in the market. 
B)  all firms are price takers. 
C)  all firms are producing the same identical product. 
D)  All of the above answers are correct. 
A)  there are many firms in the market. 
B)  all firms are price takers. 
C)  all firms are producing the same identical product. 
D)  All of the above answers are correct.

Question 17

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure.
a) What is Farmer Brown's total revenue?
b) What is Farmer Brown's marginal revenue?

Accepted Answer

a) Total revenue = price × quantity. The

Question 18

-In the above table, the average variable cost at 2 units of output is

Accepted Answer

A)  $1.00. 
B)  $2.00. 
C)  $4.00. 
D)  $4.80. 
A)  $1.00. 
B)  $2.00. 
C)  $4.00. 
D)  $4.80.

Question 19

The supply curve for a perfectly competitive firm is the portion of its marginal cost curve that lies above its marginal revenue curve.

Accepted Answer

A) True 
 B)False

Question 20

Economic profit is ________.

Accepted Answer

A)  included in the firm's total opportunity cost 
B)  equal to normal profit minus total opportunity cost 
C)  equal to total revenue minus marginal cost 
D)  equal to total revenue minus total opportunity cost 
A)  included in the firm's total opportunity cost 
B)  equal to normal profit minus total opportunity cost 
C)  equal to total revenue minus marginal cost 
D)  equal to total revenue minus total opportunity cost

If a firm is maximizing profits, the extra revenue it receives from selling its last unit of output exceeds the extra cost of producing that unit.

-Suppose the cost curves in the above figure apply to all firms in the market. If the initial price is P₁, firms are and some firms will the industry.

In perfect competition, the elasticity of demand for the product of a single firm is

-In the above figure, at a price of $8, a perfectly competitive firm produces and it .

As long as it does not shut down, a perfectly competitive firm earns the maximum profit as long as it operates so that

In a perfectly competitive market, a permanent increase in demand initially brings a higher price, economic

Perfect competition exists in a market if

-The above table shows the total cost schedule for a perfectly competitive firm. The market price is $250 per unit. Complete the table.

In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?

Because each perfectly competitive firm sells a product identical to that of the other firms

The U-pick berry market is perfectly competitive. Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit. What happens as time passes? What is the long-run equilibrium outcome?

In perfect competition, a firm that maximizes its economic profit will sell its good at a price that is

-In the long run, perfectly competitive firms make zero economic profit. This result is due mainly to the point that a perfectly competitive market has

-In the above figure, if the milk industry is perfectly competitive, then the firm's marginal revenue curve is represented by

The difference between a firm's total revenue and its total opportunity cost is the firm's

Perfect competition implies that

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure. a) What is Farmer Brown's total revenue? b) What is Farmer Brown's marginal revenue?

-In the above table, the average variable cost at 2 units of output is

The supply curve for a perfectly competitive firm is the portion of its marginal cost curve that lies above its marginal revenue curve.

Economic profit is ________.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 12: Perfect Competition

If a firm is maximizing profits, the extra revenue it receives from selling its last unit of output exceeds the extra cost of producing that unit.

-Suppose the cost curves in the above figure apply to all firms in the market. If the initial price is P1, firms are ________ and some firms will ________ the industry.

In perfect competition, the elasticity of demand for the product of a single firm is

-In the above figure, at a price of $8, a perfectly competitive firm produces ________ and it ________.

As long as it does not shut down, a perfectly competitive firm earns the maximum profit as long as it operates so that

In a perfectly competitive market, a permanent increase in demand initially brings a higher price, economic

Perfect competition exists in a market if

-The above table shows the total cost schedule for a perfectly competitive firm. The market price is $250 per unit. Complete the table.

In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?

Because each perfectly competitive firm sells a product identical to that of the other firms

The U-pick berry market is perfectly competitive. Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit. What happens as time passes? What is the long-run equilibrium outcome?

In perfect competition, a firm that maximizes its economic profit will sell its good at a price that is

-In the long run, perfectly competitive firms make zero economic profit. This result is due mainly to the point that a perfectly competitive market has

-In the above figure, if the milk industry is perfectly competitive, then the firm's marginal revenue curve is represented by

The difference between a firm's total revenue and its total opportunity cost is the firm's

Perfect competition implies that

-Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure. a) What is Farmer Brown's total revenue? b) What is Farmer Brown's marginal revenue?

-In the above table, the average variable cost at 2 units of output is

The supply curve for a perfectly competitive firm is the portion of its marginal cost curve that lies above its marginal revenue curve.

Economic profit is ________.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-Suppose the cost curves in the above figure apply to all firms in the market. If the initial price is P₁, firms are and some firms will the industry.

-In the above figure, at a price of $8, a perfectly competitive firm produces and it .