Question 1

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 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

If a competitive firm is in short-run equilibrium,then

Accepted Answer

A) profits equal zero. 
B) economic profits will be positive. 
C) economic profits will be negative. 
D) All of the above are possible in the short run. 
A) profits equal zero. 
B) economic profits will be positive. 
C) economic profits will be negative. 
D) All of the above are possible in the short run.

Question 5

If the shut-down rule,p < AVC,is the same in the short run and the long run,explain why the shut-down prices may be different.

Accepted Answer

In the long run all costs are

Question 6

If consumers view the output of any firm in a market to be identical to the output of any other firm in the market,the demand curve for the output of any given firm

Accepted Answer

A) will be identical to the market demand curve. 
B) will be horizontal. 
C) will be vertical. 
D) cannot be determined from the information given. 
A) will be identical to the market demand curve. 
B) will be horizontal. 
C) will be vertical. 
D) cannot be determined from the information given.

Question 7

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 8

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) There is not enough information to 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) There is not enough information to answer.

Question 9

-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 10

If a firm operates in a perfectly competitive market,then

Accepted Answer

A) all firms will advertise. 
B) no firms will advertise. 
C) the market leader will advertise. 
D) new firms will advertise. 
A) all firms will advertise. 
B) no firms will advertise. 
C) the market leader will advertise. 
D) new firms will advertise.

Question 11

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 12

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 13

Suppose a firm has the following total cost function: TC = 100 + 4q2.What is the minimum price necessary for the firm to earn profit? Below what price will the firm shut down in the short run?

Accepted Answer

AC = 100/q + 4q.This is minimized when d

Question 14

A firm should always shut down if its revenue is

Accepted Answer

A) declining. 
B) less than its average fixed costs. 
C) less than its total costs. 
D) less than its avoidable costs. 
A) declining. 
B) less than its average fixed costs. 
C) less than its total costs. 
D) less than its avoidable costs.

Question 15

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

Question 16

A small business owner earns $60,000 in revenue annually.The explicit annual costs equal $40,000.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 17

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 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 18

If a firm doesn't make an economic profit,it will shut down.

Accepted Answer

A) True 
 B)False

Question 19

In the long run,profits will equal zero in a competitive market because of

Accepted Answer

A) constant returns to scale. 
B) identical products being produced by all firms. 
C) the availability of information. 
D) free entry and exit. 
A) constant returns to scale. 
B) identical products being produced by all firms. 
C) the availability of information. 
D) free entry and exit.

Question 20

Suppose the Christmas trees market is perfectly competitive.A business owner is currently suffering from a loss of $1,000,the cost of producing and selling an additional Christmas tree is $20,and the current market price is $25.The owner

Accepted Answer

A) should sell more trees. 
B) should shut down his business now. 
C) should advertise in the market. 
D) is already minimizing his loss. 
A) should sell more trees. 
B) should shut down his business now. 
C) should advertise in the market. 
D) is already minimizing his loss.

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

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

Long-run market supply curves are upward sloping if

If a competitive firm is in short-run equilibrium,then

If the shut-down rule,p < AVC,is the same in the short run and the long run,explain why the shut-down prices may be different.

If consumers view the output of any firm in a market to be identical to the output of any other firm in the market,the demand curve for the output of any given firm

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

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

-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

If a firm operates in a perfectly competitive market,then

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

A market's structure is described by

Suppose a firm has the following total cost function: TC = 100 + 4q².What is the minimum price necessary for the firm to earn profit? Below what price will the firm shut down in the short run?

A firm should always shut down if its revenue is

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

A small business owner earns $60,000 in revenue annually.The explicit annual costs equal $40,000.The owner could work for someone else and earn $25,000 annually.The owner's business profit is and the economic profit is .

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 market for used cars could be described as

If a firm doesn't make an economic profit,it will shut down.

In the long run,profits will equal zero in a competitive market because of

Suppose the Christmas trees market is perfectly competitive.A business owner is currently suffering from a loss of $1,000,the cost of producing and selling an additional Christmas tree is $20,and the current market price is $25.The owner

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 8: Competitive Firms and Markets

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

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

Long-run market supply curves are upward sloping if

If a competitive firm is in short-run equilibrium,then

If the shut-down rule,p < AVC,is the same in the short run and the long run,explain why the shut-down prices may be different.

If consumers view the output of any firm in a market to be identical to the output of any other firm in the market,the demand curve for the output of any given firm

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

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

-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

If a firm operates in a perfectly competitive market,then

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

A market's structure is described by

Suppose a firm has the following total cost function: TC = 100 + 4q2.What is the minimum price necessary for the firm to earn profit? Below what price will the firm shut down in the short run?

A firm should always shut down if its revenue is

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

A small business owner earns $60,000 in revenue annually.The explicit annual costs equal $40,000.The owner could work for someone else and earn $25,000 annually.The owner's business profit is ________ and the economic profit is ________.

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 market for used cars could be described as

If a firm doesn't make an economic profit,it will shut down.

In the long run,profits will equal zero in a competitive market because of

Suppose the Christmas trees market is perfectly competitive.A business owner is currently suffering from a loss of $1,000,the cost of producing and selling an additional Christmas tree is $20,and the current market price is $25.The owner

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

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 a firm has the following total cost function: TC = 100 + 4q².What is the minimum price necessary for the firm to earn profit? Below what price will the firm shut down in the short run?

A small business owner earns $60,000 in revenue annually.The explicit annual costs equal $40,000.The owner could work for someone else and earn $25,000 annually.The owner's business profit is and the economic profit is .