Question 1

Price takers:

Accepted Answer

A)  are those individuals in a competitive market who must accept the market price as given. 
B)  is a term that implies that whatever the price is, an individual will accept it as fair. 
C)  is a term that essentially means that prices have nothing to do with individuals or groups. 
D)  is a term that 
A)  are those individuals in a competitive market who must accept the market price as given. 
B)  is a term that implies that whatever the price is, an individual will accept it as fair. 
C)  is a term that essentially means that prices have nothing to do with individuals or groups. 
D)  is a term that

Question 2

A perfectly competitive industry characterized by increasing costs has a downward-sloping long-run industry supply curve.

Accepted Answer

A) True 
 B)False

Question 3

The marginal revenue received by a firm in a perfectly competitive market:

Accepted Answer

A)  is greater than the market price. 
B)  is less than the market price. 
C)  is equal to its average revenue. 
D)  increases with the quantity of output sold. 
A)  is greater than the market price. 
B)  is less than the market price. 
C)  is equal to its average revenue. 
D)  increases with the quantity of output sold.

Question 4

In long-run equilibrium, economic profits in a perfectly competitive industry are:

Accepted Answer

A)  positive. 
B)  zero. 
C)  negative. 
D)  indeterminate. 
A)  positive. 
B)  zero. 
C)  negative. 
D)  indeterminate.

Question 5

The profit-maximizing level of output for a perfectly competitive firm occurs where there is equality between the slopes of the:

Accepted Answer

A)  marginal revenue and demand curves. 
B)  marginal revenue and marginal cost curves. 
C)  total revenue and total cost curves. 
D)  average revenue and average variable cost curves. 
A)  marginal revenue and demand curves. 
B)  marginal revenue and marginal cost curves. 
C)  total revenue and total cost curves. 
D)  average revenue and average variable cost curves.

Question 6

Individuals in a market who must take the market price as given are:

Accepted Answer

A)  quantity minimizers. 
B)  quantity takers. 
C)  price takers. 
D)  price searchers. 
A)  quantity minimizers. 
B)  quantity takers. 
C)  price takers. 
D)  price searchers.

Question 7

Shutting down:

Accepted Answer

A)  is the same thing as going out of business. 
B)  means closing the doors but not going out of business. 
C)  may be a decision to close overnight. 
D)  is properly described by B and C. 
A)  is the same thing as going out of business. 
B)  means closing the doors but not going out of business. 
C)  may be a decision to close overnight. 
D)  is properly described by B and C.

Question 8

Economic profit in long-run equilibrium in perfect competition will be:

Accepted Answer

A)  less than accounting profit. 
B)  equal to accounting profit. 
C)  greater than accounting profit. 
D)  negative. 
A)  less than accounting profit. 
B)  equal to accounting profit. 
C)  greater than accounting profit. 
D)  negative.

Question 9

A perfectly competitive firm will stay in business as long as the price per unit equals or exceeds its average total cost.

Accepted Answer

A) True 
 B)False

Question 10

If some firms in a perfectly competitive industry earn less than a zero economic profit, the industry's market supply curve will decrease in the long run.

Accepted Answer

A) True 
 B)False

Question 11

The shutdown point is where MC = minimum AVC.

Accepted Answer

A) True 
 B)False

Question 12

In the short run, a perfectly competitive firm does not produce output and earns a negative economic profit if:

Accepted Answer

A) P = ATC. B) P P > ATC. D) AVC < P < ATC. A) P = ATC. B) P P > ATC. D) AVC < P < ATC.

Question 13

In perfect competition, the profit- maximizing level of output occurs where:

Accepted Answer

A)  MR =MC > minimum AVC. 
B)  price > marginal cost > minimum AVC. 
C)  MR > MC > minimum AVC. 
D)  P = MR > MC. 
A)  MR =MC > minimum AVC. 
B)  price > marginal cost > minimum AVC. 
C)  MR > MC > minimum AVC. 
D)  P = MR > MC.

Question 14

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. If market price is P4, then average revenue is:

Accepted Answer

A)  the same as TR. 
B)  the area 0P4Aq4 divided by q4. 
C)  the same as total cost. 
D)  P4. 
A)  the same as TR. 
B)  the area 0P4Aq4 divided by q4. 
C)  the same as total cost. 
D)  P4.

Question 15

In a perfectly competitive industry, all firms will have equal marginal costs.

Accepted Answer

A) True 
 B)False

Question 16

Use the following to answer question(s): 
Exhibit: A Perfectly Competitive Firm in the Short Run
  
-(Exhibit: A Perfectly Competitive Firm in the Short Run) The firm's total revenue from the sale of its most profitable level of output is:

Accepted Answer

A)  0GLD. 
B)  0GHB. 
C)  BH. 
D)  DL. 
A)  0GLD. 
B)  0GHB. 
C)  BH. 
D)  DL.

Question 17

The assumptions of perfect competition imply that:

Accepted Answer

A)  individuals in the market accept the market price as given. 
B)  individuals can influence the market price. 
C)  the price will be a fair price. 
D)  the price will be low. 
A)  individuals in the market accept the market price as given. 
B)  individuals can influence the market price. 
C)  the price will be a fair price. 
D)  the price will be low.

Question 18

A perfectly competitive firm will incur an economic loss but will continue producing the profit-maximizing quantity of output in the short run if price is:

Accepted Answer

A)  less than marginal cost. 
B)  less than average variable cost. 
C)  greater than average total cost. 
D)  greater than average variable cost and less than average total cost. 
A)  less than marginal cost. 
B)  less than average variable cost. 
C)  greater than average total cost. 
D)  greater than average variable cost and less than average total cost.

Question 19

In perfect competition:

Accepted Answer

A)  a firm's total revenue is found by multiplying market price by the firm's quantity of output. 
B)  the firm's total revenue curve is a linear, upward-sloping line. 
C)  at any price, the greater the quantity sold, the greater is a firm's total revenue. 
D)  all of the above are true. 
A)  a firm's total revenue is found by multiplying market price by the firm's quantity of output. 
B)  the firm's total revenue curve is a linear, upward-sloping line. 
C)  at any price, the greater the quantity sold, the greater is a firm's total revenue. 
D)  all of the above are true.

Question 20

If a perfectly competitive firm is producing a quantity that generates P > MC, then profit:

Accepted Answer

A)  is maximized. 
B)  can be increased by increasing the price. 
C)  can be increased by decreasing the price. 
D)  can be increased by increasing production. 
A)  is maximized. 
B)  can be increased by increasing the price. 
C)  can be increased by decreasing the price. 
D)  can be increased by increasing production.

Price takers:

A perfectly competitive industry characterized by increasing costs has a downward-sloping long-run industry supply curve.

The marginal revenue received by a firm in a perfectly competitive market:

In long-run equilibrium, economic profits in a perfectly competitive industry are:

The profit-maximizing level of output for a perfectly competitive firm occurs where there is equality between the slopes of the:

Individuals in a market who must take the market price as given are:

Shutting down:

Economic profit in long-run equilibrium in perfect competition will be:

A perfectly competitive firm will stay in business as long as the price per unit equals or exceeds its average total cost.

If some firms in a perfectly competitive industry earn less than a zero economic profit, the industry's market supply curve will decrease in the long run.

The shutdown point is where MC = minimum AVC.

In the short run, a perfectly competitive firm does not produce output and earns a negative economic profit if:

In perfect competition, the profit- maximizing level of output occurs where:

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. If market price is P₄, then average revenue is:

In a perfectly competitive industry, all firms will have equal marginal costs.

Use the following to answer question(s): Exhibit: A Perfectly Competitive Firm in the Short Run -(Exhibit: A Perfectly Competitive Firm in the Short Run) The firm's total revenue from the sale of its most profitable level of output is:

The assumptions of perfect competition imply that:

A perfectly competitive firm will incur an economic loss but will continue producing the profit-maximizing quantity of output in the short run if price is:

In perfect competition:

If a perfectly competitive firm is producing a quantity that generates P > MC, then profit:

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

Price takers:

A perfectly competitive industry characterized by increasing costs has a downward-sloping long-run industry supply curve.

The marginal revenue received by a firm in a perfectly competitive market:

In long-run equilibrium, economic profits in a perfectly competitive industry are:

The profit-maximizing level of output for a perfectly competitive firm occurs where there is equality between the slopes of the:

Individuals in a market who must take the market price as given are:

Shutting down:

Economic profit in long-run equilibrium in perfect competition will be:

A perfectly competitive firm will stay in business as long as the price per unit equals or exceeds its average total cost.

If some firms in a perfectly competitive industry earn less than a zero economic profit, the industry's market supply curve will decrease in the long run.

The shutdown point is where MC = minimum AVC.

In the short run, a perfectly competitive firm does not produce output and earns a negative economic profit if:

In perfect competition, the profit- maximizing level of output occurs where:

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. If market price is P4, then average revenue is:

In a perfectly competitive industry, all firms will have equal marginal costs.

Use the following to answer question(s): Exhibit: A Perfectly Competitive Firm in the Short Run -(Exhibit: A Perfectly Competitive Firm in the Short Run) The firm's total revenue from the sale of its most profitable level of output is:

The assumptions of perfect competition imply that:

A perfectly competitive firm will incur an economic loss but will continue producing the profit-maximizing quantity of output in the short run if price is:

In perfect competition:

If a perfectly competitive firm is producing a quantity that generates P > MC, then profit:

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: Profit Maximizing -(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market. If market price is P₄, then average revenue is: