Question 1

-In the above figure showing a perfectly competitive firm's total revenue line, the firm's marginal revenue

Accepted Answer

A)  falls as output increases. 
B)  does not change as output increases. 
C)  rises as output increases. 
D)  cannot be determined. 
A)  falls as output increases. 
B)  does not change as output increases. 
C)  rises as output increases. 
D)  cannot be determined.

Question 2

Individual firms in perfectly competitive industries are price takers because

Accepted Answer

A)  the government sets all prices. 
B)  buyers set prices. 
C)  firms decide together on the best price to charge. 
D)  each individual firm is too small to affect the market price. 
A)  the government sets all prices. 
B)  buyers set prices. 
C)  firms decide together on the best price to charge. 
D)  each individual firm is too small to affect the market price.

Question 3

-The above table shows the per day total cost for Kiley's Baseball Glove Company. Each glove is priced at $50 and Kiley's Baseball Glove Company is a perfectly competitive firm. Between which two amounts of output does Kiley's Baseball Glove Company make an economic profit?

Accepted Answer

A)  0 and 8 
B)  1 and 8 
C)  2 and 7 
D)  3 and 6 
A)  0 and 8 
B)  1 and 8 
C)  2 and 7 
D)  3 and 6

Question 4

A perfectly competitive firm's short-run supply curve is

Accepted Answer

A)  its marginal cost curve above the shutdown point. 
B)  its marginal revenue curve above the shutdown point. 
C)  its demand curve. 
D)  horizontal at the going price. 
A)  its marginal cost curve above the shutdown point. 
B)  its marginal revenue curve above the shutdown point. 
C)  its demand curve. 
D)  horizontal at the going price.

Question 5

Which of the following statements regarding the long-term equilibrium is TRUE?

Accepted Answer

A)  As new firms enter a market, each existing firm increases the quantity it produces. 
B)  Firms leave a market if they are making zero economic profit. 
C)  Entry and exit stop when firms are making an economic profit. 
D)  Entry and exit stop when firms make zero economic profit. 
A)  As new firms enter a market, each existing firm increases the quantity it produces. 
B)  Firms leave a market if they are making zero economic profit. 
C)  Entry and exit stop when firms are making an economic profit. 
D)  Entry and exit stop when firms make zero economic profit.

Question 6

If the price of its product falls below the minimum point on the AVC curve, the best a perfectly competitive firm can do is to

Accepted Answer

A)  keep producing and incur an economic loss equal to its total variable cost. 
B)  keep producing and incur an economic loss equal to its total fixed cost. 
C)  shut down and incur an economic loss equal to its total variable cost. 
D)  shut down and incur an economic loss equal to its total fixed cost. 
A)  keep producing and incur an economic loss equal to its total variable cost. 
B)  keep producing and incur an economic loss equal to its total fixed cost. 
C)  shut down and incur an economic loss equal to its total variable cost. 
D)  shut down and incur an economic loss equal to its total fixed cost.

Question 7

In the long run, if firms in a perfectly competitive market are incurring economic losses, then

Accepted Answer

A)  new firms will enter the market and the price will rise. 
B)  some firms will leave the market and the price will fall. 
C)  some firms will leave the market and the price will rise. 
D)  new firms will enter the market and the price will fall. 
A)  new firms will enter the market and the price will rise. 
B)  some firms will leave the market and the price will fall. 
C)  some firms will leave the market and the price will rise. 
D)  new firms will enter the market and the price will fall.

Question 8

For a perfectly competitive firm, price is the same as

Accepted Answer

A)  marginal revenue. 
B)  average variable cost. 
C)  total revenue. 
D)  Both answers A and B are correct. 
A)  marginal revenue. 
B)  average variable cost. 
C)  total revenue. 
D)  Both answers A and B are correct.

Question 9

If the market price in a perfectly competitive market is less than a firm's minimum average variable cost, then the firm's total revenue will always ________.

Accepted Answer

A)  exceed its total fixed cost 
B)  be less than its total economic loss 
C)  equal its total cost 
D)  be less than its total variable cost 
A)  exceed its total fixed cost 
B)  be less than its total economic loss 
C)  equal its total cost 
D)  be less than its total variable cost

Question 10

Entry of new firms into a perfectly competitive market raises the product's price.

Accepted Answer

A) True 
 B)False

Question 11

At its shutdown point, a perfectly competitive firm earns total revenue that

Accepted Answer

A)  exceeds its total cost. 
B)  generates a normal profit. 
C)  just equals its total variable cost. 
D)  exceeds its total variable cost. 
A)  exceeds its total cost. 
B)  generates a normal profit. 
C)  just equals its total variable cost. 
D)  exceeds its total variable cost.

Question 12

In perfect competition, the marginal revenue of an individual firm

Accepted Answer

A)  is zero. 
B)  is positive but less than the price of the product. 
C)  equals the price of the product. 
D)  exceeds the price of the product. 
A)  is zero. 
B)  is positive but less than the price of the product. 
C)  equals the price of the product. 
D)  exceeds the price of the product.

Question 13

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make?

Accepted Answer

A)  $0 
B)  $30 
C)  -$10 
D)  -$15 
A)  $0 
B)  $30 
C)  -$10 
D)  -$15

Question 14

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's economic profit?

Accepted Answer

A)  zero 
B)  between 0 and $0.50 per hour 
C)  between $0.51 and $1.00 per hour 
D)  more than $1.00 per hour 
A)  zero 
B)  between 0 and $0.50 per hour 
C)  between $0.51 and $1.00 per hour 
D)  more than $1.00 per hour

Question 15

-Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip will

Accepted Answer

A)  shut down because he incurs an economic loss. 
B)  shut down because the price is below his minimum average variable cost. 
C)  stay open because he makes an economic profit. 
D)  stay open because the price is above his minimum average variable cost. 
A)  shut down because he incurs an economic loss. 
B)  shut down because the price is below his minimum average variable cost. 
C)  stay open because he makes an economic profit. 
D)  stay open because the price is above his minimum average variable cost.

Question 16

In the short run, a perfectly competitive firm will shut down if at the profit maximizing quantity the

Accepted Answer

A)  P  ATC. 
D)  P > MC. 
A)  P  ATC. 
D)  P > MC.

Question 17

-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 shut-down price?

Accepted Answer

A)  $6 per sandwich 
B)  $4 per sandwich 
C)  $3 per sandwich 
D)  $5 per sandwich 
A)  $6 per sandwich 
B)  $4 per sandwich 
C)  $3 per sandwich 
D)  $5 per sandwich

Question 18

-In the above figure, the line represented by the "1" is the

Accepted Answer

A)  average fixed cost. 
B)  marginal revenue. 
C)  total cost. 
D)  average total cost. 
A)  average fixed cost. 
B)  marginal revenue. 
C)  total cost. 
D)  average total cost.

Question 19

A perfectly competitive firm shuts down if the price of its product is

Accepted Answer

A)  greater than its minimum average variable cost. 
B)  less than its minimum average variable cost. 
C)  greater than its maximum variable cost. 
D)  less than its minimum total cost. 
A)  greater than its minimum average variable cost. 
B)  less than its minimum average variable cost. 
C)  greater than its maximum variable cost. 
D)  less than its minimum total cost.

Question 20

-Given the total cost and total revenue curves in the figure above, what is the profit-maximizing output level?

Accepted Answer

A)  30,000 bushels 
B)  60,000 bushels 
C)  80,000 bushels 
D)  All output levels occur between 30,000 and 80,000 bushels are profit-maximizing output levels. 
A)  30,000 bushels 
B)  60,000 bushels 
C)  80,000 bushels 
D)  All output levels occur between 30,000 and 80,000 bushels are profit-maximizing output levels.

-In the above figure showing a perfectly competitive firm's total revenue line, the firm's marginal revenue

Individual firms in perfectly competitive industries are price takers because

-The above table shows the per day total cost for Kiley's Baseball Glove Company. Each glove is priced at $50 and Kiley's Baseball Glove Company is a perfectly competitive firm. Between which two amounts of output does Kiley's Baseball Glove Company make an economic profit?

A perfectly competitive firm's short-run supply curve is

Which of the following statements regarding the long-term equilibrium is TRUE?

If the price of its product falls below the minimum point on the AVC curve, the best a perfectly competitive firm can do is to

In the long run, if firms in a perfectly competitive market are incurring economic losses, then

For a perfectly competitive firm, price is the same as

If the market price in a perfectly competitive market is less than a firm's minimum average variable cost, then the firm's total revenue will always ________.

Entry of new firms into a perfectly competitive market raises the product's price.

At its shutdown point, a perfectly competitive firm earns total revenue that

In perfect competition, the marginal revenue of an individual firm

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make?

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's economic profit?

-Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip will

In the short run, a perfectly competitive firm will shut down if at the profit maximizing quantity the

-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 shut-down price?

-In the above figure, the line represented by the "1" is the

A perfectly competitive firm shuts down if the price of its product is

-Given the total cost and total revenue curves in the figure above, what is the profit-maximizing output level?

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 the above figure showing a perfectly competitive firm's total revenue line, the firm's marginal revenue

Individual firms in perfectly competitive industries are price takers because

-The above table shows the per day total cost for Kiley's Baseball Glove Company. Each glove is priced at $50 and Kiley's Baseball Glove Company is a perfectly competitive firm. Between which two amounts of output does Kiley's Baseball Glove Company make an economic profit?

A perfectly competitive firm's short-run supply curve is

Which of the following statements regarding the long-term equilibrium is TRUE?

If the price of its product falls below the minimum point on the AVC curve, the best a perfectly competitive firm can do is to

In the long run, if firms in a perfectly competitive market are incurring economic losses, then

For a perfectly competitive firm, price is the same as

If the market price in a perfectly competitive market is less than a firm's minimum average variable cost, then the firm's total revenue will always ________.

Entry of new firms into a perfectly competitive market raises the product's price.

At its shutdown point, a perfectly competitive firm earns total revenue that

In perfect competition, the marginal revenue of an individual firm

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make?

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's economic profit?

-Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip will

In the short run, a perfectly competitive firm will shut down if at the profit maximizing quantity the

-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 shut-down price?

-In the above figure, the line represented by the "1" is the

A perfectly competitive firm shuts down if the price of its product is

-Given the total cost and total revenue curves in the figure above, what is the profit-maximizing output level?

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