Question 1

The Case in Point on the Burka Industry suggested that this industry:

Accepted Answer

A)  might be an example of perfect competition although it did not feature
Easy entry and exit. 
B)  might be an example of perfect competition because it did feature easy
Entry and exit. 
C)  might not be an example of perfect competition although it did feature
Easy entry and exit. 
D)  might not be an example of perfect competition because it did not feature
Easy entry and exit. 
A)  might be an example of perfect competition although it did not feature
Easy entry and exit. 
B)  might be an example of perfect competition because it did feature easy
Entry and exit. 
C)  might not be an example of perfect competition although it did feature
Easy entry and exit. 
D)  might not be an example of perfect competition because it did not feature
Easy entry and exit.

Question 2

The slope of the total revenue curve is:

Accepted Answer

A)  marginal revenue. 
B)  the change in total revenue divided by the change in price. 
C)  the amount by which total revenue increases as output decreases by one unit. 
D)  variable in perfect competition. 
A)  marginal revenue. 
B)  the change in total revenue divided by the change in price. 
C)  the amount by which total revenue increases as output decreases by one unit. 
D)  variable in perfect competition.

Question 3

Use the following to answer question(s): 
Exhibit: Total Revenue, Total Cost, and Economic Profit
  
-(Exhibit: Total Revenue, Total Costs, and Economic Profit) Economic profit will be the greatest when approximately _______ pounds are sold.

Accepted Answer

A)  2,000 
B)  4,300 
C)  7,300 
D)  8,300 
A)  2,000 
B)  4,300 
C)  7,300 
D)  8,300

Question 4

In a perfectly competitive market:

Accepted Answer

A)  there are barriers to easy entry and exit. 
B)  ease of entry is related to the sustainability of economic profits. 
C)  one seller may have more information than others. 
D)  no firm can shut down or go out of business in the short run. 
A)  there are barriers to easy entry and exit. 
B)  ease of entry is related to the sustainability of economic profits. 
C)  one seller may have more information than others. 
D)  no firm can shut down or go out of business in the short run.

Question 5

If an industry's long-run supply curve is upward sloping, the industry is characterized by:

Accepted Answer

A)  increasing cost. 
B)  decreasing cost. 
C)  constant cost. 
D)  high overhead cost. 
A)  increasing cost. 
B)  decreasing cost. 
C)  constant cost. 
D)  high overhead cost.

Question 6

If an industry experiences constant costs, the long-run industry supply curve will be downward sloping.

Accepted Answer

A) True 
 B)False

Question 7

Price in a perfectly competitive industry:

Accepted Answer

A)  is determined by each firm depending on its costs of production. 
B)  is always equal to marginal revenue for the firm. 
C)  must be greater than ATC or the firm will shut down in the short run. 
D)  is indeterminate in the short run. 
A)  is determined by each firm depending on its costs of production. 
B)  is always equal to marginal revenue for the firm. 
C)  must be greater than ATC or the firm will shut down in the short run. 
D)  is indeterminate in the short run.

Question 8

Use the following to answer question(s): 
Exhibit: Perfectly Competitive Firm
  
-(Exhibit: Perfectly Competitive Firm) The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. Assuming no changes in the costs of production, in the long run this firm will produce _______ units of output and sell its output at a price of ________ .

Accepted Answer

A)  100; $1.00 
B)  250; $1.90 
C)  300; $2.00 
D)  400; $3.00 
A)  100; $1.00 
B)  250; $1.90 
C)  300; $2.00 
D)  400; $3.00

Question 9

Use the following to answer question(s): 
Exhibit: Perfectly Competitive Firm
  
-(Exhibit: Perfectly Competitive Firm) The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm's total cost per day is:

Accepted Answer

A)  $475. 
B)  $600. 
C)  $900. 
D)  $1,200. 
A)  $475. 
B)  $600. 
C)  $900. 
D)  $1,200.

Question 10

Suppose that automobile buyers in the southern part of a town have no idea what prices are being paid in the northern part of town. This situation violates the perfect competition assumption of:

Accepted Answer

A)  many buyers and sellers. 
B)  identical goods. 
C)  complete information. 
D)  no discrimination. 
A)  many buyers and sellers. 
B)  identical goods. 
C)  complete information. 
D)  no discrimination.

