Question 1

A perfectly competitive firm's short-run supply curve is the part of its marginal cost curve that is:

Accepted Answer

A)  upward-sloping. 
B)  above its average variable cost. 
C)  above the average fixed cost. 
D)  below the average fixed cost. 
A)  upward-sloping. 
B)  above its average variable cost. 
C)  above the average fixed cost. 
D)  below the average fixed cost. B

Question 2

One of the characteristics of perfect competition is that:

Accepted Answer

A)  some firms can influence price. 
B)  firms depend on each other in setting the output. 
C)  firms produce a differentiated product. 
D)  consumers do not distinguish between the sellers. 
A)  some firms can influence price. 
B)  firms depend on each other in setting the output. 
C)  firms produce a differentiated product. 
D)  consumers do not distinguish between the sellers. D

Question 3

Consider a firm with the following cost and revenue information: ATC = $8, AVC = $6, MR = $6 and MC = $6. If the firm produces Q = 60 units in the short run, it:

Accepted Answer

A)  is minimising losses. 
B)  makes a total loss of $60. 
C)  should produce more output. 
D)  is indifferent concerning whether to keep operating or shut down. 
A)  is minimising losses. 
B)  makes a total loss of $60. 
C)  should produce more output. 
D)  is indifferent concerning whether to keep operating or shut down. D

Question 4

Assume that a firm's marginal revenue just barely exceeds marginal cost. What should the firm do under these conditions?

Accepted Answer

A)  Expand output. 
B)  Contract output. 
C)  Maintain output. 
D)  There is insufficient information to answer the question. 
A)  Expand output. 
B)  Contract output. 
C)  Maintain output. 
D)  There is insufficient information to answer the question.

Question 5

Narrbegin Exhibit 7.9 A typical firm in a perfectly competitive market   
-In Exhibit 7.9, at what price is the perfectly competitive firm in long-run equilibrium?

Accepted Answer

A)  $100. 
B)  $200. 
C)  $300. 
D)  $400. 
A)  $100. 
B)  $200. 
C)  $300. 
D)  $400.

Question 6

Assume that the market equilibrium is 100 units at the price of $70. What is the price each firm can charge if each produces 10 units of output?

Accepted Answer

A)  $7 
B)  $0.7 
C)  $70 
D)  $700 
A)  $7 
B)  $0.7 
C)  $70 
D)  $700

Question 7

Narrbegin Exhibit 7.1 Total revenue and total cost graph   
-In Exhibit 7.1, if output is between 100 and 200 units per week, economic profit for the firm is:

Accepted Answer

A)  zero. 
B)  negative or zero. 
C)  at its maximum. 
D)  positive or zero. 
A)  zero. 
B)  negative or zero. 
C)  at its maximum. 
D)  positive or zero.

Question 8

Narrbegin Exhibit 7.2 Cost per unit curves   
-As shown in Exhibit 7.2, the firm will produce in the short run if the price is at least equal to:

Accepted Answer

A)  $1 per unit. 
B)  $1.50 per unit. 
C)  $2 per unit. 
D)  $3 per unit. 
A)  $1 per unit. 
B)  $1.50 per unit. 
C)  $2 per unit. 
D)  $3 per unit.

Question 9

A perfectly competitive industry must have a perfectly elastic long-run supply curve.

Accepted Answer

A) True 
 B)False

Question 10

If a firm can easily enter and exit the market it operates in which market?

Accepted Answer

A)  Perfectly competitive. 
B)  Monopolistically competitive. 
C)  Monopolistic. 
D)  Oligopolistic. 
A)  Perfectly competitive. 
B)  Monopolistically competitive. 
C)  Monopolistic. 
D)  Oligopolistic.

Question 11

If ATC = $20, AVC = $15, AFC = $5, MC = $15 and MR = $15, then a perfectly competitive firm should:

Accepted Answer

A)  decrease output because MR> AFC. 
B)  increase output because ATC > MR. 
C)  shut down if the price will be below AVC. 
D)  maximize its profit because MR = MC. 
A)  decrease output because MR> AFC. 
B)  increase output because ATC > MR. 
C)  shut down if the price will be below AVC. 
D)  maximize its profit because MR = MC.

Question 12

Narrbegin Exhibit 7.4 Marginal revenue and cost per unit curves   
-As shown in Exhibit 7.4, the short-run supply curve for the firm corresponds to which segment of its marginal cost curve?

Accepted Answer

A)  C and all points above. 
B)  B and all points above. 
C)  A and all points above. 
D)  A to C only. 
A)  C and all points above. 
B)  B and all points above. 
C)  A and all points above. 
D)  A to C only.

Question 13

Narrbegin Exhibit 7.5 Short-run profit and loss   
-According to Exhibit 7.5, this firm will be making a short-run loss, but will continue to produce when the price is:

Accepted Answer

A)  between $15 and $20. 
B)  between $25 and $13. 
C)  between $20 and $25. 
D)  between $15 and $13. 
A)  between $15 and $20. 
B)  between $25 and $13. 
C)  between $20 and $25. 
D)  between $15 and $13.

Question 14

If a competitive firm cannot cover all of its costs, then it should shut down in the short run.

Accepted Answer

A) True 
 B)False

Question 15

Narrbegin Exhibit 7.1 Total revenue and total cost graph   
-In Exhibit 7.1, economic profit for the firm is at a maximum when output per week equals:

Accepted Answer

A)  0 units. 
B)  100 units. 
C)  200 units. 
D)  250 units. 
A)  0 units. 
B)  100 units. 
C)  200 units. 
D)  250 units.

Question 16

The long-run supply curve for a competitive constant-cost industry is:

Accepted Answer

A)  horizontal. 
B)  vertical. 
C)  upward-sloping. 
D)  downward-sloping. 
A)  horizontal. 
B)  vertical. 
C)  upward-sloping. 
D)  downward-sloping.

Question 17

At an output level of 500 units, ATC = $10, AVC = $5, MR = $3 and MC = $3, the result for the perfectly competitive firm will be:

Accepted Answer

A)  making a loss of ($5 - $3) 500 = $1000. 
B)  a decrease in output, so MC > MR. 
C)  making a short-run loss of $2500. 
D)  an increased output, so MR > MC. 
A)  making a loss of ($5 - $3) 500 = $1000. 
B)  a decrease in output, so MC > MR. 
C)  making a short-run loss of $2500. 
D)  an increased output, so MR > MC.

Question 18

Narrbegin Exhibit 7.5 Short-run profit and loss   
-According to Exhibit 7.5, a perfectly competitive firm will be making a short-run loss but still keep operating if price drops below:

Accepted Answer

A)  $20. 
B)  $15. 
C)  $13. 
D)  $25. 
A)  $20. 
B)  $15. 
C)  $13. 
D)  $25.

Question 19

Narrbegin Exhibit 7.3 A firm's cost and marginal revenue curves   
-In Exhibit 7.3, when the price is $5, the firm:

Accepted Answer

A)  is making an economic profit of $21. 
B)  should produce output equal to seven. 
C)  is breaking even. 
D)  should shut down. 
A)  is making an economic profit of $21. 
B)  should produce output equal to seven. 
C)  is breaking even. 
D)  should shut down.

Question 20

The perfectly competitive industry's short-run market supply curve is the sum of:

Accepted Answer

A)  the outputs that each of the firms will supply at the highest price. 
B)  the outputs that each of the firms will supply at the lowest price. 
C)  the outputs that each of the firms will supply at the price below average variable cost. 
D)  the outputs that each of the firms will supply at each possible price. 
A)  the outputs that each of the firms will supply at the highest price. 
B)  the outputs that each of the firms will supply at the lowest price. 
C)  the outputs that each of the firms will supply at the price below average variable cost. 
D)  the outputs that each of the firms will supply at each possible price.

A perfectly competitive firm's short-run supply curve is the part of its marginal cost curve that is:

One of the characteristics of perfect competition is that:

Consider a firm with the following cost and revenue information: ATC = $8, AVC = $6, MR = $6 and MC = $6. If the firm produces Q = 60 units in the short run, it:

Assume that a firm's marginal revenue just barely exceeds marginal cost. What should the firm do under these conditions?

Narrbegin Exhibit 7.9 A typical firm in a perfectly competitive market -In Exhibit 7.9, at what price is the perfectly competitive firm in long-run equilibrium?

Assume that the market equilibrium is 100 units at the price of $70. What is the price each firm can charge if each produces 10 units of output?

Narrbegin Exhibit 7.1 Total revenue and total cost graph -In Exhibit 7.1, if output is between 100 and 200 units per week, economic profit for the firm is:

Narrbegin Exhibit 7.2 Cost per unit curves -As shown in Exhibit 7.2, the firm will produce in the short run if the price is at least equal to:

A perfectly competitive industry must have a perfectly elastic long-run supply curve.

If a firm can easily enter and exit the market it operates in which market?

If ATC = $20, AVC = $15, AFC = $5, MC = $15 and MR = $15, then a perfectly competitive firm should:

Narrbegin Exhibit 7.4 Marginal revenue and cost per unit curves -As shown in Exhibit 7.4, the short-run supply curve for the firm corresponds to which segment of its marginal cost curve?

Narrbegin Exhibit 7.5 Short-run profit and loss -According to Exhibit 7.5, this firm will be making a short-run loss, but will continue to produce when the price is:

If a competitive firm cannot cover all of its costs, then it should shut down in the short run.

Narrbegin Exhibit 7.1 Total revenue and total cost graph -In Exhibit 7.1, economic profit for the firm is at a maximum when output per week equals:

The long-run supply curve for a competitive constant-cost industry is:

At an output level of 500 units, ATC = $10, AVC = $5, MR = $3 and MC = $3, the result for the perfectly competitive firm will be:

Narrbegin Exhibit 7.5 Short-run profit and loss -According to Exhibit 7.5, a perfectly competitive firm will be making a short-run loss but still keep operating if price drops below:

Narrbegin Exhibit 7.3 A firm's cost and marginal revenue curves -In Exhibit 7.3, when the price is $5, the firm:

The perfectly competitive industry's short-run market supply curve is the sum of:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

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Exam 8: Perfect Competition

A perfectly competitive firm's short-run supply curve is the part of its marginal cost curve that is:

One of the characteristics of perfect competition is that:

Consider a firm with the following cost and revenue information: ATC = $8, AVC = $6, MR = $6 and MC = $6. If the firm produces Q = 60 units in the short run, it:

Assume that a firm's marginal revenue just barely exceeds marginal cost. What should the firm do under these conditions?

Narrbegin Exhibit 7.9 A typical firm in a perfectly competitive market -In Exhibit 7.9, at what price is the perfectly competitive firm in long-run equilibrium?

Assume that the market equilibrium is 100 units at the price of $70. What is the price each firm can charge if each produces 10 units of output?

Narrbegin Exhibit 7.1 Total revenue and total cost graph -In Exhibit 7.1, if output is between 100 and 200 units per week, economic profit for the firm is:

Narrbegin Exhibit 7.2 Cost per unit curves -As shown in Exhibit 7.2, the firm will produce in the short run if the price is at least equal to:

A perfectly competitive industry must have a perfectly elastic long-run supply curve.

If a firm can easily enter and exit the market it operates in which market?

If ATC = $20, AVC = $15, AFC = $5, MC = $15 and MR = $15, then a perfectly competitive firm should:

Narrbegin Exhibit 7.4 Marginal revenue and cost per unit curves -As shown in Exhibit 7.4, the short-run supply curve for the firm corresponds to which segment of its marginal cost curve?

Narrbegin Exhibit 7.5 Short-run profit and loss -According to Exhibit 7.5, this firm will be making a short-run loss, but will continue to produce when the price is:

If a competitive firm cannot cover all of its costs, then it should shut down in the short run.

Narrbegin Exhibit 7.1 Total revenue and total cost graph -In Exhibit 7.1, economic profit for the firm is at a maximum when output per week equals:

The long-run supply curve for a competitive constant-cost industry is:

At an output level of 500 units, ATC = $10, AVC = $5, MR = $3 and MC = $3, the result for the perfectly competitive firm will be:

Narrbegin Exhibit 7.5 Short-run profit and loss -According to Exhibit 7.5, a perfectly competitive firm will be making a short-run loss but still keep operating if price drops below:

Narrbegin Exhibit 7.3 A firm's cost and marginal revenue curves -In Exhibit 7.3, when the price is $5, the firm:

The perfectly competitive industry's short-run market supply curve is the sum of:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters