Question 1

In which market structure are there a small number of firms competing?

Accepted Answer

A) only monopoly 
B) only oligopoly 
C) perfect competition 
D) monopolistic competition 
E) either monopoly or oligopoly 
A) only monopoly 
B) only oligopoly 
C) perfect competition 
D) monopolistic competition 
E) either monopoly or oligopoly

Question 2

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry,then

Accepted Answer

A) consumer surplus decreases. 
B) the existing firms' economic profit decreases. 
C) there must be external benefits to consumption of the good. 
D) the new firms must incur an economic loss. 
E) Both answers A and B are correct. 
A) consumer surplus decreases. 
B) the existing firms' economic profit decreases. 
C) there must be external benefits to consumption of the good. 
D) the new firms must incur an economic loss. 
E) Both answers A and B are correct.

Question 3

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.This firm will produce as long as the market price of a wafer is above

Accepted Answer

A) $1,300. 
B) $1,400. 
C) $7,900. 
D) $2,800. 
E) $9,800. 
A) $1,300. 
B) $1,400. 
C) $7,900. 
D) $2,800. 
E) $9,800.

Question 4

A market in which many firms sell identical products is

Accepted Answer

A) a monopoly. 
B) an oligopoly. 
C) only perfectly competition. 
D) only monopolistic competition. 
E) both perfect competition and monopolistic competition. 
A) a monopoly. 
B) an oligopoly. 
C) only perfectly competition. 
D) only monopolistic competition. 
E) both perfect competition and monopolistic competition.

Question 5

-Use the figure above to answer this question.Consider a perfectly competitive market experiencing good times.Figure ________ shows a firm maximizing profit in the short run because it produces ________ units and makes an economic profit of ________.

Accepted Answer

A) A;100;$2 per unit 
B) A;90;$3 per unit 
C) B;100;$0 per unit 
D) C;100;$3 per unit 
E) C;110;$2 per unit 
A) A;100;$2 per unit 
B) A;90;$3 per unit 
C) B;100;$0 per unit 
D) C;100;$3 per unit 
E) C;110;$2 per unit

Question 6

________ a large number of firms competing by making similar but slightly different products.

Accepted Answer

A) Monopoly requires 
B) Perfect competition requires 
C) Monopolistic competition requires 
D) Oligopoly requires 
E) Both perfect competition and monopolistic competition require 
A) Monopoly requires 
B) Perfect competition requires 
C) Monopolistic competition requires 
D) Oligopoly requires 
E) Both perfect competition and monopolistic competition require

Question 7

Will a perfectly competitive firm ever produce in the short run even though it is suffering an economic loss?

Accepted Answer

Yes,a perfectly competitive firm will co

Question 8

The four market types are

Accepted Answer

A) perfect competition,imperfect competition,monopoly,and oligopoly. 
B) oligopoly,monopsony,monopoly,and imperfect competition. 
C) perfect competition,monopoly,monopolistic competition,and oligopoly. 
D) oligopoly,oligopolistic competition,monopoly,and perfect competition. 
E) perfect competition,imperfect competition,monopoly,and duopoly. 
A) perfect competition,imperfect competition,monopoly,and oligopoly. 
B) oligopoly,monopsony,monopoly,and imperfect competition. 
C) perfect competition,monopoly,monopolistic competition,and oligopoly. 
D) oligopoly,oligopolistic competition,monopoly,and perfect competition. 
E) perfect competition,imperfect competition,monopoly,and duopoly.

Question 9

In the short run,a perfectly competitive firm ________ make an economic profit and ________ incur an economic loss.

Accepted Answer

A) might;will never 
B) will never;might 
C) might;might 
D) will never;will never 
E) will definitely;will never 
A) might;will never 
B) will never;might 
C) might;might 
D) will never;will never 
E) will definitely;will never

Question 10

A perfectly competitive firm maximizes its profit by producing at the point where

Accepted Answer

A) total revenue equals total cost. 
B) marginal revenue is equal to marginal cost. 
C) total revenue is equal to marginal revenue. 
D) total cost is at its minimum. 
E) total revenue is at its maximum. 
A) total revenue equals total cost. 
B) marginal revenue is equal to marginal cost. 
C) total revenue is equal to marginal revenue. 
D) total cost is at its minimum. 
E) total revenue is at its maximum.

Question 11

Consider a short-run equilibrium in a perfectly competitive market.Suppose that the firms' average total cost and marginal cost schedules differ.In the short run,

Accepted Answer

A) all firms in the market must be able to make an economic profit. 
B) all firms produce equal amounts of output. 
C) some firms might incur an economic loss,but still produce output. 
D) some firms might make an economic profit and,as a result,shut down. 
E) all firms in the market must be able to make either positive or zero economic profit. 
A) all firms in the market must be able to make an economic profit. 
B) all firms produce equal amounts of output. 
C) some firms might incur an economic loss,but still produce output. 
D) some firms might make an economic profit and,as a result,shut down. 
E) all firms in the market must be able to make either positive or zero economic profit.

Question 12

We know that a perfectly competitive firm is a price taker because

Accepted Answer

A) its MC curve slopes upward. 
B) its ATC curve is U-shaped. 
C) its demand curve is horizontal. 
D) MC and ATC are equal at the profit-maximizing amount of output. 
E) it has no supply curve. 
A) its MC curve slopes upward. 
B) its ATC curve is U-shaped. 
C) its demand curve is horizontal. 
D) MC and ATC are equal at the profit-maximizing amount of output. 
E) it has no supply curve.

Question 13

Alice,Bud,and Celia can produce rubber bands in a perfectly competitive market.If they enter the market,the minimum average total cost for a bundle of rubber bands,for the three of them is $2,$3,and $4,respectively.If the market price is $2.10 per bundle,then

Accepted Answer

A) all three of them will enter the market. 
B) only Alice will enter the market. 
C) Alice and Bud will enter the market. 
D) Bud and Celia will enter the market. 
E) Alice and Celia will enter the market. 
A) all three of them will enter the market. 
B) only Alice will enter the market. 
C) Alice and Bud will enter the market. 
D) Bud and Celia will enter the market. 
E) Alice and Celia will enter the market.

Question 14

"For a perfectly competitive market,an economic profit attracts new firms.But when these firms enter the market,the price falls and the economic profit is eliminated." Are the previous statements correct or incorrect? What is the long-run profit or loss outcome for firms in a perfectly competitive market?

Accepted Answer

The statements are correct.As the statem

Question 15

In the long run,existing firms exit a perfectly competitive market

Accepted Answer

A) only if economic profits are zero. 
B) if they make a positive economic profit. 
C) if normal profits are greater than zero. 
D) only if they incur an economic loss. 
E) if they either make a normal profit or if they incur an economic loss. 
A) only if economic profits are zero. 
B) if they make a positive economic profit. 
C) if normal profits are greater than zero. 
D) only if they incur an economic loss. 
E) if they either make a normal profit or if they incur an economic loss.

Question 16

Suppose that each of 8,000 firms in a perfectly competitive industry produces 1,000 units of a good and maximizes profits when the price of the good is $10.If there is a permanent increase in demand,in the short run each firm produces ________ 1,000 units and in the long run the number of firms is ________ 8,000.

Accepted Answer

A) more than;more than 
B) less than;more than 
C) less than;less than 
D) more than;less than 
E) exactly;more than 
A) more than;more than 
B) less than;more than 
C) less than;less than 
D) more than;less than 
E) exactly;more than

Question 17

The table below gives Amy's total cost schedule for producing holiday wreaths.Amy is a perfect competitor and can sell each wreath for $9.
a.Complete the table by calculating Amy's total revenue and her profit or loss schedule.   
b.When Amy is producing 4 wreaths,what is her total cost? What is her total revenue? What is her economic profit or economic loss?
c.What number of wreaths maximizes Amy's profit?

Accepted Answer

@#IMG-DLM& a.The completed table is above.
b.When

Question 18

Perfect competition ________ an efficient outcome because ________.

