Question 1

-The above figure shows the cost curves for a typical firm in a competitive market.From the graph,estimate the firm's profits when price equals $10 per unit.

Accepted Answer

When price = 10,p = MC when q

Question 2

In a competitive market,if buyers did not know all the prices charged by the many firms,

Accepted Answer

A)  all firms still face horizontal demand curves. 
B)  firms sell a differentiated product. 
C)  demand curves can be downward sloping for some or all firms. 
D)  the number of firms will most likely decrease. 
A)  all firms still face horizontal demand curves. 
B)  firms sell a differentiated product. 
C)  demand curves can be downward sloping for some or all firms. 
D)  the number of firms will most likely decrease.

Question 3

Suppose the long-run supply curve for a perfectly competitive industry is horizontal at a price of $12,and the minimum short-run average variable cost for each of the identical N firms in the industry is $8.If the demand curve for the industry decreases so that it intersects the short-run supply curve of the industry at $10,

Accepted Answer

A)  in the short run the price will decrease to $10, and the number of firms will still be N. In the long run the price will return to $12, and the number of firms will be less than N. 
B)  in the short run the price will decrease to $10, and the number of firms will be less than N. In the long run the price will return to $12, and the number of firms will return to N. 
C)  in the short run the price will remain at $12, and the number of firms will still be N. In the long run the price will fall to $8, and the number of firms will be less than N. 
D)  In the short run the price will decrease to $10, and the number of firms will be less than N. In the long run the price will return to $12, and the number of firms will return to N. 
A)  in the short run the price will decrease to $10, and the number of firms will still be N. In the long run the price will return to $12, and the number of firms will be less than N. 
B)  in the short run the price will decrease to $10, and the number of firms will be less than N. In the long run the price will return to $12, and the number of firms will return to N. 
C)  in the short run the price will remain at $12, and the number of firms will still be N. In the long run the price will fall to $8, and the number of firms will be less than N. 
D)  In the short run the price will decrease to $10, and the number of firms will be less than N. In the long run the price will return to $12, and the number of firms will return to N.

Question 4

Many used car owners and used 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 market for used cars could be described as

Accepted Answer

A)  relatively competitive. 
B)  perfectly competitive. 
C)  non-competitive. 
D)  having high transaction costs. 
A)  relatively competitive. 
B)  perfectly competitive. 
C)  non-competitive. 
D)  having high transaction costs.

Question 5

A market's structure is described by

Accepted Answer

A)  the number of firms in the market. 
B)  the ease with which firms can enter and exit the market. 
C)  the ability of firms to differentiate their product. 
D)  All of the above. 
A)  the number of firms in the market. 
B)  the ease with which firms can enter and exit the market. 
C)  the ability of firms to differentiate their product. 
D)  All of the above.

Question 6

-The above figure shows the cost curves for a competitive firm.If the market price is $15 per unit,the firm will earn profits of

Accepted Answer

A)  $0. 
B)  $4. 
C)  $40. 
D)  $160. 
A)  $0. 
B)  $4. 
C)  $40. 
D)  $160.

Question 7

Long-run market supply curves are downward sloping if

Accepted Answer

A)  firms are identical. 
B)  the number of firms is restricted in the long run. 
C)  input prices fall as the industry expands. 
D)  All of the above. 
A)  firms are identical. 
B)  the number of firms is restricted in the long run. 
C)  input prices fall as the industry expands. 
D)  All of the above.

Question 8

A market is perfectly competitive even if firms have the ability to set their own price as long as the price difference reflects differences in the product.

Accepted Answer

A) True 
 B)False

Question 9

If firms in a competitive market are not identical,then an increase in cost will

Accepted Answer

A)  shift marginal cost to the right. 
B)  push the most inefficient firms out of the market. 
C)  push the most efficient firms out of the market. 
D)  Need more information. 
A)  shift marginal cost to the right. 
B)  push the most inefficient firms out of the market. 
C)  push the most efficient firms out of the market. 
D)  Need more information.

Question 10

If a profit-maximizing firm finds that,at its current level of production,MR > MC,it will

Accepted Answer

A)  earn greater profits than if MR = MC. 
B)  increase output. 
C)  decrease output. 
D)  shut down. 
A)  earn greater profits than if MR = MC. 
B)  increase output. 
C)  decrease output. 
D)  shut down.

Question 11

Which of the following are not characteristics of a competitive market?

Accepted Answer

A)  There is freedom of entry and exit. 
B)  There are zero transaction costs. 
C)  There are only one or two sellers. 
D)  Buyers and sellers have complete information. 
A)  There is freedom of entry and exit. 
B)  There are zero transaction costs. 
C)  There are only one or two sellers. 
D)  Buyers and sellers have complete information.

Question 12

Under what circumstances will the residual supply curve for a country be upward sloping?

