Question 1

Downward sloping long-run supply curves occur in markets

Accepted Answer

A)  with learning-by-doing. 
B)  with increasing returns to scale. 
C)  with constant returns to scale. 
D)  Either A or B 
A)  with learning-by-doing. 
B)  with increasing returns to scale. 
C)  with constant returns to scale. 
D)  Either A or B

Question 2

The reasons why a competitive firm's short-run supply curve is upward sloping are

Accepted Answer

A)  the law of diminishing marginal returns and profit maximization. 
B)  constant returns to scale and profit maximization. 
C)  decreasing returns to scale and profit maximization. 
D)  Both B and C. 
A)  the law of diminishing marginal returns and profit maximization. 
B)  constant returns to scale and profit maximization. 
C)  decreasing returns to scale and profit maximization. 
D)  Both B and C.

Question 3

Firms in long-run perfect competition produce at

Accepted Answer

A)  increasing returns to scale. 
B)  decreasing returns to scale. 
C)  constant returns to scale. 
D)  no returns to scale. 
A)  increasing returns to scale. 
B)  decreasing returns to scale. 
C)  constant returns to scale. 
D)  no returns to scale.

Question 4

The long-run supply curve in a competitive market is upward-sloping.

Accepted Answer

A) True 
 B)False

Question 5

If firms in a competitive market are not identical,then the long-run market supply curve will be

Accepted Answer

A)  horizontal. 
B)  upward sloping. 
C)  downward sloping. 
D)  undetermined. 
A)  horizontal. 
B)  upward sloping. 
C)  downward sloping. 
D)  undetermined.

Question 6

The competitive firm's supply curve is equal to

Accepted Answer

A)  its marginal cost curve. 
B)  the portion of its marginal cost curve that lies above AC. 
C)  the portion of its marginal cost curve that lies above AVC. 
D)  the portion of its marginal cost curve that lies above AFC. 
A)  its marginal cost curve. 
B)  the portion of its marginal cost curve that lies above AC. 
C)  the portion of its marginal cost curve that lies above AVC. 
D)  the portion of its marginal cost curve that lies above AFC.

Question 7

If a firm makes zero economic profit,then the firm

Accepted Answer

A)  has no incentive to stay in the industry. 
B)  is better off exiting the industry. 
C)  is indifferent between staying and exiting the industry. 
D)  will shut down. 
A)  has no incentive to stay in the industry. 
B)  is better off exiting the industry. 
C)  is indifferent between staying and exiting the industry. 
D)  will shut down.

Question 8

An increase in the cost of an input will result in

Accepted Answer

A)  a leftward shift in the firm's supply curve. 
B)  an upward shift of the firm's marginal cost curve. 
C)  a leftward shift of the market supply curve. 
D)  All of the above. 
A)  a leftward shift in the firm's supply curve. 
B)  an upward shift of the firm's marginal cost curve. 
C)  a leftward shift of the market supply curve. 
D)  All of the above.

Question 9

If a competitive firm has to pay a lump sum tax,it will produce less.

Accepted Answer

A) True 
 B)False

Question 10

Firms that exhibit price-taking behavior

Accepted Answer

A)  wait for other firms to set price, take it as given, and charge a higher price. 
B)  have outputs that are too small to influence market price and thus take it as given. 
C)  take pricing behavior in their own hands. 
D)  are independently capable of setting price. 
A)  wait for other firms to set price, take it as given, and charge a higher price. 
B)  have outputs that are too small to influence market price and thus take it as given. 
C)  take pricing behavior in their own hands. 
D)  are independently capable of setting price.

Question 11

How can the market demand for a product be inelastic but the demand for a particular firm is elastic?

Accepted Answer

A)  There is no advertising. 
B)  There is a sufficiently large number of sellers. 
C)  There is only one or two sellers. 
D)  Buyers do not have complete information. 
A)  There is no advertising. 
B)  There is a sufficiently large number of sellers. 
C)  There is only one or two sellers. 
D)  Buyers do not have complete information.

Question 12

Many auction sites,such as eBay,provide a reputation score by which previous customers can rate a seller.Which of the following characteristics of a competitive market is this policy trying to emulate?

Accepted Answer

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

Question 13

-The above figure shows the cost curves for a competitive firm.If the firm is to operate in the short run,price must exceed

Accepted Answer

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

Question 14

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at $0.20 per pound when 500 pounds are grown.The demand for potatoes is Q = 10,000/p.If the long-run supply curve is horizontal,then how many firms will this industry sustain in the long run?

Accepted Answer

A)  0 
B)  100 
C)  50,000 
D)  There is not enough information to answer. 
A)  0 
B)  100 
C)  50,000 
D)  There is not enough information to answer.

Question 15

Suppose TC = 10 + (0.1 ∗ q2).If p = 10,the firm's profits will be

Accepted Answer

A)  240. 
B)  250. 
C)  260. 
D)  -10 because the firm will shut down. 
A)  240. 
B)  250. 
C)  260. 
D)  -10 because the firm will shut down.

Question 16

The demand curve that an individual competitive firm faces is known as its

Accepted Answer

A)  excess demand curve. 
B)  market demand curve. 
C)  residual demand curve. 
D)  leftover demand curve. 
A)  excess demand curve. 
B)  market demand curve. 
C)  residual demand curve. 
D)  leftover demand curve.

Question 17

A small business owner earns $50,000 in revenue annually.The explicit annual costs equal $30,000.The owner could work for someone else and earn $25,000 annually.The owner's business profit is ________ and the economic profit is ________.

Accepted Answer

A)  $20,000, $5,000 
B)  $20,000, -$5,000 
C)  $25,000, -$5,000 
D)  $45,000, -$5,000 
A)  $20,000, $5,000 
B)  $20,000, -$5,000 
C)  $25,000, -$5,000 
D)  $45,000, -$5,000

Question 18

The model of perfect competition is valuable for

Accepted Answer

A)  prediction. 
B)  comparison to other markets. 
C)  Either A or B 
D)  None of the above. 
A)  prediction. 
B)  comparison to other markets. 
C)  Either A or B 
D)  None of the above.

Question 19

-The above figure shows the long-run cost curves for a typical firm in a competitive market.If the number of firms is unrestricted and input costs are constant,derive the long-run market supply curve.

Accepted Answer

The long-run market

Question 20

-The above figure shows the cost curves for a typical firm in a competitive market.If there are 200 identical firms,estimate the market quantity supplied when p = 4,8,and 10.

Accepted Answer

When p = 4,p < AVC so no firms

Downward sloping long-run supply curves occur in markets

The reasons why a competitive firm's short-run supply curve is upward sloping are

Firms in long-run perfect competition produce at

The long-run supply curve in a competitive market is upward-sloping.

If firms in a competitive market are not identical,then the long-run market supply curve will be

The competitive firm's supply curve is equal to

If a firm makes zero economic profit,then the firm

An increase in the cost of an input will result in

If a competitive firm has to pay a lump sum tax,it will produce less.

Firms that exhibit price-taking behavior

How can the market demand for a product be inelastic but the demand for a particular firm is elastic?

Many auction sites,such as eBay,provide a reputation score by which previous customers can rate a seller.Which of the following characteristics of a competitive market is this policy trying to emulate?

-The above figure shows the cost curves for a competitive firm.If the firm is to operate in the short run,price must exceed

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at $0.20 per pound when 500 pounds are grown.The demand for potatoes is Q = 10,000/p.If the long-run supply curve is horizontal,then how many firms will this industry sustain in the long run?

Suppose TC = 10 + (0.1 ∗ q²).If p = 10,the firm's profits will be

The demand curve that an individual competitive firm faces is known as its

A small business owner earns $50,000 in revenue annually.The explicit annual costs equal $30,000.The owner could work for someone else and earn $25,000 annually.The owner's business profit is and the economic profit is .

The model of perfect competition is valuable for

-The above figure shows the long-run cost curves for a typical firm in a competitive market.If the number of firms is unrestricted and input costs are constant,derive the long-run market supply curve.

-The above figure shows the cost curves for a typical firm in a competitive market.If there are 200 identical firms,estimate the market quantity supplied when p = 4,8,and 10.

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

Downward sloping long-run supply curves occur in markets

The reasons why a competitive firm's short-run supply curve is upward sloping are

Firms in long-run perfect competition produce at

The long-run supply curve in a competitive market is upward-sloping.

If firms in a competitive market are not identical,then the long-run market supply curve will be

The competitive firm's supply curve is equal to

If a firm makes zero economic profit,then the firm

An increase in the cost of an input will result in

If a competitive firm has to pay a lump sum tax,it will produce less.

Firms that exhibit price-taking behavior

How can the market demand for a product be inelastic but the demand for a particular firm is elastic?

Many auction sites,such as eBay,provide a reputation score by which previous customers can rate a seller.Which of the following characteristics of a competitive market is this policy trying to emulate?

-The above figure shows the cost curves for a competitive firm.If the firm is to operate in the short run,price must exceed

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at $0.20 per pound when 500 pounds are grown.The demand for potatoes is Q = 10,000/p.If the long-run supply curve is horizontal,then how many firms will this industry sustain in the long run?

Suppose TC = 10 + (0.1 ∗ q2).If p = 10,the firm's profits will be

The demand curve that an individual competitive firm faces is known as its

A small business owner earns $50,000 in revenue annually.The explicit annual costs equal $30,000.The owner could work for someone else and earn $25,000 annually.The owner's business profit is ________ and the economic profit is ________.

The model of perfect competition is valuable for

-The above figure shows the long-run cost curves for a typical firm in a competitive market.If the number of firms is unrestricted and input costs are constant,derive the long-run market supply curve.

-The above figure shows the cost curves for a typical firm in a competitive market.If there are 200 identical firms,estimate the market quantity supplied when p = 4,8,and 10.

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 TC = 10 + (0.1 ∗ q²).If p = 10,the firm's profits will be

A small business owner earns $50,000 in revenue annually.The explicit annual costs equal $30,000.The owner could work for someone else and earn $25,000 annually.The owner's business profit is and the economic profit is .