Question 1

In a perfectly competitive industry

Accepted Answer

A)  each firm sets its own price so that it is different from the prices of its competitors. 
B)  earning an economic profit is certain. 
C)  each firm is a price taker. 
D)  consumers band together to demand the lowest price possible. 
A)  each firm sets its own price so that it is different from the prices of its competitors. 
B)  earning an economic profit is certain. 
C)  each firm is a price taker. 
D)  consumers band together to demand the lowest price possible.

Question 2

In a perfectly competitive industry, the demand for a single firm's product is

Accepted Answer

A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  as elastic as the market demand. 
D)  inelastic, but not perfectly inelastic. 
A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  as elastic as the market demand. 
D)  inelastic, but not perfectly inelastic.

Question 3

A firm is producing the profit-maximizing amount of output when it is producing where its ________ curve intersects its ________ curve.

Accepted Answer

A)  MC; MR 
B)  MC; AVC 
C)  MC; ATC 
D)  MC; TR 
A)  MC; MR 
B)  MC; AVC 
C)  MC; ATC 
D)  MC; TR

Question 4

-The figure above shows a firm in a perfectly competitive market. The firm will shut down if price falls below

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P4.

Question 5

In a perfectly competitive market that is in long-run equilibrium, a permanent leftward shift in the market demand curve

Accepted Answer

A)  raises the price in the short run. 
B)  raises profits in the short run. 
C)  leads to firms leaving the market in the long run. 
D)  raises the price at first but then returns it to its original level in the long run. 
A)  raises the price in the short run. 
B)  raises profits in the short run. 
C)  leads to firms leaving the market in the long run. 
D)  raises the price at first but then returns it to its original level in the long run.

Question 6

-In the above figure, if the price is P1 and the firm produced Q3, the firm's economic profit is ________ than if it produced Q1 and ________ than if it produced Q2.

Accepted Answer

A)  less; less 
B)  less; more 
C)  more; less 
D)  more; more 
A)  less; less 
B)  less; more 
C)  more; less 
D)  more; more

Question 7

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What is Evan's maximum short-run economic profit?

Accepted Answer

A)  $6 per hour 
B)  $1 per hour 
C)  -$6 per hour 
D)  zero 
A)  $6 per hour 
B)  $1 per hour 
C)  -$6 per hour 
D)  zero

Question 8

-The figure above shows the costs for the typical grower in the perfectly competitive turnip market. Currently, the price is $1,000 for a ton of turnips. In the long run, the market supply of turnips will ________.

Accepted Answer

A)  decrease and the price of a ton of turnips will fall to $600 
B)  increase and the turnip grower's economic profit will increase 
C)  increase and the turnip grower's economic profit will decrease 
D)  decrease and the price of a ton of turnips will rise to $1,200 
A)  decrease and the price of a ton of turnips will fall to $600 
B)  increase and the turnip grower's economic profit will increase 
C)  increase and the turnip grower's economic profit will decrease 
D)  decrease and the price of a ton of turnips will rise to $1,200

Question 9

The market demand for wheat is ________ and the demand for wheat produced by an individual farm is ________.

Accepted Answer

A)  perfectly elastic; perfectly inelastic 
B)  not perfectly elastic; perfectly elastic 
C)  not perfectly inelastic; inelastic 
D)  elastic; unit elastic 
A)  perfectly elastic; perfectly inelastic 
B)  not perfectly elastic; perfectly elastic 
C)  not perfectly inelastic; inelastic 
D)  elastic; unit elastic

Question 10

A firm that shuts down and produces no output incurs a loss equal to its

Accepted Answer

A)  total fixed costs. 
B)  total variable costs. 
C)  marginal costs. 
D)  marginal revenue. 
A)  total fixed costs. 
B)  total variable costs. 
C)  marginal costs. 
D)  marginal revenue.

Question 11

What is the relationship between the price, P, and the average total cost, ATC, for a firm in perfect competition that makes an economic profit? That makes zero economic profit? That incurs an economic loss?

Accepted Answer

If the price is greater than the average

Question 12

-In the short run, a perfectly competitive firm

Accepted Answer

A)  might not make an economic profit. 
B)  will always make an economic profit. 
C)  chooses its optimal plant size. 
D)  is in equilibrium only when its economic profit is zero. 
A)  might not make an economic profit. 
B)  will always make an economic profit. 
C)  chooses its optimal plant size. 
D)  is in equilibrium only when its economic profit is zero.

Question 13

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. The current market price is 4 cents per page. With no change in demand and technology, in the long run, the price will

Accepted Answer

A)  remain unchanged. 
B)  rise to 5 cents per page. 
C)  fall to 2 cents per page. 
D)  fall to 1 cent per page. 
A)  remain unchanged. 
B)  rise to 5 cents per page. 
C)  fall to 2 cents per page. 
D)  fall to 1 cent per page.

Question 14

-The figure above shows a perfectly competitive firm. To maximize its profit, the firm will produce ________ units of output and the price will be ________ for a unit.

Accepted Answer

A)  30; $40 
B)  30; $30 
C)  20; $40 
D)  20; $30 
A)  30; $40 
B)  30; $30 
C)  20; $40 
D)  20; $30

Question 15

If a perfectly competitive firm decides to shut down in the short run, its loss will equal its

Accepted Answer

A)  minimum average variable cost, AVC. 
B)  total variable cost, TVC. 
C)  total fixed cost, TFC. 
D)  average total cost, ATC. 
A)  minimum average variable cost, AVC. 
B)  total variable cost, TVC. 
C)  total fixed cost, TFC. 
D)  average total cost, ATC.

Question 16

"Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the short run in the corn market, what is TRUE if the production of ethanol increases?

Accepted Answer

A)  The demand curve for individual corn farmers will shift upward. 
B)  The price individual corn farmers receive will decrease. 
C)  The total cost curve for individual corn farmers will shift upward. 
D)  The marginal cost curve for individual corn farmers will shift downward. 
A)  The demand curve for individual corn farmers will shift upward. 
B)  The price individual corn farmers receive will decrease. 
C)  The total cost curve for individual corn farmers will shift upward. 
D)  The marginal cost curve for individual corn farmers will shift downward.

Question 17

A perfectly competitive firm has a total revenue curve that is

Accepted Answer

A)  upward sloping with an increasing slope. 
B)  downward sloping with a constant slope. 
C)  upward sloping with a decreasing slope. 
D)  upward sloping with a constant slope. 
A)  upward sloping with an increasing slope. 
B)  downward sloping with a constant slope. 
C)  upward sloping with a decreasing slope. 
D)  upward sloping with a constant slope.

Question 18

Perfect competition arises if the ________ efficient scale of a single producer is ________ relative to the demand for the good or service.

Accepted Answer

A)  minimum; small 
B)  minimum; large 
C)  maximum; small 
D)  maximum; large 
A)  minimum; small 
B)  minimum; large 
C)  maximum; small 
D)  maximum; large

Question 19

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, how much economic profit does the firm make?

Accepted Answer

A)  $0 
B)  $12 
C)  -$20 
D)  -$10 
A)  $0 
B)  $12 
C)  -$20 
D)  -$10

Question 20

As long as it does not shut down, a profit-maximizing perfectly competitive firm will

Accepted Answer

A)  always earn an economic profit. 
B)  produce so that marginal revenue equals marginal cost. 
C)  produce so that price equals average cost. 
D)  never set its price equal to its marginal revenue. 
A)  always earn an economic profit. 
B)  produce so that marginal revenue equals marginal cost. 
C)  produce so that price equals average cost. 
D)  never set its price equal to its marginal revenue.

In a perfectly competitive industry

In a perfectly competitive industry, the demand for a single firm's product is

A firm is producing the profit-maximizing amount of output when it is producing where its curve intersects its curve.

-The figure above shows a firm in a perfectly competitive market. The firm will shut down if price falls below

In a perfectly competitive market that is in long-run equilibrium, a permanent leftward shift in the market demand curve

-In the above figure, if the price is P₁and the firm produced Q₃, the firm's economic profit is than if it produced Q₁ and than if it produced Q₂.

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What is Evan's maximum short-run economic profit?

-The figure above shows the costs for the typical grower in the perfectly competitive turnip market. Currently, the price is $1,000 for a ton of turnips. In the long run, the market supply of turnips will ________.

The market demand for wheat is and the demand for wheat produced by an individual farm is .

A firm that shuts down and produces no output incurs a loss equal to its

What is the relationship between the price, P, and the average total cost, ATC, for a firm in perfect competition that makes an economic profit? That makes zero economic profit? That incurs an economic loss?

-In the short run, a perfectly competitive firm

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. The current market price is 4 cents per page. With no change in demand and technology, in the long run, the price will

-The figure above shows a perfectly competitive firm. To maximize its profit, the firm will produce units of output and the price will be for a unit.

If a perfectly competitive firm decides to shut down in the short run, its loss will equal its

"Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the short run in the corn market, what is TRUE if the production of ethanol increases?

A perfectly competitive firm has a total revenue curve that is

Perfect competition arises if the efficient scale of a single producer is relative to the demand for the good or service.

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, how much economic profit does the firm make?

As long as it does not shut down, a profit-maximizing perfectly competitive firm will

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

In a perfectly competitive industry

In a perfectly competitive industry, the demand for a single firm's product is

A firm is producing the profit-maximizing amount of output when it is producing where its ________ curve intersects its ________ curve.

-The figure above shows a firm in a perfectly competitive market. The firm will shut down if price falls below

In a perfectly competitive market that is in long-run equilibrium, a permanent leftward shift in the market demand curve

-In the above figure, if the price is P1 and the firm produced Q3, the firm's economic profit is ________ than if it produced Q1 and ________ than if it produced Q2.

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What is Evan's maximum short-run economic profit?

-The figure above shows the costs for the typical grower in the perfectly competitive turnip market. Currently, the price is $1,000 for a ton of turnips. In the long run, the market supply of turnips will ________.

The market demand for wheat is ________ and the demand for wheat produced by an individual farm is ________.

A firm that shuts down and produces no output incurs a loss equal to its

What is the relationship between the price, P, and the average total cost, ATC, for a firm in perfect competition that makes an economic profit? That makes zero economic profit? That incurs an economic loss?

-In the short run, a perfectly competitive firm

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. The current market price is 4 cents per page. With no change in demand and technology, in the long run, the price will

-The figure above shows a perfectly competitive firm. To maximize its profit, the firm will produce ________ units of output and the price will be ________ for a unit.

If a perfectly competitive firm decides to shut down in the short run, its loss will equal its

"Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the short run in the corn market, what is TRUE if the production of ethanol increases?

A perfectly competitive firm has a total revenue curve that is

Perfect competition arises if the ________ efficient scale of a single producer is ________ relative to the demand for the good or service.

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, how much economic profit does the firm make?

As long as it does not shut down, a profit-maximizing perfectly competitive firm will

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

A firm is producing the profit-maximizing amount of output when it is producing where its curve intersects its curve.

-In the above figure, if the price is P₁and the firm produced Q₃, the firm's economic profit is than if it produced Q₁ and than if it produced Q₂.

The market demand for wheat is and the demand for wheat produced by an individual farm is .

-The figure above shows a perfectly competitive firm. To maximize its profit, the firm will produce units of output and the price will be for a unit.

Perfect competition arises if the efficient scale of a single producer is relative to the demand for the good or service.