Question 1

When a perfectly competitive firm is in long-run equilibrium, what is the relationship between the firm's marginal cost, average total cost, marginal revenue, and price?

Accepted Answer

Marginal cost and av

Question 2

-Which of the following characterizes a perfectly competitive market?

Accepted Answer

A)  The market demand curve is vertical. 
B)  The demand for each individual firm's product is perfectly elastic. 
C)  Each firm sets a different price. 
D)  Each firm produces a product slightly different from that of its competitors. 
A)  The market demand curve is vertical. 
B)  The demand for each individual firm's product is perfectly elastic. 
C)  Each firm sets a different price. 
D)  Each firm produces a product slightly different from that of its competitors.

Question 3

-The figure above shows a perfectly competitive firm. The figure shows a firm

Accepted Answer

A)  in the short run. 
B)  in the long run. 
C)  at its shutdown point. 
D)  Both answers A and C are correct. 
A)  in the short run. 
B)  in the long run. 
C)  at its shutdown point. 
D)  Both answers A and C are correct.

Question 4

An example of a perfectly competitive industry is

Accepted Answer

A)  a big city police department. 
B)  the market for corn in the United States. 
C)  the market for French impressionists' paintings. 
D)  the National Football League. 
A)  a big city police department. 
B)  the market for corn in the United States. 
C)  the market for French impressionists' paintings. 
D)  the National Football League.

Question 5

A perfectly competitive firm produces so that its marginal cost equals the price.

Accepted Answer

A) True 
 B)False

Question 6

When a perfectly competitive market is in its long-run equilibrium, the fact that the firms make zero economic profit will

Accepted Answer

A)  encourage new firms to enter the market. 
B)  cause existing firms to shut down. 
C)  cause existing firms to leave the market. 
D)  mean that the firms' owners earn a normal return. 
A)  encourage new firms to enter the market. 
B)  cause existing firms to shut down. 
C)  cause existing firms to leave the market. 
D)  mean that the firms' owners earn a normal return.

Question 7

In a perfectly competitive market, which of the following determines the market price?

Accepted Answer

A)  market demand and a firm's supply 
B)  market supply and a firm's demand 
C)  a firm's demand and its supply 
D)  market demand and market supply 
A)  market demand and a firm's supply 
B)  market supply and a firm's demand 
C)  a firm's demand and its supply 
D)  market demand and market supply

Question 8

A perfectly competitive firm that is producing a positive quantity of a good maximizes its economic profit if it produces so that

Accepted Answer

A)  total revenue = total cost. 
B)  marginal revenue = marginal cost. 
C)  average revenue = average total cost. 
D)  average total cost = average variable cost. 
A)  total revenue = total cost. 
B)  marginal revenue = marginal cost. 
C)  average revenue = average total cost. 
D)  average total cost = average variable cost.

Question 9

With regard to its economic profits and economic losses, how is the short run different from the long run for a perfectly competitive firm?

Accepted Answer

The firm can make an economic profit, in

Question 10

There is a technological advance in a perfectly market. Which of the following statements is NOT true?

Accepted Answer

A)  As more firms begin to use the new technology, the market supply increases and the price falls. 
B)  Technological change brings permanent gains to producers and temporary gains to consumers. 
C)  In the new long-run equilibrium, all the old-technology firms have exited. 
D)  In the long-run equilibrium, competition eliminates any short-run economic profit. 
A)  As more firms begin to use the new technology, the market supply increases and the price falls. 
B)  Technological change brings permanent gains to producers and temporary gains to consumers. 
C)  In the new long-run equilibrium, all the old-technology firms have exited. 
D)  In the long-run equilibrium, competition eliminates any short-run economic profit.

Question 11

Pete is a perfectly competitive rose grower. The above table gives quantities and the price for which Pete can sell his roses.
a) What is Pete's total revenue if he sells 1 dozen roses? 2 dozen roses? 3 dozen roses? 4 dozen roses?
b) What is the marginal revenue of the 2nd dozen roses sold? Of the 3rd dozen? Of the 4th dozen?

Accepted Answer

a) The total revenue when 1 dozen roses

Question 12

-The donut market is perfectly competitive. The figure shows the costs of a typical donut producer. In the short run, the donut producer's supply curve is the curve running from point ________ to point E.

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 13

-The above figure shows a firm's total revenue line. The firm must be in a market with

Accepted Answer

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

Question 14

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will earn a positive economic profit?

Accepted Answer

A)  from 0 to 30,000 bushels 
B)  from 0 to 60,000 bushels 
C)  between 30,000 and 80,000 bushels 
D)  over 80,000 bushels 
A)  from 0 to 30,000 bushels 
B)  from 0 to 60,000 bushels 
C)  between 30,000 and 80,000 bushels 
D)  over 80,000 bushels

Question 15

-The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. Which of the following statements is TRUE?

Accepted Answer

A)  The firm is producing at minimum long-run average cost. 
B)  Over time, this firm will leave this industry. 
C)  The firm is earning positive economic profit. 
D)  The firm will eventually decrease its production. 
A)  The firm is producing at minimum long-run average cost. 
B)  Over time, this firm will leave this industry. 
C)  The firm is earning positive economic profit. 
D)  The firm will eventually decrease its production.

Question 16

What is one reason why would corn production, which takes place in a perfectly competitive market, achieve an efficient use of resources?

Accepted Answer

A)  because a perfectly competitive firm produces at the lowest possible long run average total cost 
B)  because a perfectly competitive firm produces where marginal revenue exceeds marginal cost 
C)  because a perfectly competitive firm is a price maker 
D)  because the goal of a perfectly competitive firm is to profit maximize 
A)  because a perfectly competitive firm produces at the lowest possible long run average total cost 
B)  because a perfectly competitive firm produces where marginal revenue exceeds marginal cost 
C)  because a perfectly competitive firm is a price maker 
D)  because the goal of a perfectly competitive firm is to profit maximize

Question 17

When the firm produces the quantity that sets marginal revenue equal to marginal cost, a perfectly competitive firm is

Accepted Answer

A)  determining the price it will set. 
B)  maximizing its revenues. 
C)  maximizing its profit. 
D)  establishing its shutdown point. 
A)  determining the price it will set. 
B)  maximizing its revenues. 
C)  maximizing its profit. 
D)  establishing its shutdown point.

Question 18

Paul runs a shop that sells printers. Paul is a perfect competitor and can sell each printer for a price of $300. The marginal cost of selling one printer a day is $200; the marginal cost of selling a second printer is $250; and the marginal cost of selling a third printer is $350. To maximize his profit, Paul should sell

Accepted Answer

A)  one printer a day. 
B)  two printers a day. 
C)  three printers a day. 
D)  more than three printers a day. 
A)  one printer a day. 
B)  two printers a day. 
C)  three printers a day. 
D)  more than three printers a day.

Question 19

The assumption that a perfectly competitive industry has many sellers, each selling an identical product, leads to the conclusion that

Accepted Answer

A)  consumers get to see a variety of outputs. 
B)  there are many buyers. 
C)  the economic profit will be positive in the long run. 
D)  firms are price takers. 
A)  consumers get to see a variety of outputs. 
B)  there are many buyers. 
C)  the economic profit will be positive in the long run. 
D)  firms are price takers.

Question 20

Which of the following four firms would most likely be part of a perfectly competitive market?

Accepted Answer

A)  Village Pizza sells NY style pizza and hard-to-find microbrews in a college town. 
B)  The WaveHouse is the only place in San Diego where you can ride an indoor 10 foot wave. 
C)  Mark sells the tomatoes he grew in his backyard at the local farmers market. 
D)  Amara Massage specializes in pre- and post-natal massage. 
A)  Village Pizza sells NY style pizza and hard-to-find microbrews in a college town. 
B)  The WaveHouse is the only place in San Diego where you can ride an indoor 10 foot wave. 
C)  Mark sells the tomatoes he grew in his backyard at the local farmers market. 
D)  Amara Massage specializes in pre- and post-natal massage.

When a perfectly competitive firm is in long-run equilibrium, what is the relationship between the firm's marginal cost, average total cost, marginal revenue, and price?

-Which of the following characterizes a perfectly competitive market?

-The figure above shows a perfectly competitive firm. The figure shows a firm

An example of a perfectly competitive industry is

A perfectly competitive firm produces so that its marginal cost equals the price.

When a perfectly competitive market is in its long-run equilibrium, the fact that the firms make zero economic profit will

In a perfectly competitive market, which of the following determines the market price?

A perfectly competitive firm that is producing a positive quantity of a good maximizes its economic profit if it produces so that

With regard to its economic profits and economic losses, how is the short run different from the long run for a perfectly competitive firm?

There is a technological advance in a perfectly market. Which of the following statements is NOT true?

-The donut market is perfectly competitive. The figure shows the costs of a typical donut producer. In the short run, the donut producer's supply curve is the curve running from point ________ to point E.

-The above figure shows a firm's total revenue line. The firm must be in a market with

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will earn a positive economic profit?

-The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. Which of the following statements is TRUE?

What is one reason why would corn production, which takes place in a perfectly competitive market, achieve an efficient use of resources?

When the firm produces the quantity that sets marginal revenue equal to marginal cost, a perfectly competitive firm is

The assumption that a perfectly competitive industry has many sellers, each selling an identical product, leads to the conclusion that

Which of the following four firms would most likely be part of a perfectly competitive market?

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

When a perfectly competitive firm is in long-run equilibrium, what is the relationship between the firm's marginal cost, average total cost, marginal revenue, and price?

-Which of the following characterizes a perfectly competitive market?

-The figure above shows a perfectly competitive firm. The figure shows a firm

An example of a perfectly competitive industry is

A perfectly competitive firm produces so that its marginal cost equals the price.

When a perfectly competitive market is in its long-run equilibrium, the fact that the firms make zero economic profit will

In a perfectly competitive market, which of the following determines the market price?

A perfectly competitive firm that is producing a positive quantity of a good maximizes its economic profit if it produces so that

With regard to its economic profits and economic losses, how is the short run different from the long run for a perfectly competitive firm?

There is a technological advance in a perfectly market. Which of the following statements is NOT true?

-The donut market is perfectly competitive. The figure shows the costs of a typical donut producer. In the short run, the donut producer's supply curve is the curve running from point ________ to point E.

-The above figure shows a firm's total revenue line. The firm must be in a market with

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will earn a positive economic profit?

-The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. Which of the following statements is TRUE?

What is one reason why would corn production, which takes place in a perfectly competitive market, achieve an efficient use of resources?

When the firm produces the quantity that sets marginal revenue equal to marginal cost, a perfectly competitive firm is

The assumption that a perfectly competitive industry has many sellers, each selling an identical product, leads to the conclusion that

Which of the following four firms would most likely be part of a perfectly competitive market?

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