Question 1

The return that the entrepreneur can obtain in the best alternative business is called the

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 2

Fresno County, California is the largest agricultural producing county in the country and almonds are an important crop with more than 99,000 acres harvested. Each acre produces about a ton of almonds and sold at a price of $4300 a ton. The Sagardia Brothers grew 600 acres of almonds. How many tons would the brothers sell if they priced the almonds at $4500 a ton?

Accepted Answer

A)  0 tons 
B)  600 tons 
C)  400 tons 
D)  200 tons 
A)  0 tons 
B)  600 tons 
C)  400 tons 
D)  200 tons

Question 3

-In the above figure, if the price is $16 per unit, a profit maximizing perfectly competitive firm will

Accepted Answer

A)  shut down. 
B)  incur an economic loss but continue to operate. 
C)  make zero economic profit. 
D)  make an economic profit. 
A)  shut down. 
B)  incur an economic loss but continue to operate. 
C)  make zero economic profit. 
D)  make an economic profit.

Question 4

In a perfectly competitive market, in the long run a permanent decrease in the market demand results in a smaller number of firms.

Accepted Answer

A) True 
 B)False

Question 5

-The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces ________ frames each week, makes ________ of total revenue, and makes zero ________ profit.

Accepted Answer

A)  200; $4,000; economic 
B)  300; $9,000; normal 
C)  200; $4,000; normal 
D)  300; $9,000; economic 
A)  200; $4,000; economic 
B)  300; $9,000; normal 
C)  200; $4,000; normal 
D)  300; $9,000; economic

Question 6

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

Accepted Answer

A)  the price falling in the short run. 
B)  the firms' economic profits falling in the short run. 
C)  firms leaving the industry in the long run. 
D)  none of the events listed above. 
A)  the price falling in the short run. 
B)  the firms' economic profits falling in the short run. 
C)  firms leaving the industry in the long run. 
D)  none of the events listed above.

Question 7

Describe the different possible profit outcomes for a perfectly competitive firm in the short run versus the long run. Explain why they occur.

Accepted Answer

In the short run, a perfectly competitiv

Question 8

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 2 cents per page, what is Fast Copy's profit maximizing level of output?

Accepted Answer

A)  16 pages per hour 
B)  32 pages per hour 
C)  48 pages per hour 
D)  64 pages per hour 
A)  16 pages per hour 
B)  32 pages per hour 
C)  48 pages per hour 
D)  64 pages per hour

Question 9

"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)  Individual corn farmers will incur an economic loss in the short run and will shut down. 
B)  Individual corn farmers will make an economic profit in the short run. 
C)  Individual corn farmers will incur an economic loss in the short run, but they will still produce. 
D)  Individual corn farmers will make zero economic profit in the short run. 
A)  Individual corn farmers will incur an economic loss in the short run and will shut down. 
B)  Individual corn farmers will make an economic profit in the short run. 
C)  Individual corn farmers will incur an economic loss in the short run, but they will still produce. 
D)  Individual corn farmers will make zero economic profit in the short run.

Question 10

-Sue's Sea Shells by the Sea Shore is a perfectly competitive firm selling sea shells at the market price of $2 per dozen. Sue's Sea Shells by the Sea Shore has fixed costs of $40 per day and a variable cost schedule in the table above. The profit-maximizing level of output for Sue's Sea Shells by the Sea Shore is

Accepted Answer

A)  202 dozen sea shells by the sea shore per day. 
B)  204 dozen sea shells by the sea shore per day. 
C)  205 dozen sea shells by the sea shore per day. 
D)  206 dozen sea shells by the sea shore per day. 
A)  202 dozen sea shells by the sea shore per day. 
B)  204 dozen sea shells by the sea shore per day. 
C)  205 dozen sea shells by the sea shore per day. 
D)  206 dozen sea shells by the sea shore per day.

Question 11

-In the above figure, if the price is $16 per unit, how many units will a profit maximizing perfectly competitive firm produce?

Accepted Answer

A)  0 
B)  20 
C)  30 
D)  35 
A)  0 
B)  20 
C)  30 
D)  35

Question 12

-In the above figure, at a price of $6, a perfectly competitive firm produces ________ and it ________.

Accepted Answer

A)  some output; incurs an economic loss 
B)  0; incurs an economic loss 
C)  0; does not incur an economic loss or make an economic profit 
D)  0; makes an economic profit 
A)  some output; incurs an economic loss 
B)  0; incurs an economic loss 
C)  0; does not incur an economic loss or make an economic profit 
D)  0; makes an economic profit

Question 13

If marginal revenue exceeds marginal cost, to increase its profit the firm will

Accepted Answer

A)  decrease its output. 
B)  increase its output. 
C)  keep its output the same. 
D)  shut down. 
A)  decrease its output. 
B)  increase its output. 
C)  keep its output the same. 
D)  shut down.

Question 14

-In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is

Accepted Answer

A)  $15. 
B)  $30. 
C)  $90. 
D)  $105. 
A)  $15. 
B)  $30. 
C)  $90. 
D)  $105.

Question 15

The market for lawn services is perfectly competitive. Larry's Lawn Service cannot increase its total revenue by raising its price because ________.

Accepted Answer

A)  Larry's supply of lawn services is perfectly inelastic 
B)  the demand for Larry's services is perfectly inelastic 
C)  Larry's supply of lawn services is inelastic 
D)  the demand for Larry's services is perfectly elastic 
A)  Larry's supply of lawn services is perfectly inelastic 
B)  the demand for Larry's services is perfectly inelastic 
C)  Larry's supply of lawn services is inelastic 
D)  the demand for Larry's services is perfectly elastic

Question 16

In perfect competition, firms enter the market whenever the market price exceeds the minimum average variable cost.

Accepted Answer

A) True 
 B)False

Question 17

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

Accepted Answer

A)  zero elasticity. 
B)  unitary elasticity. 
C)  elasticity equal to the price of apples. 
D)  infinite elasticity. 
A)  zero elasticity. 
B)  unitary elasticity. 
C)  elasticity equal to the price of apples. 
D)  infinite elasticity.

Question 18

-The figure above shows depicts the marginal revenue and costs of a perfectly competitive firm. The price the firm charges is

Accepted Answer

A)  $4 per unit. 
B)  $8 per unit. 
C)  $16 per unit. 
D)  None of the above answers is correct. 
A)  $4 per unit. 
B)  $8 per unit. 
C)  $16 per unit. 
D)  None of the above answers is correct.

Question 19

Which of the following is a defining characteristic of a perfectly competitive market?

Accepted Answer

A)  advertisements by well-known celebrities 
B)  persistent economic profits in the long run 
C)  no restrictions on entry into the industry 
D)  higher prices being charged for certain name brands 
A)  advertisements by well-known celebrities 
B)  persistent economic profits in the long run 
C)  no restrictions on entry into the industry 
D)  higher prices being charged for certain name brands

Question 20

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, what is Giuseppe's profit-maximizing output?

Accepted Answer

A)  2 pizzas per hour 
B)  3 pizzas per hour 
C)  4 pizzas per hour 
D)  0 pizzas per hour 
A)  2 pizzas per hour 
B)  3 pizzas per hour 
C)  4 pizzas per hour 
D)  0 pizzas per hour

The return that the entrepreneur can obtain in the best alternative business is called the

-In the above figure, if the price is $16 per unit, a profit maximizing perfectly competitive firm will

In a perfectly competitive market, in the long run a permanent decrease in the market demand results in a smaller number of firms.

-The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces frames each week, makes of total revenue, and makes zero profit.

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

Describe the different possible profit outcomes for a perfectly competitive firm in the short run versus the long run. Explain why they occur.

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 2 cents per page, what is Fast Copy's profit maximizing level of output?

"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?

-In the above figure, if the price is $16 per unit, how many units will a profit maximizing perfectly competitive firm produce?

-In the above figure, at a price of $6, a perfectly competitive firm produces and it .

If marginal revenue exceeds marginal cost, to increase its profit the firm will

-In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is

The market for lawn services is perfectly competitive. Larry's Lawn Service cannot increase its total revenue by raising its price because ________.

In perfect competition, firms enter the market whenever the market price exceeds the minimum average variable cost.

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

-The figure above shows depicts the marginal revenue and costs of a perfectly competitive firm. The price the firm charges is

Which of the following is a defining characteristic of a perfectly competitive market?

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, what is Giuseppe's profit-maximizing output?

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

The return that the entrepreneur can obtain in the best alternative business is called the

-In the above figure, if the price is $16 per unit, a profit maximizing perfectly competitive firm will

In a perfectly competitive market, in the long run a permanent decrease in the market demand results in a smaller number of firms.

-The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces ________ frames each week, makes ________ of total revenue, and makes zero ________ profit.

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

Describe the different possible profit outcomes for a perfectly competitive firm in the short run versus the long run. Explain why they occur.

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 2 cents per page, what is Fast Copy's profit maximizing level of output?

"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?

-In the above figure, if the price is $16 per unit, how many units will a profit maximizing perfectly competitive firm produce?

-In the above figure, at a price of $6, a perfectly competitive firm produces ________ and it ________.

If marginal revenue exceeds marginal cost, to increase its profit the firm will

-In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is

The market for lawn services is perfectly competitive. Larry's Lawn Service cannot increase its total revenue by raising its price because ________.

In perfect competition, firms enter the market whenever the market price exceeds the minimum average variable cost.

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

-The figure above shows depicts the marginal revenue and costs of a perfectly competitive firm. The price the firm charges is

Which of the following is a defining characteristic of a perfectly competitive market?

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, what is Giuseppe's profit-maximizing output?

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

-The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces frames each week, makes of total revenue, and makes zero profit.

-In the above figure, at a price of $6, a perfectly competitive firm produces and it .