Question 1

If a competitive firm charges more than the market price, then it makes a profit and gains more customers.

Accepted Answer

A) True 
 B)False

Question 2

If ATC = $20, AVC = $12, MR = $15 and MC = $15, then the result for the perfectly competitive firm would be:

Accepted Answer

A)  making a short-run loss. 
B)  making a short-run profit. 
C)  breaking even. 
D)  shutting down. 
A)  making a short-run loss. 
B)  making a short-run profit. 
C)  breaking even. 
D)  shutting down.

Question 3

Narrbegin Exhibit 7.2 Cost per unit curves   
-In Exhibit 7.2, if the price of the firm's product is $3 per unit, the firm will:

Accepted Answer

A)  suffer a loss. 
B)  enjoy a profit. 
C)  be indifferent about whether to produce or not to produce. 
D)  have to increase the levels of production. 
A)  suffer a loss. 
B)  enjoy a profit. 
C)  be indifferent about whether to produce or not to produce. 
D)  have to increase the levels of production.

Question 4

A constant-cost industry is an industry in which expansion of total output results in higher prices to consumers.

Accepted Answer

A) True 
 B)False

Question 5

Perfectly competitive markets are characterised by:

Accepted Answer

A)  a large number of producers and consumers. 
B)  very strong barriers to entry and exit. 
C)  firms selling a quality product. 
D)  many different products. 
A)  a large number of producers and consumers. 
B)  very strong barriers to entry and exit. 
C)  firms selling a quality product. 
D)  many different products.

Question 6

Narrbegin Exhibit 7.5 Short-run profit and loss   
-According to Exhibit 7.5, if the price of the good is $17, then the result for the perfectly competitive firm will be:

Accepted Answer

A)  making a long-run profit. 
B)  making a long-run loss and so it will shut down. 
C)  making a short-run loss but it will continue to produce. 
D)  making a normal profit. 
E)  indeterminate. 
A)  making a long-run profit. 
B)  making a long-run loss and so it will shut down. 
C)  making a short-run loss but it will continue to produce. 
D)  making a normal profit. 
E)  indeterminate.

Question 7

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. If the demand curve shifts from D1 to D2, the adjustment sequence between points will be:

Accepted Answer

A)  A to B then back to A. 
B)  A to D then back to A. 
C)  A to D then to C. 
D)  A to B then to C. 
A)  A to B then back to A. 
B)  A to D then back to A. 
C)  A to D then to C. 
D)  A to B then to C.

Question 8

Narrbegin Exhibit 7.6   
-According to Exhibit 7.6, if MR = $20, the result for a perfectly competitive firm will be:

Accepted Answer

A)  making a short-run profit. 
B)  making a short-run loss of $10 per unit. 
C)  making a short-run loss. 
D)  making a short-run loss of $5 
A)  making a short-run profit. 
B)  making a short-run loss of $10 per unit. 
C)  making a short-run loss. 
D)  making a short-run loss of $5

Question 9

A perfectly competitive firm always set the price:

Accepted Answer

A)  equal to market cost of production. 
B)  below the equilibrium market price. 
C)  above the equilibrium market price. 
D)  equal to the equilibrium market price. 
A)  equal to market cost of production. 
B)  below the equilibrium market price. 
C)  above the equilibrium market price. 
D)  equal to the equilibrium market price.

Question 10

If the computer market experiences a surge in demand, then the long-run supply curve for the industry is likely to be:

Accepted Answer

A)  downward-sloping if it causes the price of computer chips to rise. 
B)  upward-sloping if it causes the price of computer chips to fall. 
C)  downward-sloping if it causes the price of computer chips to fall. 
D)  horizontal if it causes the price of computer chips to stay the same. 
A)  downward-sloping if it causes the price of computer chips to rise. 
B)  upward-sloping if it causes the price of computer chips to fall. 
C)  downward-sloping if it causes the price of computer chips to fall. 
D)  horizontal if it causes the price of computer chips to stay the same.

Question 11

If the market price is equal to the average variable cost, the firm should:

Accepted Answer

A)  keep operating or shut down. 
B)  increase the output. 
C)  change fixed inputs. 
D)  increase the price. 
A)  keep operating or shut down. 
B)  increase the output. 
C)  change fixed inputs. 
D)  increase the price.

Question 12

As the marginal revenue curve moves upward the perfectly competitive firm will:

Accepted Answer

A)  change the selection of products it offers to the customers. 
B)  change its output and will be able to charge a higher price. 
C)  change its output but will not be able to change the price. 
D)  change its price and will not change its output. 
A)  change the selection of products it offers to the customers. 
B)  change its output and will be able to charge a higher price. 
C)  change its output but will not be able to change the price. 
D)  change its price and will not change its output.

Question 13

A firm in a perfectly competitive market faces:

Accepted Answer

A)  its own upward-sloping demand curve. 
B)  its own downward-sloping demand curve. 
C)  a market demand curve. 
D)  a perfectly elastic demand curve. 
A)  its own upward-sloping demand curve. 
B)  its own downward-sloping demand curve. 
C)  a market demand curve. 
D)  a perfectly elastic demand curve.

Question 14

If marginal revenue exceeds marginal cost in the short run, the perfectly competitive firm earns an economic profit in the short run.

Accepted Answer

A) True 
 B)False

Question 15

As the electronic components industry expands, the salaries paid to electrical engineers rise in response to higher demand. We can conclude that the electronic components industry is a/an:

Accepted Answer

A)  constant-cost industry. 
B)  marginal-cost industry. 
C)  decreasing-cost industry. 
D)  increasing-cost industry. 
A)  constant-cost industry. 
B)  marginal-cost industry. 
C)  decreasing-cost industry. 
D)  increasing-cost industry.

Question 16

Narrbegin Exhibit 7.3 A firm's cost and marginal revenue curves   
-In Exhibit 7.3, when the output is eight units, the firm:

Accepted Answer

A)  has a profit. 
B)  should not operate. 
C)  should ask for a higher price. 
D)  should produce more. 
E)  is operating at the minimum ATC. 
A)  has a profit. 
B)  should not operate. 
C)  should ask for a higher price. 
D)  should produce more. 
E)  is operating at the minimum ATC.

Question 17

The long-run supply curve in a perfectly competitive increasing-cost industry is upward-sloping.

Accepted Answer

A) True 
 B)False

Question 18

In a constant-cost industry, input prices remain constant as:

Accepted Answer

A)  the supply of inputs fluctuates. 
B)  firms encounter diseconomies of scale. 
C)  workers become more experienced. 
D)  firms enter and exit the industry. 
A)  the supply of inputs fluctuates. 
B)  firms encounter diseconomies of scale. 
C)  workers become more experienced. 
D)  firms enter and exit the industry.

Question 19

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. Which of the following is a part of the industry-adjustment process?

Accepted Answer

A)  The price will temporarily rise at point C. 
B)  New firms will charge less. 
C)  Firms will temporarily make positive economic profits. 
D)  New firms will exit the industry. 
A)  The price will temporarily rise at point C. 
B)  New firms will charge less. 
C)  Firms will temporarily make positive economic profits. 
D)  New firms will exit the industry.

Question 20

Narrbegin Exhibit 7.8   
-According to Exhibit 7.8, the output level of the short-run equilibrium for this firm is:

Accepted Answer

A) 1200. 
B) 100. 
C) 110. 
D)  120. 
A) 1200. 
B) 100. 
C) 110. 
D)  120.

If a competitive firm charges more than the market price, then it makes a profit and gains more customers.

If ATC = $20, AVC = $12, MR = $15 and MC = $15, then the result for the perfectly competitive firm would be:

Narrbegin Exhibit 7.2 Cost per unit curves -In Exhibit 7.2, if the price of the firm's product is $3 per unit, the firm will:

A constant-cost industry is an industry in which expansion of total output results in higher prices to consumers.

Perfectly competitive markets are characterised by:

Narrbegin Exhibit 7.5 Short-run profit and loss -According to Exhibit 7.5, if the price of the good is $17, then the result for the perfectly competitive firm will be:

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. If the demand curve shifts from D₁ to D₂, the adjustment sequence between points will be:

Narrbegin Exhibit 7.6 -According to Exhibit 7.6, if MR = $20, the result for a perfectly competitive firm will be:

A perfectly competitive firm always set the price:

If the computer market experiences a surge in demand, then the long-run supply curve for the industry is likely to be:

If the market price is equal to the average variable cost, the firm should:

As the marginal revenue curve moves upward the perfectly competitive firm will:

A firm in a perfectly competitive market faces:

If marginal revenue exceeds marginal cost in the short run, the perfectly competitive firm earns an economic profit in the short run.

As the electronic components industry expands, the salaries paid to electrical engineers rise in response to higher demand. We can conclude that the electronic components industry is a/an:

Narrbegin Exhibit 7.3 A firm's cost and marginal revenue curves -In Exhibit 7.3, when the output is eight units, the firm:

The long-run supply curve in a perfectly competitive increasing-cost industry is upward-sloping.

In a constant-cost industry, input prices remain constant as:

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. Which of the following is a part of the industry-adjustment process?

Narrbegin Exhibit 7.8 -According to Exhibit 7.8, the output level of the short-run equilibrium for this firm is:

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

If a competitive firm charges more than the market price, then it makes a profit and gains more customers.

If ATC = $20, AVC = $12, MR = $15 and MC = $15, then the result for the perfectly competitive firm would be:

Narrbegin Exhibit 7.2 Cost per unit curves -In Exhibit 7.2, if the price of the firm's product is $3 per unit, the firm will:

A constant-cost industry is an industry in which expansion of total output results in higher prices to consumers.

Perfectly competitive markets are characterised by:

Narrbegin Exhibit 7.5 Short-run profit and loss -According to Exhibit 7.5, if the price of the good is $17, then the result for the perfectly competitive firm will be:

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. If the demand curve shifts from D1 to D2, the adjustment sequence between points will be:

Narrbegin Exhibit 7.6 -According to Exhibit 7.6, if MR = $20, the result for a perfectly competitive firm will be:

A perfectly competitive firm always set the price:

If the computer market experiences a surge in demand, then the long-run supply curve for the industry is likely to be:

If the market price is equal to the average variable cost, the firm should:

As the marginal revenue curve moves upward the perfectly competitive firm will:

A firm in a perfectly competitive market faces:

If marginal revenue exceeds marginal cost in the short run, the perfectly competitive firm earns an economic profit in the short run.

As the electronic components industry expands, the salaries paid to electrical engineers rise in response to higher demand. We can conclude that the electronic components industry is a/an:

Narrbegin Exhibit 7.3 A firm's cost and marginal revenue curves -In Exhibit 7.3, when the output is eight units, the firm:

The long-run supply curve in a perfectly competitive increasing-cost industry is upward-sloping.

In a constant-cost industry, input prices remain constant as:

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. Which of the following is a part of the industry-adjustment process?

Narrbegin Exhibit 7.8 -According to Exhibit 7.8, the output level of the short-run equilibrium for this firm is:

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. If the demand curve shifts from D₁ to D₂, the adjustment sequence between points will be:

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. Which of the following is a part of the industry-adjustment process?