Question 1

a)Complete the table below which shows the cost data for Smith's Snuff,a perfectly competitive firm and answer the questions (b-d)which follow.

Accepted Answer

@#IMG-DLM& 
b)What are the shutdown price and the

Question 2

What is break-even price?

Accepted Answer

A) A price that just covers average fixed costs. 
B) A price that just covers average total costs. 
C) A price at which the firm makes only normal profits. 
D) A price that just covers average variable costs. 
A) A price that just covers average fixed costs. 
B) A price that just covers average total costs. 
C) A price at which the firm makes only normal profits. 
D) A price that just covers average variable costs.

Question 3

The data are for a firm operating in perfect competition.
  
-Use Table 8.7 to answer this question.If the market price is $80,what is the profit-maximizing output and will be the firm profit or loss?

Accepted Answer

A) 4 units and a loss of $80. 
B) 5 units and a loss of $40. 
C) 6 units and a loss of $36. 
D) 6 units and zero profit. 
A) 4 units and a loss of $80. 
B) 5 units and a loss of $40. 
C) 6 units and a loss of $36. 
D) 6 units and zero profit.

Question 4

Explain why a perfectly competitive firm faces a horizontal demand curve?

Accepted Answer

In a perfectly competitive market,the in

Question 5

The following graph shows the costs for a perfectly competitive producer:
  
-Refer to the above graph to answer this question.What is the value of the shut-down price?

Accepted Answer

A) $10. 
B) $15. 
C) $20. 
D) $750. 
E) Cannot be determined. 
A) $10. 
B) $15. 
C) $20. 
D) $750. 
E) Cannot be determined.

Question 6

Which of the following is the correct sequence of events following a decrease in demand for a product in a perfectly competitive market?

Accepted Answer

A) A decrease in the price and in the total profits of the representative firm which causes new firms to enter the industry. 
B) A decrease in the price and in the total profits of the representative firm which causes firms to leave the industry. 
C) A decrease in the price but an increase in the total profits of the representative firm which causes new firms to enter the industry. 
D) An increase in the price but a decrease in the total profits of the representative firm which causes firms to leave the industry. 
A) A decrease in the price and in the total profits of the representative firm which causes new firms to enter the industry. 
B) A decrease in the price and in the total profits of the representative firm which causes firms to leave the industry. 
C) A decrease in the price but an increase in the total profits of the representative firm which causes new firms to enter the industry. 
D) An increase in the price but a decrease in the total profits of the representative firm which causes firms to leave the industry.

Question 7

Which of the following conditions means that the perfectly competitive firm is maximizing its profits?

Accepted Answer

A) That the price equals average revenue. 
B) That the price is equal to marginal revenue. 
C) That the price is equal to marginal cost. 
D) That the price is equal to average cost. 
A) That the price equals average revenue. 
B) That the price is equal to marginal revenue. 
C) That the price is equal to marginal cost. 
D) That the price is equal to average cost.

Question 8

The data are for a firm operating in perfect competition.
  
-Use Table 8.7 to answer this question.What is the firm's shut down price?

Accepted Answer

A) $60. 
B) $70. 
C) $86. 
D) $200. 
A) $60. 
B) $70. 
C) $86. 
D) $200.

Question 9

Differentiate between a firm and an industry.

Accepted Answer

An industry is a gro

Question 10

The Competitive Industry and Firm
-Refer to the graph above to answer this question.What is the value of total revenue at the break-even price?

Accepted Answer

A) $40. 
B) $100. 
C) $200. 
D) $210. 
E) $280. 
A) $40. 
B) $100. 
C) $200. 
D) $210. 
E) $280.

Question 11

What is the correct interpretation of the perfectly competitive firm's supply curve?

Accepted Answer

A) It is the same as its average variable cost curve. 
B) It is the same as its total variable cost curve. 
C) It is the same as the portion of its marginal cost curve that lies above the average variable cost curve. 
D) It is the same as the portion of its average variable cost curve that lies above the marginal cost curve. 
A) It is the same as its average variable cost curve. 
B) It is the same as its total variable cost curve. 
C) It is the same as the portion of its marginal cost curve that lies above the average variable cost curve. 
D) It is the same as the portion of its average variable cost curve that lies above the marginal cost curve.

Question 12

The following graph (A)represents the cost curves for a representative firm in a perfectly competitive market.The market demand is shown in graph (B):
  
-Refer to the above graph to answer this question.Suppose that the market demand were to increase by 2,000 units.At the new equilibrium price in this market,what will be the representative firm's output?

Accepted Answer

A) 25. 
B) 30. 
C) 35. 
D) 40. 
E) 45. 
A) 25. 
B) 30. 
C) 35. 
D) 40. 
E) 45.

Question 13

The following questions are based on the key below.Assume that you are given cost and price data for a number of competitive firms at their present output levels.In all cases the marginal cost is increasing.With this information,indicate whether each firm should,in the short run:
1.produce more
2.produce less.
3.shut down
4.cannot be determined from the information.
-Refer to the information above to answer this question.If the price exceeds the firm's average variable costs but is less than its marginal cost what should the firm do?

Accepted Answer

A) 1. 
B) 2. 
C) 3. 
D) 4. 
A) 1. 
B) 2. 
C) 3. 
D) 4.

Question 14

The following graph shows the costs for a perfectly competitive producer:
  
-Refer to the above graph to answer this question.Which of the following represents the firm's supply curve?

Accepted Answer

A) Refer to table A 
B) Refer to table B 
C) Refer to table C 
D) Refer to table D 
A) Refer to table A 
B) Refer to table B 
C) Refer to table C 
D) Refer to table D

Question 15

What is the formula for marginal profit (M)?

Accepted Answer

A) $\Delta$ T $\pi$/$\Delta$ Q. 
B) $\Delta$ TC/$\Delta$ Q. 
C) $\Delta$ Q/$\Delta$ T $\pi$. 
D) $\Delta$ Q x $\Delta$ T $\pi$. 
A) $\Delta$ T $\pi$/$\Delta$ Q. 
B) $\Delta$ TC/$\Delta$ Q. 
C) $\Delta$ Q/$\Delta$ T $\pi$. 
D) $\Delta$ Q x $\Delta$ T $\pi$.

Question 16

Graph A shows the market demand and supply in a perfectly competitive market.Graph B shows the cost curves of a representative profit-maximizing firm in that industry.
  
-Refer to the above graph to answer this question.If the market is in equilibrium,what will be the firm's total profit or loss?

Accepted Answer

A) Profit of $200. 
B) Loss of $10,000. 
C) Profit of $20,000. 
D) Loss of $20,000. 
E) Loss of $200. 
A) Profit of $200. 
B) Loss of $10,000. 
C) Profit of $20,000. 
D) Loss of $20,000. 
E) Loss of $200.

Question 17

Table 8.1 shows the total cost for a perfectly competitive firm.
   a)Calculate MC for all levels of output.
b)If the price is $6,what is the profit maximizing level of output?
c)If the price is $7,what is the profit maximizing level of output?
d)If the price is $8,what is the profit maximizing level of output?

Accepted Answer

a)
 @#IMG-DLM& 
For each answer below,recall that

Question 18

Demonstrate graphically and explain verbally an example where a perfectly competitive firm is earning a positive economic profit.Be sure to label the profit maximizing level of output and shade in the area that represents profit.

Accepted Answer

The diagram: @#IMG-DLM& 
The firm chooses to produ

Question 19

What are the main features of perfectly competitive markets? Explain each.

Accepted Answer

A)it is composed of many buyers and sell

Question 20

Assume that the following data is for a profit-maximizing manufacturer:
  
-Refer to the above information to answer this question.If the total fixed costs were to increase by $50 what would be the new shut-down price?

Accepted Answer

A) $30. 
B) $50. 
C) $60. 
D) $70. 
E) $80. 
A) $30. 
B) $50. 
C) $60. 
D) $70. 
E) $80.

a)Complete the table below which shows the cost data for Smith's Snuff,a perfectly competitive firm and answer the questions (b-d)which follow.

What is break-even price?

The data are for a firm operating in perfect competition. -Use Table 8.7 to answer this question.If the market price is $80,what is the profit-maximizing output and will be the firm profit or loss?

Explain why a perfectly competitive firm faces a horizontal demand curve?

The following graph shows the costs for a perfectly competitive producer: -Refer to the above graph to answer this question.What is the value of the shut-down price?

Which of the following is the correct sequence of events following a decrease in demand for a product in a perfectly competitive market?

Which of the following conditions means that the perfectly competitive firm is maximizing its profits?

The data are for a firm operating in perfect competition. -Use Table 8.7 to answer this question.What is the firm's shut down price?

Differentiate between a firm and an industry.

The Competitive Industry and Firm -Refer to the graph above to answer this question.What is the value of total revenue at the break-even price?

What is the correct interpretation of the perfectly competitive firm's supply curve?

The following graph shows the costs for a perfectly competitive producer: -Refer to the above graph to answer this question.Which of the following represents the firm's supply curve?

What is the formula for marginal profit (M)?

Graph A shows the market demand and supply in a perfectly competitive market.Graph B shows the cost curves of a representative profit-maximizing firm in that industry. -Refer to the above graph to answer this question.If the market is in equilibrium,what will be the firm's total profit or loss?

Demonstrate graphically and explain verbally an example where a perfectly competitive firm is earning a positive economic profit.Be sure to label the profit maximizing level of output and shade in the area that represents profit.

What are the main features of perfectly competitive markets? Explain each.

Assume that the following data is for a profit-maximizing manufacturer: -Refer to the above information to answer this question.If the total fixed costs were to increase by $50 what would be the new shut-down price?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 8: Perfect Competition

a)Complete the table below which shows the cost data for Smith's Snuff,a perfectly competitive firm and answer the questions (b-d)which follow.

What is break-even price?

The data are for a firm operating in perfect competition. -Use Table 8.7 to answer this question.If the market price is $80,what is the profit-maximizing output and will be the firm profit or loss?

Explain why a perfectly competitive firm faces a horizontal demand curve?

The following graph shows the costs for a perfectly competitive producer: -Refer to the above graph to answer this question.What is the value of the shut-down price?

Which of the following is the correct sequence of events following a decrease in demand for a product in a perfectly competitive market?

Which of the following conditions means that the perfectly competitive firm is maximizing its profits?

The data are for a firm operating in perfect competition. -Use Table 8.7 to answer this question.What is the firm's shut down price?

Differentiate between a firm and an industry.

The Competitive Industry and Firm -Refer to the graph above to answer this question.What is the value of total revenue at the break-even price?

What is the correct interpretation of the perfectly competitive firm's supply curve?

The following graph shows the costs for a perfectly competitive producer: -Refer to the above graph to answer this question.Which of the following represents the firm's supply curve?

What is the formula for marginal profit (M)?

Graph A shows the market demand and supply in a perfectly competitive market.Graph B shows the cost curves of a representative profit-maximizing firm in that industry. -Refer to the above graph to answer this question.If the market is in equilibrium,what will be the firm's total profit or loss?

Demonstrate graphically and explain verbally an example where a perfectly competitive firm is earning a positive economic profit.Be sure to label the profit maximizing level of output and shade in the area that represents profit.

What are the main features of perfectly competitive markets? Explain each.

Assume that the following data is for a profit-maximizing manufacturer: -Refer to the above information to answer this question.If the total fixed costs were to increase by $50 what would be the new shut-down price?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters