Question 1

Narrbegin Exhibit 7.4 Marginal revenue and cost per unit curves   
-As shown in Exhibit 7.4, the firm will produce in the short run if the price per unit is at least equal to:

Accepted Answer

A)  $10. 
B)  $15. 
C)  $20. 
D)  $30. 
A)  $10. 
B)  $15. 
C)  $20. 
D)  $30.

Question 2

Assume that the market price is $10 and the minimum AVC is $15. The firm should:

Accepted Answer

A)  increase production. 
B)  continue to operate at the same level. 
C)  decrease production. 
D)  shut down. 
A)  increase production. 
B)  continue to operate at the same level. 
C)  decrease production. 
D)  shut down.

Question 3

Narrbegin Exhibit 7.3 A firm's cost and marginal revenue curves   
-In Exhibit 7.3, when the price is $2, the profit-maximising (or loss-minimising) firm:

Accepted Answer

A)  should shut down and produce zero. 
B)  should produce output equal to four. 
C)  is making an economic profit of $8. 
D)  should try to produce more output. 
A)  should shut down and produce zero. 
B)  should produce output equal to four. 
C)  is making an economic profit of $8. 
D)  should try to produce more output.

Question 4

Narrbegin Exhibit 7.9 A typical firm in a perfectly competitive market   
-As shown in Exhibit 7.9, the perfectly competitive firm is in long-run equilibrium at an output of:

Accepted Answer

A)  0 units per week. 
B)  200 units per week. 
C)  400 units per week. 
D)  600 units per week. 
A)  0 units per week. 
B)  200 units per week. 
C)  400 units per week. 
D)  600 units per week.

Question 5

One of the characteristics of the perfectly competitive market is:

Accepted Answer

A)  a small number of large firms. 
B)  firms that sell a heterogeneous product. 
C)  sellers and buyers both can increase the price on the market. 
D)  there is a large number of small firms. 
A)  a small number of large firms. 
B)  firms that sell a heterogeneous product. 
C)  sellers and buyers both can increase the price on the market. 
D)  there is a large number of small firms.

Question 6

Narrbegin Exhibit 7.2 Cost per unit curves   
-In Exhibit 7.2, if the price of the firm's product is $2.00 per unit, the firm will produce:

Accepted Answer

A)  five units per day. 
B)  10 units per day. 
C)  15 units per day. 
D)  20 units per day. 
A)  five units per day. 
B)  10 units per day. 
C)  15 units per day. 
D)  20 units per day.

Question 7

Because a competitive firm is a price taker, it:

Accepted Answer

A)  can set its own prices. 
B)  faces a demand curve that is relatively inelastic. 
C)  enjoys high barriers to entry. 
D)  faces a demand curve that is perfectly elastic. 
A)  can set its own prices. 
B)  faces a demand curve that is relatively inelastic. 
C)  enjoys high barriers to entry. 
D)  faces a demand curve that is perfectly elastic.

Question 8

Narrbegin Exhibit 7.9 A typical firm in a perfectly competitive market   
-Refer to Exhibit 7.9 and assume the perfectly competitive firm is in long-run equilibrium and there is an increase in demand. Along which cost curve, in the short run, will the firm increase output?

Accepted Answer

A)  Short-run average total cost curve B. 
B)  Short-run marginal cost curve B. 
C)  Long-run average cost curve. 
D)  The firm shuts down. 
A)  Short-run average total cost curve B. 
B)  Short-run marginal cost curve B. 
C)  Long-run average cost curve. 
D)  The firm shuts down.

Question 9

Part of the ACCC's role is to:

Accepted Answer

A)  improve efficiency in markets by promoting competitive pricing. 
B)  encourage adherence to fair trading practices. 
C)  inform the public about the Trade Practices Act. 
D)  do all the above. 
A)  improve efficiency in markets by promoting competitive pricing. 
B)  encourage adherence to fair trading practices. 
C)  inform the public about the Trade Practices Act. 
D)  do all the above.

Question 10

Assume the short-run average total cost for a perfectly competitive industry remains constant as the output of the industry expands. In the long run, the industry supply curve will:

Accepted Answer

A)  have a positive slope. 
B)  have a negative slope. 
C)  be perfectly horizontal. 
D)  be perfectly vertical. 
A)  have a positive slope. 
B)  have a negative slope. 
C)  be perfectly horizontal. 
D)  be perfectly vertical.

Question 11

Narrbegin Exhibit 7.1 Total revenue and total cost graph   
-In Exhibit 7.1, the firm will produce at which level of output:

Accepted Answer

A)  zero. 
B) 150. 
C) 350. 
D)  250. 
A)  zero. 
B) 150. 
C) 350. 
D)  250.

Question 12

For a perfectly competitive firm, short-run equilibrium is determined by:

Accepted Answer

A)  the point where P = MC. 
B)  the point where P = ATC. 
C)  the point where P = AVC. 
D)  the point where MC = ATC. 
A)  the point where P = MC. 
B)  the point where P = ATC. 
C)  the point where P = AVC. 
D)  the point where MC = ATC.

Question 13

If a firm is operating at a loss in the short run and finds that its price is greater than average variable cost, then in the short run:

Accepted Answer

A)  it should produce where MR = MC. 
B)  it should produce zero output. 
C)  it should go out of business. 
D)  total revenue is less than total variable costs. 
A)  it should produce where MR = MC. 
B)  it should produce zero output. 
C)  it should go out of business. 
D)  total revenue is less than total variable costs.

Question 14

If input prices for a perfectly competitive firm increase as the output of the industry expands in the long run, the long-run industry supply curve will:

Accepted Answer

A)  have a constant slope. 
B)  have a negative slope. 
C)  be perfectly horizontal. 
D)  have a positive slope. 
A)  have a constant slope. 
B)  have a negative slope. 
C)  be perfectly horizontal. 
D)  have a positive slope.

Question 15

The market curve derived for the perfectly competitive market is based on the following assumptions:

Accepted Answer

A)  input prices remain unchanged as output expands. 
B)  output prices remain unchanged as output expands. 
C)  input prices reduce as output expands. 
D)  input prices increase as output expands. 
A)  input prices remain unchanged as output expands. 
B)  output prices remain unchanged as output expands. 
C)  input prices reduce as output expands. 
D)  input prices increase as output expands.

Question 16

In long-run equilibrium, which of the following is not equal to price for a perfectly competitive firm?

Accepted Answer

A)  Short-run average variable cost. 
B)  Long-run average total cost. 
C)  Short-run marginal cost. 
D)  Short-run average total cost. 
A)  Short-run average variable cost. 
B)  Long-run average total cost. 
C)  Short-run marginal cost. 
D)  Short-run average total cost.

Question 17

Narrbegin Exhibit 7.10 Long-run perfectly competitive industry   
-Refer to Exhibit 7.10 and assume that a perfectly competitive industry is in long-run equilibrium at point A and the demand curve shifts from D1 to D2. The result is a long-run supply curve drawn from point:

Accepted Answer

A)  A to point B. 
B)  B to point A. 
C)  A to point D. 
D)  A to point C. 
A)  A to point B. 
B)  B to point A. 
C)  A to point D. 
D)  A to point C.

Question 18

In the long run, the perfectly competitive firm:

Accepted Answer

A)  always increases the output. 
B)  never increases the price. 
C)  never changes its fixed inputs. 
D)  can exit or enter the industry. 
A)  always increases the output. 
B)  never increases the price. 
C)  never changes its fixed inputs. 
D)  can exit or enter the industry.

Question 19

Consider a firm operating where P = 10, MR = 10, MC = 10 and ATC = 10 (and there is no fixed cost). This firm is:

Accepted Answer

A)  making an economic profit of 10. 
B)  an example of monopolistic competition. 
C)  going to go out of business in the long run. 
D)  perfectly competitive in long-run equilibrium. 
A)  making an economic profit of 10. 
B)  an example of monopolistic competition. 
C)  going to go out of business in the long run. 
D)  perfectly competitive in long-run equilibrium.

Question 20

In the short run, if a perfectly competitive firm is producing at a price above average total cost, its economic profit must be:

Accepted Answer

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

Narrbegin Exhibit 7.4 Marginal revenue and cost per unit curves -As shown in Exhibit 7.4, the firm will produce in the short run if the price per unit is at least equal to:

Assume that the market price is $10 and the minimum AVC is $15. The firm should:

Narrbegin Exhibit 7.3 A firm's cost and marginal revenue curves -In Exhibit 7.3, when the price is $2, the profit-maximising (or loss-minimising) firm:

Narrbegin Exhibit 7.9 A typical firm in a perfectly competitive market -As shown in Exhibit 7.9, the perfectly competitive firm is in long-run equilibrium at an output of:

One of the characteristics of the perfectly competitive market is:

Narrbegin Exhibit 7.2 Cost per unit curves -In Exhibit 7.2, if the price of the firm's product is $2.00 per unit, the firm will produce:

Because a competitive firm is a price taker, it:

Narrbegin Exhibit 7.9 A typical firm in a perfectly competitive market -Refer to Exhibit 7.9 and assume the perfectly competitive firm is in long-run equilibrium and there is an increase in demand. Along which cost curve, in the short run, will the firm increase output?

Part of the ACCC's role is to:

Assume the short-run average total cost for a perfectly competitive industry remains constant as the output of the industry expands. In the long run, the industry supply curve will:

Narrbegin Exhibit 7.1 Total revenue and total cost graph -In Exhibit 7.1, the firm will produce at which level of output:

For a perfectly competitive firm, short-run equilibrium is determined by:

If a firm is operating at a loss in the short run and finds that its price is greater than average variable cost, then in the short run:

If input prices for a perfectly competitive firm increase as the output of the industry expands in the long run, the long-run industry supply curve will:

The market curve derived for the perfectly competitive market is based on the following assumptions:

In long-run equilibrium, which of the following is not equal to price for a perfectly competitive firm?

Narrbegin Exhibit 7.10 Long-run perfectly competitive industry -Refer to Exhibit 7.10 and assume that a perfectly competitive industry is in long-run equilibrium at point A and the demand curve shifts from D₁ to D₂. The result is a long-run supply curve drawn from point:

In the long run, the perfectly competitive firm:

Consider a firm operating where P = 10, MR = 10, MC = 10 and ATC = 10 (and there is no fixed cost). This firm is:

In the short run, if a perfectly competitive firm is producing at a price above average total cost, its economic profit must be:

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

Exam 8: Perfect Competition

Narrbegin Exhibit 7.4 Marginal revenue and cost per unit curves -As shown in Exhibit 7.4, the firm will produce in the short run if the price per unit is at least equal to:

Assume that the market price is $10 and the minimum AVC is $15. The firm should:

Narrbegin Exhibit 7.3 A firm's cost and marginal revenue curves -In Exhibit 7.3, when the price is $2, the profit-maximising (or loss-minimising) firm:

Narrbegin Exhibit 7.9 A typical firm in a perfectly competitive market -As shown in Exhibit 7.9, the perfectly competitive firm is in long-run equilibrium at an output of:

One of the characteristics of the perfectly competitive market is:

Narrbegin Exhibit 7.2 Cost per unit curves -In Exhibit 7.2, if the price of the firm's product is $2.00 per unit, the firm will produce:

Because a competitive firm is a price taker, it:

Narrbegin Exhibit 7.9 A typical firm in a perfectly competitive market -Refer to Exhibit 7.9 and assume the perfectly competitive firm is in long-run equilibrium and there is an increase in demand. Along which cost curve, in the short run, will the firm increase output?

Part of the ACCC's role is to:

Assume the short-run average total cost for a perfectly competitive industry remains constant as the output of the industry expands. In the long run, the industry supply curve will:

Narrbegin Exhibit 7.1 Total revenue and total cost graph -In Exhibit 7.1, the firm will produce at which level of output:

For a perfectly competitive firm, short-run equilibrium is determined by:

If a firm is operating at a loss in the short run and finds that its price is greater than average variable cost, then in the short run:

If input prices for a perfectly competitive firm increase as the output of the industry expands in the long run, the long-run industry supply curve will:

The market curve derived for the perfectly competitive market is based on the following assumptions:

In long-run equilibrium, which of the following is not equal to price for a perfectly competitive firm?

Narrbegin Exhibit 7.10 Long-run perfectly competitive industry -Refer to Exhibit 7.10 and assume that a perfectly competitive industry is in long-run equilibrium at point A and the demand curve shifts from D1 to D2. The result is a long-run supply curve drawn from point:

In the long run, the perfectly competitive firm:

Consider a firm operating where P = 10, MR = 10, MC = 10 and ATC = 10 (and there is no fixed cost). This firm is:

In the short run, if a perfectly competitive firm is producing at a price above average total cost, its economic profit must be:

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

Narrbegin Exhibit 7.10 Long-run perfectly competitive industry -Refer to Exhibit 7.10 and assume that a perfectly competitive industry is in long-run equilibrium at point A and the demand curve shifts from D₁ to D₂. The result is a long-run supply curve drawn from point: