Question 1

A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its

Accepted Answer

A)  total cost. 
B)  total variable cost. 
C)  total fixed cost. 
D)  marginal cost. 
A)  total cost. 
B)  total variable cost. 
C)  total fixed cost. 
D)  marginal cost.

Question 2

Which of the following is TRUE regarding a perfectly competitive firm?

Accepted Answer

A)  The firm can charge a lower price than its competitors and thereby sell more output and increase its profits. 
B)  The firm always earns a normal profit. 
C)  The firm's marginal revenue continually decreases. 
D)  The firm's minimum efficient scale is small relative to the market demand. 
A)  The firm can charge a lower price than its competitors and thereby sell more output and increase its profits. 
B)  The firm always earns a normal profit. 
C)  The firm's marginal revenue continually decreases. 
D)  The firm's minimum efficient scale is small relative to the market demand.

Question 3

During the first half of the 2000s, the price of pork rose. After that, within a couple of years the price fell back to about the level before the initial increase. What might have led to these events?

Accepted Answer

There are thousands upon thousands of ho

Question 4

-In the above figure, the firm is breaking even at points

Accepted Answer

A)  a and c. 
B)  b and d. 
C)  c and d. 
D)  a and d. 
A)  a and c. 
B)  b and d. 
C)  c and d. 
D)  a and d.

Question 5

A perfectly competitive firm is definitely making an economic profit when

Accepted Answer

A)  MR = MC. 
B)  P = ATC. 
C)  P  ATC. 
A)  MR = MC. 
B)  P = ATC. 
C)  P  ATC.

Question 6

A perfectly competitive industry is in long-run equilibrium. Some firms in the industry adopt new technology that reduces the average total cost of producing the good. In the long run, the price is ________, firms with the new technology make ________ economic profit, and firms with the old technology ________.

Accepted Answer

A)  lower; zero; exit the industry 
B)  constant; a positive; make zero economic profit 
C)  lower; zero; switch to the new technology or exit the industry 
D)  constant; zero; exit the industry 
A)  lower; zero; exit the industry 
B)  constant; a positive; make zero economic profit 
C)  lower; zero; switch to the new technology or exit the industry 
D)  constant; zero; exit the industry

Question 7

What is a normal profit?

Accepted Answer

A normal profit is the return

Question 8

The price elasticity of demand for any particular perfectly competitive firm's output is

Accepted Answer

A)  less than 1. 
B)  1. 
C)  equal to zero. 
D)  infinite. 
A)  less than 1. 
B)  1. 
C)  equal to zero. 
D)  infinite.

Question 9

-In the long-run equilibrium in a perfectly competitive market,

Accepted Answer

A)  the firms make an economic profit. 
B)  the firms' owners make a normal profit. 
C)  the average total cost is maximized. 
D)  marginal cost is at a minimum. 
A)  the firms make an economic profit. 
B)  the firms' owners make a normal profit. 
C)  the average total cost is maximized. 
D)  marginal cost is at a minimum.

Question 10

If the market price of a perfectly competitive firm's product is below its average variable cost, then the firm's

Accepted Answer

A)  marginal revenue is zero. 
B)  total revenue is as large as possible. 
C)  total revenue if it stayed open would be less than its total variable costs. 
D)  total revenue if it stayed open is less than its total cost but greater than its total fixed costs. 
A)  marginal revenue is zero. 
B)  total revenue is as large as possible. 
C)  total revenue if it stayed open would be less than its total variable costs. 
D)  total revenue if it stayed open is less than its total cost but greater than its total fixed costs.

Question 11

Which of the following best describes the short-run supply curve for an individual perfectly competitive firm?

Accepted Answer

A)  It is the firm's marginal cost curve. 
B)  It is the upward-sloping part of the firm's marginal cost curve. 
C)  It is the vertical axis at prices less than minimum average variable cost and is the firm's marginal cost curve at prices above minimum average variable cost. 
D)  It is the vertical axis at prices less than minimum average total cost and is the firm's marginal cost curve at prices above minimum average total cost. 
A)  It is the firm's marginal cost curve. 
B)  It is the upward-sloping part of the firm's marginal cost curve. 
C)  It is the vertical axis at prices less than minimum average variable cost and is the firm's marginal cost curve at prices above minimum average variable cost. 
D)  It is the vertical axis at prices less than minimum average total cost and is the firm's marginal cost curve at prices above minimum average total cost.

Question 12

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

Accepted Answer

A)  is more than $300. 
B)  is $300. 
C)  is less than $300. 
D)  The premise of the question is wrong because the firm is incurring an economic loss. 
A)  is more than $300. 
B)  is $300. 
C)  is less than $300. 
D)  The premise of the question is wrong because the firm is incurring an economic loss.

Question 13

-Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure above. To increase her profit, Carol should

Accepted Answer

A)  increase her output. 
B)  decrease her output. 
C)  maintain the current level of output because it gives her the maximum profit. 
D)  Not enough information is given to determine if Carol should increase, decrease, or not change her level of output. 
A)  increase her output. 
B)  decrease her output. 
C)  maintain the current level of output because it gives her the maximum profit. 
D)  Not enough information is given to determine if Carol should increase, decrease, or not change her level of output.

Question 14

-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. At which of the following amounts of output is the economic profit maximized for Kiley's Baseball Glove Company?

Accepted Answer

A)  0 
B)  2 
C)  5 
D)  8 
A)  0 
B)  2 
C)  5 
D)  8

Question 15

Describe how economic losses are eliminated in a perfectly competitive industry.

Accepted Answer

If firms are incurring economic losses,

Question 16

In a perfectly competitive market, the price elasticity of demand for the market demand is ________ and the price elasticity of demand for an individual firm's demand is ________.

Accepted Answer

A)  infinite; infinite 
B)  less than infinite; infinite 
C)  infinite; less than infinite 
D)  less than infinite; less than infinite 
A)  infinite; infinite 
B)  less than infinite; infinite 
C)  infinite; less than infinite 
D)  less than infinite; less than infinite

Question 17

In perfect competition

Accepted Answer

A)  each firm can influence the price of the good. 
B)  there are few buyers. 
C)  there are significant restrictions on entry. 
D)  all firms in the market sell their product at the same price. 
A)  each firm can influence the price of the good. 
B)  there are few buyers. 
C)  there are significant restrictions on entry. 
D)  all firms in the market sell their product at the same price.

Question 18

-The above diagram shows the cost curves for a perfectly competitive wheat farmer. At what price does the wheat farmer shut down?

Accepted Answer

The wheat farmer shuts down if

Question 19

The break-even point is defined as occurring at an output rate at which

Accepted Answer

A)  total revenue equals total opportunity cost. 
B)  economic profit is maximized. 
C)  marginal revenue equals marginal cost. 
D)  total cost is minimized. 
A)  total revenue equals total opportunity cost. 
B)  economic profit is maximized. 
C)  marginal revenue equals marginal cost. 
D)  total cost is minimized.

Question 20

-In the short run, a perfectly competitive firm's economic profits

Accepted Answer

A)  must equal zero, that is, the firm earns a normal profit. 
B)  must be positive. 
C)  might be positive, negative (an economic loss), or zero (a normal profit). 
D)  must be negative, that is the firm must incur an economic loss. 
A)  must equal zero, that is, the firm earns a normal profit. 
B)  must be positive. 
C)  might be positive, negative (an economic loss), or zero (a normal profit). 
D)  must be negative, that is the firm must incur an economic loss.

A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its

Which of the following is TRUE regarding a perfectly competitive firm?

During the first half of the 2000s, the price of pork rose. After that, within a couple of years the price fell back to about the level before the initial increase. What might have led to these events?

-In the above figure, the firm is breaking even at points

A perfectly competitive firm is definitely making an economic profit when

A perfectly competitive industry is in long-run equilibrium. Some firms in the industry adopt new technology that reduces the average total cost of producing the good. In the long run, the price is , firms with the new technology make economic profit, and firms with the old technology .

What is a normal profit?

The price elasticity of demand for any particular perfectly competitive firm's output is

-In the long-run equilibrium in a perfectly competitive market,

If the market price of a perfectly competitive firm's product is below its average variable cost, then the firm's

Which of the following best describes the short-run supply curve for an individual perfectly competitive firm?

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

-Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure above. To increase her profit, Carol should

-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. At which of the following amounts of output is the economic profit maximized for Kiley's Baseball Glove Company?

Describe how economic losses are eliminated in a perfectly competitive industry.

In a perfectly competitive market, the price elasticity of demand for the market demand is and the price elasticity of demand for an individual firm's demand is .

In perfect competition

-The above diagram shows the cost curves for a perfectly competitive wheat farmer. At what price does the wheat farmer shut down?

The break-even point is defined as occurring at an output rate at which

-In the short run, a perfectly competitive firm's economic profits

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

A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its

Which of the following is TRUE regarding a perfectly competitive firm?

During the first half of the 2000s, the price of pork rose. After that, within a couple of years the price fell back to about the level before the initial increase. What might have led to these events?

-In the above figure, the firm is breaking even at points

A perfectly competitive firm is definitely making an economic profit when

What is a normal profit?

The price elasticity of demand for any particular perfectly competitive firm's output is

-In the long-run equilibrium in a perfectly competitive market,

If the market price of a perfectly competitive firm's product is below its average variable cost, then the firm's

Which of the following best describes the short-run supply curve for an individual perfectly competitive firm?

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

-Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure above. To increase her profit, Carol should

-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. At which of the following amounts of output is the economic profit maximized for Kiley's Baseball Glove Company?

Describe how economic losses are eliminated in a perfectly competitive industry.

In a perfectly competitive market, the price elasticity of demand for the market demand is ________ and the price elasticity of demand for an individual firm's demand is ________.

In perfect competition

-The above diagram shows the cost curves for a perfectly competitive wheat farmer. At what price does the wheat farmer shut down?

The break-even point is defined as occurring at an output rate at which

-In the short run, a perfectly competitive firm's economic profits

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 a perfectly competitive market, the price elasticity of demand for the market demand is and the price elasticity of demand for an individual firm's demand is .