Accepted Answer

A) achieves;total surplus is maximized 
B) achieves;marginal benefit equals marginal cost 
C) does not achieve;firms do not get to choose their price 
D) does not achieve;firms produce goods with perfect substitutes 
E) Both A and B are correct. 
A) achieves;total surplus is maximized 
B) achieves;marginal benefit equals marginal cost 
C) does not achieve;firms do not get to choose their price 
D) does not achieve;firms produce goods with perfect substitutes 
E) Both A and B are correct.

Question 19

Pumpkin growing is a perfectly competitive industry.Suppose that pumpkin growers are all incurring an economic loss.What happens as time passes? What is the long-run equilibrium outcome?

Accepted Answer

Because the firms are incurring an econo

Question 20

If demand for a seller's product is perfectly elastic,which of the following is true?
I.The firm will sell no output if it sets the price its product above the market price.
Ii.There are many perfect substitutes for the seller's product.
Iii.The firm will sell no output if it sets the price its product below the market price.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) ii and iii 
A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) ii and iii

In which market structure are there a small number of firms competing?

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry,then

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.This firm will produce as long as the market price of a wafer is above

A market in which many firms sell identical products is

-Use the figure above to answer this question.Consider a perfectly competitive market experiencing good times.Figure shows a firm maximizing profit in the short run because it produces units and makes an economic profit of .

________ a large number of firms competing by making similar but slightly different products.

Will a perfectly competitive firm ever produce in the short run even though it is suffering an economic loss?

The four market types are

In the short run,a perfectly competitive firm make an economic profit and incur an economic loss.

A perfectly competitive firm maximizes its profit by producing at the point where

Consider a short-run equilibrium in a perfectly competitive market.Suppose that the firms' average total cost and marginal cost schedules differ.In the short run,

We know that a perfectly competitive firm is a price taker because

Alice,Bud,and Celia can produce rubber bands in a perfectly competitive market.If they enter the market,the minimum average total cost for a bundle of rubber bands,for the three of them is $2,$3,and $4,respectively.If the market price is $2.10 per bundle,then

In the long run,existing firms exit a perfectly competitive market

Suppose that each of 8,000 firms in a perfectly competitive industry produces 1,000 units of a good and maximizes profits when the price of the good is $10.If there is a permanent increase in demand,in the short run each firm produces 1,000 units and in the long run the number of firms is 8,000.

Perfect competition an efficient outcome because .

Pumpkin growing is a perfectly competitive industry.Suppose that pumpkin growers are all incurring an economic loss.What happens as time passes? What is the long-run equilibrium outcome?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 11: Perfect Competition

In which market structure are there a small number of firms competing?

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry,then

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.This firm will produce as long as the market price of a wafer is above

A market in which many firms sell identical products is

-Use the figure above to answer this question.Consider a perfectly competitive market experiencing good times.Figure ________ shows a firm maximizing profit in the short run because it produces ________ units and makes an economic profit of ________.

________ a large number of firms competing by making similar but slightly different products.

Will a perfectly competitive firm ever produce in the short run even though it is suffering an economic loss?

The four market types are

In the short run,a perfectly competitive firm ________ make an economic profit and ________ incur an economic loss.

A perfectly competitive firm maximizes its profit by producing at the point where

Consider a short-run equilibrium in a perfectly competitive market.Suppose that the firms' average total cost and marginal cost schedules differ.In the short run,

We know that a perfectly competitive firm is a price taker because

Alice,Bud,and Celia can produce rubber bands in a perfectly competitive market.If they enter the market,the minimum average total cost for a bundle of rubber bands,for the three of them is $2,$3,and $4,respectively.If the market price is $2.10 per bundle,then

In the long run,existing firms exit a perfectly competitive market

Perfect competition ________ an efficient outcome because ________.

Pumpkin growing is a perfectly competitive industry.Suppose that pumpkin growers are all incurring an economic loss.What happens as time passes? What is the long-run equilibrium outcome?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

-Use the figure above to answer this question.Consider a perfectly competitive market experiencing good times.Figure shows a firm maximizing profit in the short run because it produces units and makes an economic profit of .

In the short run,a perfectly competitive firm make an economic profit and incur an economic loss.

Perfect competition an efficient outcome because .