Accepted Answer

A)  when it does not import any of the good from the rest of the world 
B)  when it imports a small portion of the rest of the world's supply of the good 
C)  when it imports a large portion of the rest of the world's supply of the good 
D)  Either A or B 
A)  when it does not import any of the good from the rest of the world 
B)  when it imports a small portion of the rest of the world's supply of the good 
C)  when it imports a large portion of the rest of the world's supply of the good 
D)  Either A or B

Question 13

Long-run market supply curves are upward sloping if

Accepted Answer

A)  firms are identical. 
B)  the number of firms is restricted in the long run. 
C)  input prices fall as the industry expands. 
D)  All of the above. 
A)  firms are identical. 
B)  the number of firms is restricted in the long run. 
C)  input prices fall as the industry expands. 
D)  All of the above.

Question 14

If a firm goes out of business because of negative economic profits,its books

Accepted Answer

A)  might indicate a positive accounting profit. 
B)  might indicate that opportunity costs were zero. 
C)  might indicate that taxes are too high. 
D)  might suggest a mistaken value of explicit costs. 
A)  might indicate a positive accounting profit. 
B)  might indicate that opportunity costs were zero. 
C)  might indicate that taxes are too high. 
D)  might suggest a mistaken value of explicit costs.

Question 15

If a firm is operating at an output level where losses are minimized,the firm

Accepted Answer

A)  has no incentive to stay in the industry. 
B)  is better off exiting the industry. 
C)  is maximizing profits. 
D)  will shut down. 
A)  has no incentive to stay in the industry. 
B)  is better off exiting the industry. 
C)  is maximizing profits. 
D)  will shut down.

Question 16

The "Got Milk?" advertising campaign is a good example of

Accepted Answer

A)  advertising in a competitive market. 
B)  how advertising in a competitive market does not pay off for a single firm. 
C)  interest groups financed by the industry advertise for the whole industry. 
D)  All of the above. 
A)  advertising in a competitive market. 
B)  how advertising in a competitive market does not pay off for a single firm. 
C)  interest groups financed by the industry advertise for the whole industry. 
D)  All of the above.

Question 17

If a competitive firm's marginal profit is positive at an output of 1000 units,

Accepted Answer

A)  at 1000 units, MR = MC. 
B)  it should produce more than 1000 units. 
C)  it should produce less than 1000 units. 
D)  at 1000 units, MR < MC. 
A)  at 1000 units, MR = MC. 
B)  it should produce more than 1000 units. 
C)  it should produce less than 1000 units. 
D)  at 1000 units, MR < MC.

Question 18

Explain why shutting down and going out-of-business are different concepts.

Accepted Answer

Shutting down means that the firm seizes

Question 19

Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?

Accepted Answer

A)  perfect information 
B)  freedom of entry and exit 
C)  price taking behavior 
D)  homogeneous products 
A)  perfect information 
B)  freedom of entry and exit 
C)  price taking behavior 
D)  homogeneous products

Question 20

If the market price in a competitive market is below the minimum of average variable cost,the firm will shut down.

Accepted Answer

A) True 
 B)False

-The above figure shows the cost curves for a typical firm in a competitive market.From the graph,estimate the firm's profits when price equals $10 per unit.

In a competitive market,if buyers did not know all the prices charged by the many firms,

Many used car owners and used 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 market for used cars could be described as

A market's structure is described by

-The above figure shows the cost curves for a competitive firm.If the market price is $15 per unit,the firm will earn profits of

Long-run market supply curves are downward sloping if

A market is perfectly competitive even if firms have the ability to set their own price as long as the price difference reflects differences in the product.

If firms in a competitive market are not identical,then an increase in cost will

If a profit-maximizing firm finds that,at its current level of production,MR > MC,it will

Which of the following are not characteristics of a competitive market?

Under what circumstances will the residual supply curve for a country be upward sloping?

Long-run market supply curves are upward sloping if

If a firm goes out of business because of negative economic profits,its books

If a firm is operating at an output level where losses are minimized,the firm

The "Got Milk?" advertising campaign is a good example of

If a competitive firm's marginal profit is positive at an output of 1000 units,

Explain why shutting down and going out-of-business are different concepts.

Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?

If the market price in a competitive market is below the minimum of average variable cost,the firm will shut down.

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

-The above figure shows the cost curves for a typical firm in a competitive market.From the graph,estimate the firm's profits when price equals $10 per unit.

In a competitive market,if buyers did not know all the prices charged by the many firms,

Many used car owners and used 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 market for used cars could be described as

A market's structure is described by

-The above figure shows the cost curves for a competitive firm.If the market price is $15 per unit,the firm will earn profits of

Long-run market supply curves are downward sloping if

A market is perfectly competitive even if firms have the ability to set their own price as long as the price difference reflects differences in the product.

If firms in a competitive market are not identical,then an increase in cost will

If a profit-maximizing firm finds that,at its current level of production,MR > MC,it will

Which of the following are not characteristics of a competitive market?

Under what circumstances will the residual supply curve for a country be upward sloping?

Long-run market supply curves are upward sloping if

If a firm goes out of business because of negative economic profits,its books

If a firm is operating at an output level where losses are minimized,the firm

The "Got Milk?" advertising campaign is a good example of

If a competitive firm's marginal profit is positive at an output of 1000 units,

Explain why shutting down and going out-of-business are different concepts.

Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?

If the market price in a competitive market is below the minimum of average variable cost,the firm will shut down.

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