Question 11

Costs included in the economic concept of cost but that are not an explicit cost are:

Accepted Answer

A)  outlay costs. 
B)  accounting profits. 
C)  implicit costs. 
D)  economic profits. 
A)  outlay costs. 
B)  accounting profits. 
C)  implicit costs. 
D)  economic profits.

Question 12

Suppose that the market for haircuts in a community is a perfectly competitive constant-cost industry and that the market is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the long run, we expect that:

Accepted Answer

A)  more firms will enter the market, driving the price of haircuts up and the profits of individual firms back down to zero. 
B)  more firms will enter the market, driving the price of haircuts down and the profits of individual firms back down to zero. 
C)  firms will leave the market, driving the price of haircuts up and the profits of individual firms up. 
D)  firms will leave the market, driving the price of haircuts up and the profits of individual firms back down to zero. 
A)  more firms will enter the market, driving the price of haircuts up and the profits of individual firms back down to zero. 
B)  more firms will enter the market, driving the price of haircuts down and the profits of individual firms back down to zero. 
C)  firms will leave the market, driving the price of haircuts up and the profits of individual firms up. 
D)  firms will leave the market, driving the price of haircuts up and the profits of individual firms back down to zero.

Question 13

Marginal revenue is a firm's:

Accepted Answer

A)  ratio of profit to quantity. 
B)  ratio of average revenue to quantity. 
C)  price per unit times the number of units sold. 
D)  increase in total revenue when it sells an additional unit of output. 
A)  ratio of profit to quantity. 
B)  ratio of average revenue to quantity. 
C)  price per unit times the number of units sold. 
D)  increase in total revenue when it sells an additional unit of output.

Question 14

If all firms in a perfectly competitive industry earn zero economic profits, in the long run, the:

Accepted Answer

A)  industry supply curve will shift to the left. 
B)  industry supply curve will shift to the right. 
C)  number of firms in the industry will not change. 
D)  number of firms in the industry will increase. 
A)  industry supply curve will shift to the left. 
B)  industry supply curve will shift to the right. 
C)  number of firms in the industry will not change. 
D)  number of firms in the industry will increase.

Question 15

Which of the following is true?

Accepted Answer

A)  Price and average revenue are never equal. 
B)  Price and marginal revenue are seldom equal under conditions of perfect competition. 
C)  When a firm is operating under perfectly competitive market conditions, price and marginal cost will always be equal if the firm is maximizing profits. 
D)  Average revenue equals price times quantity. 
A)  Price and average revenue are never equal. 
B)  Price and marginal revenue are seldom equal under conditions of perfect competition. 
C)  When a firm is operating under perfectly competitive market conditions, price and marginal cost will always be equal if the firm is maximizing profits. 
D)  Average revenue equals price times quantity.

Question 16

If a perfectly competitive firm increases production from 10 units to 11 units, and the market price is $20 per unit, total revenue for 11 units is:

Accepted Answer

A)  $10. 
B)  $20. 
C)  $200. 
D)  $220. 
A)  $10. 
B)  $20. 
C)  $200. 
D)  $220.

Question 17

Use the following to answer question(s): 
Exhibit: Total Revenue and Total Cost
  
-(Exhibit: Total Revenue and Cost) The most profitable level of output occurs at quantity:

Accepted Answer

A)  F. 
B)  K. 
C)  L. 
D)  M. 
A)  F. 
B)  K. 
C)  L. 
D)  M.

Question 18

Economic profit is maximized when:

Accepted Answer

A)  the slope of the total revenue curve is equal to the slope of the total cost curve. 
B)  marginal revenue is more than marginal cost. 
C)  an additional unit of output yields a benefit to the firm greater than the additional cost. 
D)  no more output can be sold at the market price. 
A)  the slope of the total revenue curve is equal to the slope of the total cost curve. 
B)  marginal revenue is more than marginal cost. 
C)  an additional unit of output yields a benefit to the firm greater than the additional cost. 
D)  no more output can be sold at the market price.

Question 19

Use the following to answer question(s): 
Exhibit: Profit Maximizing
  
-(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market. Curve N is the _______ curve.

Accepted Answer

A)  ATC 
B)  MR 
C)  MC 
D)  AVC 
A)  ATC 
B)  MR 
C)  MC 
D)  AVC

Question 20

Use the following to answer question(s): 
Exhibit: Total Revenue, Total Cost, and Economic Profit
  
-(Exhibit: Total Revenue, Total Costs, and Economic Profit) At zero level of output, total costs are ________ and total revenue is _______ .

Accepted Answer

A)  0; 0 
B)  300; 0 
C)  800; 300 
D)  0; 300 
A)  0; 0 
B)  300; 0 
C)  800; 300 
D)  0; 300

The Case in Point on the Burka Industry suggested that this industry:

The slope of the total revenue curve is:

Use the following to answer question(s): Exhibit: Total Revenue, Total Cost, and Economic Profit -(Exhibit: Total Revenue, Total Costs, and Economic Profit) Economic profit will be the greatest when approximately _______ pounds are sold.

In a perfectly competitive market:

If an industry's long-run supply curve is upward sloping, the industry is characterized by:

If an industry experiences constant costs, the long-run industry supply curve will be downward sloping.

Price in a perfectly competitive industry:

Use the following to answer question(s): Exhibit: Perfectly Competitive Firm -(Exhibit: Perfectly Competitive Firm) The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm's total cost per day is:

Suppose that automobile buyers in the southern part of a town have no idea what prices are being paid in the northern part of town. This situation violates the perfect competition assumption of:

Costs included in the economic concept of cost but that are not an explicit cost are:

Suppose that the market for haircuts in a community is a perfectly competitive constant-cost industry and that the market is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the long run, we expect that:

Marginal revenue is a firm's:

If all firms in a perfectly competitive industry earn zero economic profits, in the long run, the:

Which of the following is true?

If a perfectly competitive firm increases production from 10 units to 11 units, and the market price is $20 per unit, total revenue for 11 units is:

Use the following to answer question(s): Exhibit: Total Revenue and Total Cost -(Exhibit: Total Revenue and Cost) The most profitable level of output occurs at quantity:

Economic profit is maximized when:

Use the following to answer question(s): Exhibit: Profit Maximizing -(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market. Curve N is the _______ curve.

Use the following to answer question(s): Exhibit: Total Revenue, Total Cost, and Economic Profit -(Exhibit: Total Revenue, Total Costs, and Economic Profit) At zero level of output, total costs are __ and total revenue is _ .

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 9: Competitive Markets for Goods and Services

The Case in Point on the Burka Industry suggested that this industry:

The slope of the total revenue curve is:

Use the following to answer question(s): Exhibit: Total Revenue, Total Cost, and Economic Profit -(Exhibit: Total Revenue, Total Costs, and Economic Profit) Economic profit will be the greatest when approximately _______ pounds are sold.

In a perfectly competitive market:

If an industry's long-run supply curve is upward sloping, the industry is characterized by:

If an industry experiences constant costs, the long-run industry supply curve will be downward sloping.

Price in a perfectly competitive industry:

Use the following to answer question(s): Exhibit: Perfectly Competitive Firm -(Exhibit: Perfectly Competitive Firm) The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm's total cost per day is:

Suppose that automobile buyers in the southern part of a town have no idea what prices are being paid in the northern part of town. This situation violates the perfect competition assumption of:

Costs included in the economic concept of cost but that are not an explicit cost are:

Suppose that the market for haircuts in a community is a perfectly competitive constant-cost industry and that the market is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the long run, we expect that:

Marginal revenue is a firm's:

If all firms in a perfectly competitive industry earn zero economic profits, in the long run, the:

Which of the following is true?

If a perfectly competitive firm increases production from 10 units to 11 units, and the market price is $20 per unit, total revenue for 11 units is:

Use the following to answer question(s): Exhibit: Total Revenue and Total Cost -(Exhibit: Total Revenue and Cost) The most profitable level of output occurs at quantity:

Economic profit is maximized when:

Use the following to answer question(s): Exhibit: Profit Maximizing -(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market. Curve N is the _______ curve.

Use the following to answer question(s): Exhibit: Total Revenue, Total Cost, and Economic Profit -(Exhibit: Total Revenue, Total Costs, and Economic Profit) At zero level of output, total costs are ________ and total revenue is _______ .

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Use the following to answer question(s): Exhibit: Total Revenue, Total Cost, and Economic Profit -(Exhibit: Total Revenue, Total Costs, and Economic Profit) At zero level of output, total costs are __ and total revenue is _ .