Question 1

Figure 12-10  
-Refer to Figure 12-10.Total revenue at the profit-maximizing level of output is

Accepted Answer

A)  $1,200. 
B)  $2,500. 
C)  $4,800. 
D)  $6,000. 
A)  $1,200. 
B)  $2,500. 
C)  $4,800. 
D)  $6,000. D

Question 2

Using two graphs,illustrate how a positive technological change in the market for notebook computers could eliminate short-run economic profit for a firm in that market.On the first graph,use a supply and demand graph to illustrate the positive technological change.On the second graph,use demand,ATC,MC and MR curves to illustrate the elimination of economic profit resulting from the positive technological change.Explain what is taking place in each graph.

Accepted Answer

On the first graph,supply shifts to the right as a result of the positive technological change,lowering the equilibrium price and increasing the equilibrium quantity.On the second graph,the lower price shifts the demand curve down to where it intersects the ATC curve at its minimum point,eliminating economic profit.

Question 3

Figure 12-6   Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples.
-Refer to Figure 12-6.If Jason maximizes his profit he will produce the output rate indicated by point ________ and his average profit will equal ________.

Accepted Answer

A)  d; $3 minus ATC at point d 
B)  b; $3 minus ATC at point b 
C)  e; $3 minus ATC at point e 
D)  a; $3 
A)  d; $3 minus ATC at point d 
B)  b; $3 minus ATC at point b 
C)  e; $3 minus ATC at point e 
D)  a; $3 A

Question 4

Assume the market for organically-grown produce is perfectly competitive.All else equal,as farmers find it less profitable to produce and sell organic produce in this market

Accepted Answer

A)  the demand curve will shift to the left and the equilibrium price will decrease. 
B)  the supply curve will shift to the left and the equilibrium price will increase. 
C)  the supply curve will shift to the right, the demand curve will shift to the left, and the equilibrium price will decrease. 
D)  the supply curve will shift to the left, the demand curve will shift to the left, and the equilibrium price will increase. 
A)  the demand curve will shift to the left and the equilibrium price will decrease. 
B)  the supply curve will shift to the left and the equilibrium price will increase. 
C)  the supply curve will shift to the right, the demand curve will shift to the left, and the equilibrium price will decrease. 
D)  the supply curve will shift to the left, the demand curve will shift to the left, and the equilibrium price will increase.

Question 5

Figure 12-10  
-Refer to Figure 12-10.At the profit-maximizing output level,the firm earns

Accepted Answer

A)  zero economic profit. 
B)  a profit of $600. 
C)  a profit of $1,200. 
D)  a profit of $2,700. 
A)  zero economic profit. 
B)  a profit of $600. 
C)  a profit of $1,200. 
D)  a profit of $2,700.

Question 6

Figure 12-16  
-Refer to Figure 12-16.Which panel best represents the perfectly competitive organic produce market in which some firms are experiencing short-run losses,and consumers are displaying an increased preference for organic produce?

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D 
A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D

Question 7

Figure 12-11  
-Refer to Figure 12-11.Suppose the prevailing price is $20 and the firm is currently producing 1,350 units.In the long-run equilibrium

Accepted Answer

A)  there will be fewer firms in the industry and total industry output decreases. 
B)  there will be more firms in the industry and total industry output increases. 
C)  there will be fewer firms in the industry but total industry output increases. 
D)  there will be more firms in the industry and total industry output remains constant. 
A)  there will be fewer firms in the industry and total industry output decreases. 
B)  there will be more firms in the industry and total industry output increases. 
C)  there will be fewer firms in the industry but total industry output increases. 
D)  there will be more firms in the industry and total industry output remains constant.

Question 8

What is meant by allocative efficiency? How does a perfectly competitive firm achieve allocative efficiency?

Accepted Answer

Allocative efficiency refers to a state

Question 9

Table 12-2
   Table 12-2 lists the various pounds (lbs.) of apples that Margie Stattler can sell. Assume that Margie operates in a perfectly competitive market.
-Refer to Table 12-2.What is Margie's total revenue if she sells 250 pounds of apples?

Accepted Answer

A)  $250 
B)  $500 
C)  $750 
D)  There is not enough information in the table to determine Margie's total revenue. 
A)  $250 
B)  $500 
C)  $750 
D)  There is not enough information in the table to determine Margie's total revenue.

Question 10

What characteristic of a competitive market has made the "long run pretty short" in the market for iPhone applications?

Accepted Answer

A)  few firms in the market 
B)  identical products 
C)  ease of entry 
D)  blocked entry 
A)  few firms in the market 
B)  identical products 
C)  ease of entry 
D)  blocked entry

Question 11

Figure 12-6   Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples.
-Refer to Figure 12-6.Which of the following statements is true?

Accepted Answer

A)  Jason should produce where MC equals $3 (point d) where he will minimize his losses. 
B)  Jason should produce where the distance between MC and his demand curve is greatest (point b). 
C)  Jason cannot earn a profit from selling any number of apples. 
D)  Jason should produce where MC equals $3 (point d) where he will maximize his profit. 
A)  Jason should produce where MC equals $3 (point d) where he will minimize his losses. 
B)  Jason should produce where the distance between MC and his demand curve is greatest (point b). 
C)  Jason cannot earn a profit from selling any number of apples. 
D)  Jason should produce where MC equals $3 (point d) where he will maximize his profit.

Question 12

Ted's Pancake Kitchen suffers a short-run loss.When should Ted decide to shut down rather than continue to produce?

Accepted Answer

A)  if his Kitchen's revenue is less than its variable costs 
B)  if his Kitchen's revenue is less than its fixed costs 
C)  if his Kitchen's revenue is less than its explicit costs 
D)  if his Kitchen's revenue is less than its total costs 
A)  if his Kitchen's revenue is less than its variable costs 
B)  if his Kitchen's revenue is less than its fixed costs 
C)  if his Kitchen's revenue is less than its explicit costs 
D)  if his Kitchen's revenue is less than its total costs

Question 13

Fill in the columns in the following table and use the values in the table to determine the profit-maximizing level of output.

Accepted Answer

@#IMG-DLM& The profit-maximizi

Question 14

Which of the following statements is correct?

Accepted Answer

A)  Economic profit takes into account all costs involved in producing a product. 
B)  Accounting profit is not relevant in preparing the firm's financial statement. 
C)  Economic profit always exceeds accounting profit. 
D)  Accounting profit is the same as economic profit. 
A)  Economic profit takes into account all costs involved in producing a product. 
B)  Accounting profit is not relevant in preparing the firm's financial statement. 
C)  Economic profit always exceeds accounting profit. 
D)  Accounting profit is the same as economic profit.

Question 15

If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold,what should the farm do to maximize its profit?

Accepted Answer

A)  determine what the total revenue and total cost of production are 
B)  increase output 
C)  decrease output 
D)  lower its price to sell more 
A)  determine what the total revenue and total cost of production are 
B)  increase output 
C)  decrease output 
D)  lower its price to sell more

Question 16

Figure 12-20  
-Refer to Figure 12-20.If the market price is P1,what is the allocatively efficient output level?

Accepted Answer

A)  Q0 
B)  Q1 
C)  Q2 
D)  There is no allocatively efficient output level because the firm is making a loss. 
A)  Q0 
B)  Q1 
C)  Q2 
D)  There is no allocatively efficient output level because the firm is making a loss.

Question 17

Assume that a perfectly competitive market is in long-run equilibrium.Suppose as a result of a health hazard associated with the industry's product,demand decreases drastically.What is the immediate result of this event?

Accepted Answer

A)  The market price falls and the typical firm suffers an economic loss. 
B)  The market supply increases to offset the fall in demand. 
C)  The typical firm's average total cost curve shifts downward. 
D)  The typical firm's marginal cost curve shifts to the left. 
A)  The market price falls and the typical firm suffers an economic loss. 
B)  The market supply increases to offset the fall in demand. 
C)  The typical firm's average total cost curve shifts downward. 
D)  The typical firm's marginal cost curve shifts to the left.

Question 18

A perfectly competitive firm will maximize its profit at the rate of output where the vertical distance between its total revenue and total cost is the largest.This is the same rate of output where

Accepted Answer

A)  average total cost equals marginal revenue. 
B)  marginal revenue equals marginal profit. 
C)  marginal revenue equals marginal cost. 
D)  marginal revenue equals average revenue. 
A)  average total cost equals marginal revenue. 
B)  marginal revenue equals marginal profit. 
C)  marginal revenue equals marginal cost. 
D)  marginal revenue equals average revenue.

Question 19

In the short run,a firm that incurs losses might choose to produce rather than shut down if the amount of its revenue is less than its fixed cost.

Accepted Answer

A) True 
 B)False

Question 20

If a typical firm in a perfectly competitive industry is incurring losses,then

Accepted Answer

A)  all firms will continue to lose money. 
B)  some firms will exit in the long run, causing market supply to decrease and market price to rise increasing profits for the remaining firms. 
C)  some firms will exit in the long run, causing market supply to decrease and market price to fall increasing losses for the remaining firms. 
D)  some firms will enter in the long run, causing market supply to increase and market price to rise increasing profit for all firms. 
A)  all firms will continue to lose money. 
B)  some firms will exit in the long run, causing market supply to decrease and market price to rise increasing profits for the remaining firms. 
C)  some firms will exit in the long run, causing market supply to decrease and market price to fall increasing losses for the remaining firms. 
D)  some firms will enter in the long run, causing market supply to increase and market price to rise increasing profit for all firms.

Figure 12-10 -Refer to Figure 12-10.Total revenue at the profit-maximizing level of output is

Figure 12-6 Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 12-6.If Jason maximizes his profit he will produce the output rate indicated by point and his average profit will equal .

Assume the market for organically-grown produce is perfectly competitive.All else equal,as farmers find it less profitable to produce and sell organic produce in this market

Figure 12-10 -Refer to Figure 12-10.At the profit-maximizing output level,the firm earns

Figure 12-16 -Refer to Figure 12-16.Which panel best represents the perfectly competitive organic produce market in which some firms are experiencing short-run losses,and consumers are displaying an increased preference for organic produce?

Figure 12-11 -Refer to Figure 12-11.Suppose the prevailing price is $20 and the firm is currently producing 1,350 units.In the long-run equilibrium

What is meant by allocative efficiency? How does a perfectly competitive firm achieve allocative efficiency?

Table 12-2 Table 12-2 lists the various pounds (lbs.) of apples that Margie Stattler can sell. Assume that Margie operates in a perfectly competitive market. -Refer to Table 12-2.What is Margie's total revenue if she sells 250 pounds of apples?

What characteristic of a competitive market has made the "long run pretty short" in the market for iPhone applications?

Figure 12-6 Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 12-6.Which of the following statements is true?

Ted's Pancake Kitchen suffers a short-run loss.When should Ted decide to shut down rather than continue to produce?

Fill in the columns in the following table and use the values in the table to determine the profit-maximizing level of output.

Which of the following statements is correct?

If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold,what should the farm do to maximize its profit?

Figure 12-20 -Refer to Figure 12-20.If the market price is P₁,what is the allocatively efficient output level?

Assume that a perfectly competitive market is in long-run equilibrium.Suppose as a result of a health hazard associated with the industry's product,demand decreases drastically.What is the immediate result of this event?

A perfectly competitive firm will maximize its profit at the rate of output where the vertical distance between its total revenue and total cost is the largest.This is the same rate of output where

In the short run,a firm that incurs losses might choose to produce rather than shut down if the amount of its revenue is less than its fixed cost.

If a typical firm in a perfectly competitive industry is incurring losses,then

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice,taxes,and the Distribution of Income

Filters

Exam 12: Firms in Perfectly Competitive Markets

Figure 12-10 -Refer to Figure 12-10.Total revenue at the profit-maximizing level of output is

Figure 12-6 Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 12-6.If Jason maximizes his profit he will produce the output rate indicated by point ________ and his average profit will equal ________.

Assume the market for organically-grown produce is perfectly competitive.All else equal,as farmers find it less profitable to produce and sell organic produce in this market

Figure 12-10 -Refer to Figure 12-10.At the profit-maximizing output level,the firm earns

Figure 12-16 -Refer to Figure 12-16.Which panel best represents the perfectly competitive organic produce market in which some firms are experiencing short-run losses,and consumers are displaying an increased preference for organic produce?

Figure 12-11 -Refer to Figure 12-11.Suppose the prevailing price is $20 and the firm is currently producing 1,350 units.In the long-run equilibrium

What is meant by allocative efficiency? How does a perfectly competitive firm achieve allocative efficiency?

Table 12-2 Table 12-2 lists the various pounds (lbs.) of apples that Margie Stattler can sell. Assume that Margie operates in a perfectly competitive market. -Refer to Table 12-2.What is Margie's total revenue if she sells 250 pounds of apples?

What characteristic of a competitive market has made the "long run pretty short" in the market for iPhone applications?

Figure 12-6 Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 12-6.Which of the following statements is true?

Ted's Pancake Kitchen suffers a short-run loss.When should Ted decide to shut down rather than continue to produce?

Fill in the columns in the following table and use the values in the table to determine the profit-maximizing level of output.

Which of the following statements is correct?

If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold,what should the farm do to maximize its profit?

Figure 12-20 -Refer to Figure 12-20.If the market price is P1,what is the allocatively efficient output level?

Assume that a perfectly competitive market is in long-run equilibrium.Suppose as a result of a health hazard associated with the industry's product,demand decreases drastically.What is the immediate result of this event?

A perfectly competitive firm will maximize its profit at the rate of output where the vertical distance between its total revenue and total cost is the largest.This is the same rate of output where

In the short run,a firm that incurs losses might choose to produce rather than shut down if the amount of its revenue is less than its fixed cost.

If a typical firm in a perfectly competitive industry is incurring losses,then

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice,taxes,and the Distribution of Income

Filters

Figure 12-6 Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 12-6.If Jason maximizes his profit he will produce the output rate indicated by point and his average profit will equal .

Figure 12-20 -Refer to Figure 12-20.If the market price is P₁,what is the allocatively efficient output level?