Question 1

When a perfectly competitive firm decides to shut down, it is most likely that

Accepted Answer

A)  marginal cost is above average variable cost. 
B)  marginal cost is above average total cost. 
C)  price is below the firm's average variable cost. 
D)  fixed costs exceed variable costs. 
A)  marginal cost is above average variable cost. 
B)  marginal cost is above average total cost. 
C)  price is below the firm's average variable cost. 
D)  fixed costs exceed variable costs.

Question 2

A firm in a competitive market has the following cost structure:   If the market price is $4, this firm will

Accepted Answer

A)  produce 2 units in the short run and exit in the long run. 
B)  produce 3 units in the short run and exit in the long run. 
C)  produce 4 units in the short run and exit in the long run. 
D)  shut down in the short run and exit in the long run. 
A)  produce 2 units in the short run and exit in the long run. 
B)  produce 3 units in the short run and exit in the long run. 
C)  produce 4 units in the short run and exit in the long run. 
D)  shut down in the short run and exit in the long run.

Question 3

Robin owns a horse stables and riding academy and gives riding lessons for children at "pony camp." Her business operates in a competitive industry. Robin gives riding lessons to 20 children per month. Her monthly total revenue is $4,000. The marginal cost of pony camp is $200 per child. In order to maximize profits, Robin should

Accepted Answer

A)  give riding lessons to more than 20 children per month. 
B)  give riding lessons to fewer than 20 children per month. 
C)  continue to give riding lessons to 20 children per month. 
D)  We do not have enough information to answer the question. 
A)  give riding lessons to more than 20 children per month. 
B)  give riding lessons to fewer than 20 children per month. 
C)  continue to give riding lessons to 20 children per month. 
D)  We do not have enough information to answer the question.

When a perfectly competitive firm decides to shut down, it is most likely that

A firm in a competitive market has the following cost structure: If the market price is $4, this firm will

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 14: Firms in Competitive Markets

When a perfectly competitive firm decides to shut down, it is most likely that

A firm in a competitive market has the following cost structure: If the market price is $4, this firm will

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters