Question 1

-The figure above shows a perfectly competitive firm. When the firm maximizes its profit, its total cost is

Accepted Answer

A)  $1,200. 
B)  less than $1,200 but more than zero. 
C)  more than $1,200. 
D)  zero. 
A)  $1,200. 
B)  less than $1,200 but more than zero. 
C)  more than $1,200. 
D)  zero.

Question 2

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $12.50 what is the firm's economic profit?

Accepted Answer

A)  zero 
B)  $10 per hour 
C)  -$10 per hour 
D)  $20 per hour 
A)  zero 
B)  $10 per hour 
C)  -$10 per hour 
D)  $20 per hour

Question 3

-In the above figure, if the price is P1, the firm will produce

Accepted Answer

A)  nothing. 
B)  where MC equals ATC. 
C)  where MC equals P1. 
D)  where ATC equals P1. 
A)  nothing. 
B)  where MC equals ATC. 
C)  where MC equals P1. 
D)  where ATC equals P1.

Question 4

The short-run supply curve for a perfectly competitive firm is its

Accepted Answer

A)  marginal cost curve above the horizontal axis. 
B)  marginal cost curve above its shutdown point. 
C)  average cost curve above the horizontal axis. 
D)  average cost curve above its shutdown point. 
A)  marginal cost curve above the horizontal axis. 
B)  marginal cost curve above its shutdown point. 
C)  average cost curve above the horizontal axis. 
D)  average cost curve above its shutdown point.

Question 5

-In the figure above, a firm is operating at point A on the graph. At point A, the firm's average cost curve

Accepted Answer

A)  has negative slope. 
B)  has positive slope. 
C)  is horizontal. 
D)  is vertical. 
A)  has negative slope. 
B)  has positive slope. 
C)  is horizontal. 
D)  is vertical.

Question 6

-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 quantity of sandwiches produced will maximize Evan's economic profit in the short run?

Accepted Answer

A)  2 sandwiches per hour 
B)  3 sandwiches per hour 
C)  4 sandwiches per hour 
D)  5 sandwiches per hour 
A)  2 sandwiches per hour 
B)  3 sandwiches per hour 
C)  4 sandwiches per hour 
D)  5 sandwiches per hour

Question 7

As perfectly competitive firms leave a market because they are incurring an economic loss, the price of the good ________ and the economic loss of each remaining firm ________.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases

Question 8

For a perfectly competitive firm, as its output increases its marginal revenue ________ and its marginal cost ________.

Accepted Answer

A)  changes; changes 
B)  changes; does not change 
C)  does not change; changes 
D)  does not change; does not change 
A)  changes; changes 
B)  changes; does not change 
C)  does not change; changes 
D)  does not change; does not change

Question 9

If the price received by a perfectly competitive firm is less than its average variable cost, what will the firm do in the short run? Why?

Accepted Answer

If the price is less than the average va

Question 10

A perfectly competitive firm is producing more than the profit-maximizing amount of its product. You can conclude that its

Accepted Answer

A)  total cost exceeds its total revenue. 
B)  average total cost exceeds the price of the product. 
C)  marginal revenue is less than the price of the product. 
D)  marginal cost exceeds the price of the product. 
A)  total cost exceeds its total revenue. 
B)  average total cost exceeds the price of the product. 
C)  marginal revenue is less than the price of the product. 
D)  marginal cost exceeds the price of the product.

Question 11

-The figure above shows Mollie's Mugs' costs of producing mugs. The mug market is perfectly competitive. If the market price of a mug falls to $5 and Mollie's shuts down temporarily, its total variable cost is ________ an hour and it incurs an economic loss of ________ an hour.

Accepted Answer

A)  $160; $280 
B)  $8; $14 
C)  $0; $120 
D)  $0; $6 
A)  $160; $280 
B)  $8; $14 
C)  $0; $120 
D)  $0; $6

Question 12

If a perfectly competitive firm manufacturing chairs decides to produce 100 more chairs, what happens to the market price of a chair?

Accepted Answer

The price will not change. Any one perfe

Question 13

-Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $14.20. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

Accepted Answer

The profit maximizing level of output is

Question 14

In perfect competition, at all levels of output the market price is the same as the firm's ________.

Accepted Answer

A)  marginal revenue 
B)  normal profit 
C)  average variable cost 
D)  fixed cost 
A)  marginal revenue 
B)  normal profit 
C)  average variable cost 
D)  fixed cost

Question 15

-In the short run, the firm makes zero economic profit when the price is ________ minimum average total cost, makes an economic profit when the price is ________ minimum average total cost, and incurs an economic loss when the price is ________ minimum average total cost.

Accepted Answer

A)  equal to; higher than; lower than 
B)  equal to; lower than; higher than 
C)  higher than; equal to; lower than 
D)  lower than; equal to; higher than 
A)  equal to; higher than; lower than 
B)  equal to; lower than; higher than 
C)  higher than; equal to; lower than 
D)  lower than; equal to; higher than

Question 16

-The figure above shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8, in the short run the firm will

Accepted Answer

A)  make zero economic profit. 
B)  make an economic profit. 
C)  incur an economic loss. 
D)  None of the above answers is correct because more information is needed to determine the firm's economic profit or loss. 
A)  make zero economic profit. 
B)  make an economic profit. 
C)  incur an economic loss. 
D)  None of the above answers is correct because more information is needed to determine the firm's economic profit or loss.

Question 17

Entry of new firms into a perfectly competitive market lowers the profits of the existing firms.

Accepted Answer

A) True 
 B)False

Question 18

In the short run, a perfectly competitive firm can

Accepted Answer

A)  only make an economic profit. 
B)  only make zero economic profit. 
C)  only incur an economic loss. 
D)  make an economic profit, zero economic profit, or incur an economic loss. 
A)  only make an economic profit. 
B)  only make zero economic profit. 
C)  only incur an economic loss. 
D)  make an economic profit, zero economic profit, or incur an economic loss.

Question 19

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut

Accepted Answer

A)  is greater than marginal cost. 
B)  is greater than short-run average cost. 
C)  is greater than long-run average cost. 
D)  equals long-run average cost. 
A)  is greater than marginal cost. 
B)  is greater than short-run average cost. 
C)  is greater than long-run average cost. 
D)  equals long-run average cost.

Question 20

-In the above figure, the marginal cost of the last unit produced by the profit maximizing firm is

Accepted Answer

A)  $5. 
B)  $10. 
C)  $15. 
D)  $20. 
A)  $5. 
B)  $10. 
C)  $15. 
D)  $20.

-The figure above shows a perfectly competitive firm. When the firm maximizes its profit, its total cost is

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $12.50 what is the firm's economic profit?

-In the above figure, if the price is P₁, the firm will produce

The short-run supply curve for a perfectly competitive firm is its

-In the figure above, a firm is operating at point A on the graph. At point A, the firm's average cost curve

-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 quantity of sandwiches produced will maximize Evan's economic profit in the short run?

As perfectly competitive firms leave a market because they are incurring an economic loss, the price of the good and the economic loss of each remaining firm .

For a perfectly competitive firm, as its output increases its marginal revenue and its marginal cost .

If the price received by a perfectly competitive firm is less than its average variable cost, what will the firm do in the short run? Why?

A perfectly competitive firm is producing more than the profit-maximizing amount of its product. You can conclude that its

-The figure above shows Mollie's Mugs' costs of producing mugs. The mug market is perfectly competitive. If the market price of a mug falls to $5 and Mollie's shuts down temporarily, its total variable cost is an hour and it incurs an economic loss of an hour.

If a perfectly competitive firm manufacturing chairs decides to produce 100 more chairs, what happens to the market price of a chair?

-Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $14.20. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

In perfect competition, at all levels of output the market price is the same as the firm's ________.

-In the short run, the firm makes zero economic profit when the price is minimum average total cost, makes an economic profit when the price is minimum average total cost, and incurs an economic loss when the price is minimum average total cost.

-The figure above shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8, in the short run the firm will

Entry of new firms into a perfectly competitive market lowers the profits of the existing firms.

In the short run, a perfectly competitive firm can

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut

-In the above figure, the marginal cost of the last unit produced by the profit maximizing firm 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

-The figure above shows a perfectly competitive firm. When the firm maximizes its profit, its total cost is

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $12.50 what is the firm's economic profit?

-In the above figure, if the price is P1, the firm will produce

The short-run supply curve for a perfectly competitive firm is its

-In the figure above, a firm is operating at point A on the graph. At point A, the firm's average cost curve

-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 quantity of sandwiches produced will maximize Evan's economic profit in the short run?

As perfectly competitive firms leave a market because they are incurring an economic loss, the price of the good ________ and the economic loss of each remaining firm ________.

For a perfectly competitive firm, as its output increases its marginal revenue ________ and its marginal cost ________.

If the price received by a perfectly competitive firm is less than its average variable cost, what will the firm do in the short run? Why?

A perfectly competitive firm is producing more than the profit-maximizing amount of its product. You can conclude that its

-The figure above shows Mollie's Mugs' costs of producing mugs. The mug market is perfectly competitive. If the market price of a mug falls to $5 and Mollie's shuts down temporarily, its total variable cost is ________ an hour and it incurs an economic loss of ________ an hour.

If a perfectly competitive firm manufacturing chairs decides to produce 100 more chairs, what happens to the market price of a chair?

-Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $14.20. What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

In perfect competition, at all levels of output the market price is the same as the firm's ________.

-In the short run, the firm makes zero economic profit when the price is ________ minimum average total cost, makes an economic profit when the price is ________ minimum average total cost, and incurs an economic loss when the price is ________ minimum average total cost.

-The figure above shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8, in the short run the firm will

Entry of new firms into a perfectly competitive market lowers the profits of the existing firms.

In the short run, a perfectly competitive firm can

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut

-In the above figure, the marginal cost of the last unit produced by the profit maximizing firm 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

-In the above figure, if the price is P₁, the firm will produce

As perfectly competitive firms leave a market because they are incurring an economic loss, the price of the good and the economic loss of each remaining firm .

For a perfectly competitive firm, as its output increases its marginal revenue and its marginal cost .

-The figure above shows Mollie's Mugs' costs of producing mugs. The mug market is perfectly competitive. If the market price of a mug falls to $5 and Mollie's shuts down temporarily, its total variable cost is an hour and it incurs an economic loss of an hour.

-In the short run, the firm makes zero economic profit when the price is minimum average total cost, makes an economic profit when the price is minimum average total cost, and incurs an economic loss when the price is minimum average total cost.