Question 1

If all conditions for a perfectly competitive market are met,

Accepted Answer

A)  firms face sunk cost when entering the market. 
B)  firms' demand curves are horizontal. 
C)  the market demand curve is horizontal. 
D)  the firms' demand curves are downward-sloping. 
A)  firms face sunk cost when entering the market. 
B)  firms' demand curves are horizontal. 
C)  the market demand curve is horizontal. 
D)  the firms' demand curves are downward-sloping.

Question 2

Suppose there are 1000 identical wheat farmers.For each,TC = 10 + q2 Derive the market supply curve.

Accepted Answer

For each MC = 2q and AVC = q.T

Question 3

If a firm happened to be the only seller of a particular product,it might behave as a price taker as long as

Accepted Answer

A)  buyers have full information about the firm's price. 
B)  the transaction costs of doing business with this firm are low. 
C)  there are many buyers. 
D)  there is free entry and exit. 
A)  buyers have full information about the firm's price. 
B)  the transaction costs of doing business with this firm are low. 
C)  there are many buyers. 
D)  there is free entry and exit.

Question 4

When the production of a good involves several inputs,an increase in the cost of one input will usually cause total costs to

Accepted Answer

A)  rise more than in proportion. 
B)  rise less than in proportion. 
C)  remain unchanged. 
D)  rise by the exact amount of the input price increase. 
A)  rise more than in proportion. 
B)  rise less than in proportion. 
C)  remain unchanged. 
D)  rise by the exact amount of the input price increase.

Question 5

Suppose that once a well is dug,water flows out of it continuously without any additional effort.Customers collect their water and pay a per gallon fee when they leave the site of the well.In the short run,the competitive firm in this market

Accepted Answer

A)  will not shut down because variable costs are zero. 
B)  has no fixed costs. 
C)  faces diminishing marginal returns. 
D)  can act as a price setter. 
A)  will not shut down because variable costs are zero. 
B)  has no fixed costs. 
C)  faces diminishing marginal returns. 
D)  can act as a price setter.

Question 6

Suppose TC = 10 + (0.1 ∗ q2).If there are 100 identical firms in the market,the market supply curve is

Accepted Answer

A)  Q = 1000 ∗ p. 
B)  Q = 500 ∗ p. 
C)  Q = 100 ∗ p. 
D)  Q = 10. 
A)  Q = 1000 ∗ p. 
B)  Q = 500 ∗ p. 
C)  Q = 100 ∗ p. 
D)  Q = 10.

Question 7

Even though fixed costs do not affect the output decision,an increase in fixed costs results in a wider range of prices for which the firm operates at a loss.

Accepted Answer

A) True 
 B)False

Question 8

Many car owners and car dealers describe their different cars for sale in the local newspapers and list their asking price.Many people shopping for a used car consider the different choices listed in the paper.The absence of which condition prohibits this market from being described as perfectly competitive?

Accepted Answer

A)  Buyers and sellers know the prices. 
B)  Firms freely enter and exit. 
C)  Transaction costs are low. 
D)  Consumers believe all firms sell identical products. 
A)  Buyers and sellers know the prices. 
B)  Firms freely enter and exit. 
C)  Transaction costs are low. 
D)  Consumers believe all firms sell identical products.

Question 9

If a firm is a price taker,then its marginal revenue will always equal

Accepted Answer

A)  price. 
B)  total cost. 
C)  zero. 
D)  one. 
A)  price. 
B)  total cost. 
C)  zero. 
D)  one.

Question 10

In the absence of any government regulation on price,if a firm has no power to set price on its own,one can safely conclude

Accepted Answer

A)  the demand curve for the firm's product is horizontal. 
B)  there aren't many firms in the industry. 
C)  the market is in long-run equilibrium. 
D)  the firms in this industry are not profitable. 
A)  the demand curve for the firm's product is horizontal. 
B)  there aren't many firms in the industry. 
C)  the market is in long-run equilibrium. 
D)  the firms in this industry are not profitable.

Question 11

A special license is required to operate a taxi in many cities.The number of licenses is restricted.More drivers want licenses than are issued.This describes a non-perfectly competitive market because

Accepted Answer

A)  taxi services are very different. 
B)  firms cannot freely enter and exit the market. 
C)  transaction costs are high. 
D)  the government generates revenue from the licenses. 
A)  taxi services are very different. 
B)  firms cannot freely enter and exit the market. 
C)  transaction costs are high. 
D)  the government generates revenue from the licenses.

Question 12

-The above figure shows the cost curves for a competitive firm.If the firm is to earn economic profit,price must exceed

Accepted Answer

A)  $0. 
B)  $5. 
C)  $10. 
D)  $11. 
A)  $0. 
B)  $5. 
C)  $10. 
D)  $11.

Question 13

If transaction costs are high,then it is more likely a firm's demand curve is downward sloping.

Accepted Answer

A) True 
 B)False

Question 14

A firm will shut down in the short run if

Accepted Answer

A)  total fixed costs are too high. 
B)  total revenue from operating would not cover all costs. 
C)  total revenue from operating would not cover variable costs. 
D)  total revenue from operating would not cover fixed costs. 
A)  total fixed costs are too high. 
B)  total revenue from operating would not cover all costs. 
C)  total revenue from operating would not cover variable costs. 
D)  total revenue from operating would not cover fixed costs.

Question 15

There are currently N identical firms in a market.If it is a perfectly competitive market,the short-run market supply curve at any given price is

Accepted Answer

A)  N times the supply of an individual firm. 
B)  N - 1 times the supply of an individual firm. 
C)  N plus the supply of an individual firm. 
D)  It cannot be determined from the information provided. 
A)  N times the supply of an individual firm. 
B)  N - 1 times the supply of an individual firm. 
C)  N plus the supply of an individual firm. 
D)  It cannot be determined from the information provided.

Question 16

Which of the following markets would reach long-run equilibrium fastest?

Accepted Answer

A)  online retail 
B)  auto dealers 
C)  oil extraction 
D)  World Series tickets 
A)  online retail 
B)  auto dealers 
C)  oil extraction 
D)  World Series tickets

Question 17

If a firm sets marginal revenue equal to marginal cost,it will make an economic profit.

Accepted Answer

A) True 
 B)False

Question 18

Economists define a market to be competitive when the firms

Accepted Answer

A)  spend large amounts of money on advertising to lure customers away from the competition. 
B)  watch each other's behavior closely. 
C)  are price takers. 
D)  All of the above. 
A)  spend large amounts of money on advertising to lure customers away from the competition. 
B)  watch each other's behavior closely. 
C)  are price takers. 
D)  All of the above.

Question 19

All the supply of peppermint oil is produced from mint plants grown in one county by several competitive growers (the number of growers is not limited).The quality of land in the county varies greatly.Would you expect the long-run market supply curve to slope upward,downward,or remain constant? Why?

Accepted Answer

The long-run market supply curve will sl

Question 20

-The above figure shows the cost curves for a competitive firm.If the profit-maximizing level of output is 40,price is equal to

Accepted Answer

A)  $0. 
B)  $15. 
C)  $10. 
D)  $11. 
A)  $0. 
B)  $15. 
C)  $10. 
D)  $11.

If all conditions for a perfectly competitive market are met,

Suppose there are 1000 identical wheat farmers.For each,TC = 10 + q² Derive the market supply curve.

If a firm happened to be the only seller of a particular product,it might behave as a price taker as long as

When the production of a good involves several inputs,an increase in the cost of one input will usually cause total costs to

Suppose that once a well is dug,water flows out of it continuously without any additional effort.Customers collect their water and pay a per gallon fee when they leave the site of the well.In the short run,the competitive firm in this market

Suppose TC = 10 + (0.1 ∗ q²).If there are 100 identical firms in the market,the market supply curve is

Even though fixed costs do not affect the output decision,an increase in fixed costs results in a wider range of prices for which the firm operates at a loss.

If a firm is a price taker,then its marginal revenue will always equal

In the absence of any government regulation on price,if a firm has no power to set price on its own,one can safely conclude

A special license is required to operate a taxi in many cities.The number of licenses is restricted.More drivers want licenses than are issued.This describes a non-perfectly competitive market because

-The above figure shows the cost curves for a competitive firm.If the firm is to earn economic profit,price must exceed

If transaction costs are high,then it is more likely a firm's demand curve is downward sloping.

A firm will shut down in the short run if

There are currently N identical firms in a market.If it is a perfectly competitive market,the short-run market supply curve at any given price is

Which of the following markets would reach long-run equilibrium fastest?

If a firm sets marginal revenue equal to marginal cost,it will make an economic profit.

Economists define a market to be competitive when the firms

All the supply of peppermint oil is produced from mint plants grown in one county by several competitive growers (the number of growers is not limited).The quality of land in the county varies greatly.Would you expect the long-run market supply curve to slope upward,downward,or remain constant? Why?

-The above figure shows the cost curves for a competitive firm.If the profit-maximizing level of output is 40,price is equal to

Introduction

Supply and Demand

Applying the Supply and Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 8: Competitive Firms and Markets

If all conditions for a perfectly competitive market are met,

Suppose there are 1000 identical wheat farmers.For each,TC = 10 + q2 Derive the market supply curve.

If a firm happened to be the only seller of a particular product,it might behave as a price taker as long as

When the production of a good involves several inputs,an increase in the cost of one input will usually cause total costs to

Suppose that once a well is dug,water flows out of it continuously without any additional effort.Customers collect their water and pay a per gallon fee when they leave the site of the well.In the short run,the competitive firm in this market

Suppose TC = 10 + (0.1 ∗ q2).If there are 100 identical firms in the market,the market supply curve is

Even though fixed costs do not affect the output decision,an increase in fixed costs results in a wider range of prices for which the firm operates at a loss.

If a firm is a price taker,then its marginal revenue will always equal

In the absence of any government regulation on price,if a firm has no power to set price on its own,one can safely conclude

A special license is required to operate a taxi in many cities.The number of licenses is restricted.More drivers want licenses than are issued.This describes a non-perfectly competitive market because

-The above figure shows the cost curves for a competitive firm.If the firm is to earn economic profit,price must exceed

If transaction costs are high,then it is more likely a firm's demand curve is downward sloping.

A firm will shut down in the short run if

There are currently N identical firms in a market.If it is a perfectly competitive market,the short-run market supply curve at any given price is

Which of the following markets would reach long-run equilibrium fastest?

If a firm sets marginal revenue equal to marginal cost,it will make an economic profit.

Economists define a market to be competitive when the firms

-The above figure shows the cost curves for a competitive firm.If the profit-maximizing level of output is 40,price is equal to

Introduction

Supply and Demand

Applying the Supply and Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Suppose there are 1000 identical wheat farmers.For each,TC = 10 + q² Derive the market supply curve.

Suppose TC = 10 + (0.1 ∗ q²).If there are 100 identical firms in the market,the market supply curve is