Question 1

A perfectly competitive firm definitely makes an economic profit in the short run if price is

Accepted Answer

A) equal to marginal cost. 
B) equal to average total cost. 
C) greater than average total cost. 
D) greater than marginal cost. 
E) greater than average variable cost. 
A) equal to marginal cost. 
B) equal to average total cost. 
C) greater than average total cost. 
D) greater than marginal cost. 
E) greater than average variable cost.

Question 2

A market is classified as an oligopoly when

Accepted Answer

A) a few firms compete. 
B) many firms produce a slightly differentiated product. 
C) no matter how many firms are in the market,a barrier blocks entry by other new firms. 
D) many firms produce the same product. 
E) only one firm sells a product with no close substitutes. 
A) a few firms compete. 
B) many firms produce a slightly differentiated product. 
C) no matter how many firms are in the market,a barrier blocks entry by other new firms. 
D) many firms produce the same product. 
E) only one firm sells a product with no close substitutes.

Question 3

What is the difference between perfect competition and monopolistic competition?

Accepted Answer

A) Perfect competition has a large number of small firms while monopolistic competition does not. 
B) Perfect competition has barriers to entry while monopolistic competition does not. 
C) Perfect competition has no barriers to entry,while monopolistic competition does. 
D) In perfect competition,firms produce identical goods,while in monopolistic competition,firms produce slightly different goods. 
E) In monopolistic competition,firms produce identical goods,while in perfect competition,firms produce slightly different goods. 
A) Perfect competition has a large number of small firms while monopolistic competition does not. 
B) Perfect competition has barriers to entry while monopolistic competition does not. 
C) Perfect competition has no barriers to entry,while monopolistic competition does. 
D) In perfect competition,firms produce identical goods,while in monopolistic competition,firms produce slightly different goods. 
E) In monopolistic competition,firms produce identical goods,while in perfect competition,firms produce slightly different goods.

Question 4

The firm in the figure above has a total revenue equal to ________.

Accepted Answer

A) $5.10 × 10 
B) $8.00 × 10 
C) ($5.10 - $8.00)× 10 
D) ($8.00 - $5.10)× 10 
E) None of the above answers is correct because more information is needed. 
A) $5.10 × 10 
B) $8.00 × 10 
C) ($5.10 - $8.00)× 10 
D) ($8.00 - $5.10)× 10 
E) None of the above answers is correct because more information is needed.

Question 5

Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?

Accepted Answer

A) if the total revenue exceeds the total fixed cost 
B) if the total revenue exceeds the total variable cost 
C) if the total revenue is positive 
D) if the total revenue is increasing 
E) if the marginal revenue exceeds the price. 
A) if the total revenue exceeds the total fixed cost 
B) if the total revenue exceeds the total variable cost 
C) if the total revenue is positive 
D) if the total revenue is increasing 
E) if the marginal revenue exceeds the price.

Question 6

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies,the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit,Jennifer should

Accepted Answer

A) not produce this additional batch. 
B) produce this batch of cookies because they will help lower her average fixed cost. 
C) charge $120 for this batch. 
D) shut down. 
E) produce this batch of cookies because their MR exceeds their MC. 
A) not produce this additional batch. 
B) produce this batch of cookies because they will help lower her average fixed cost. 
C) charge $120 for this batch. 
D) shut down. 
E) produce this batch of cookies because their MR exceeds their MC.

Question 7

If a perfectly competitive firm is maximizing its profit and is making an economic profit,which of the following is correct?
I.Price equals marginal revenue.
Ii.Marginal revenue equals marginal cost.
Iii.Price is greater than average total cost.

Accepted Answer

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

Question 8

As a perfectly competitive firm's output increases,its total revenue ________ and its total cost ________.

Accepted Answer

A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) does not change;increases 
A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) does not change;increases

Question 9

In the long run,perfectly competitive firms will exit the market if the price is

Accepted Answer

A) higher than average variable cost. 
B) equal to average total cost. 
C) less than average total cost. 
D) equal to average fixed cost. 
E) equal to marginal revenue. 
A) higher than average variable cost. 
B) equal to average total cost. 
C) less than average total cost. 
D) equal to average fixed cost. 
E) equal to marginal revenue.

Question 10

If concerns about mad-cow disease impose economic losses on the perfectly competitive cattle ranchers,exit by the ranchers combined with no further changes in the demand for beef will force the price of beef to

Accepted Answer

A) decrease. 
B) not change. 
C) increase. 
D) fluctuate,with the trend being lower prices. 
E) probably change,but more information about the market supply of beef is needed to answer the question. 
A) decrease. 
B) not change. 
C) increase. 
D) fluctuate,with the trend being lower prices. 
E) probably change,but more information about the market supply of beef is needed to answer the question.

Question 11

-Use the figure above to answer this question.Consider a perfectly competitive firm in a short run equilibrium.Figure ________ shows a firm in bad times because the firm produces ________ units and makes a(n)________.

Accepted Answer

A) A;100;economic loss 
B) A;110;economic loss 
C) B;90;economic profit 
D) C;100;economic loss 
E) C;100;normal profit 
A) A;100;economic loss 
B) A;110;economic loss 
C) B;90;economic profit 
D) C;100;economic loss 
E) C;100;normal profit

Question 12

For a perfectly competitive rancher in Wyoming,if the price does not change,an economic profit could turn into an economic loss if the

Accepted Answer

A) average total cost curve shifts downward. 
B) average total cost curve does not change. 
C) average total cost curve shifts upward. 
D) marginal cost curve shifts downward. 
E) average fixed cost decreases. 
A) average total cost curve shifts downward. 
B) average total cost curve does not change. 
C) average total cost curve shifts upward. 
D) marginal cost curve shifts downward. 
E) average fixed cost decreases.

Question 13

The market demand curve in a perfectly competitive market is ________ and the demand curve for a perfectly competitive firm's output is ________.

Accepted Answer

A) downward sloping;downward sloping 
B) downward sloping;horizontal 
C) horizontal;downward sloping 
D) horizontal;horizontal 
E) downward sloping;upward sloping 
A) downward sloping;downward sloping 
B) downward sloping;horizontal 
C) horizontal;downward sloping 
D) horizontal;horizontal 
E) downward sloping;upward sloping

Question 14

If perfectly competitive firms are maximizing their profit and are making an economic profit,the market ________ in a short-run equilibrium and ________ in a long-run equilibrium.

Accepted Answer

A) is;is 
B) is;is not 
C) is not;is 
D) is not;is not 
E) is;might be 
A) is;is 
B) is;is not 
C) is not;is 
D) is not;is not 
E) is;might be

Question 15

If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel,how many bushels would Farmer Brown sell?

Accepted Answer

A) some,but fewer than he would at a price of $4 
B) more than he would at a price of $4 
C) just as many as he would at a price of $4 
D) none 
E) More information is needed about the prices charged by the other wheat farmers. 
A) some,but fewer than he would at a price of $4 
B) more than he would at a price of $4 
C) just as many as he would at a price of $4 
D) none 
E) More information is needed about the prices charged by the other wheat farmers.

Question 16

Which of the following will increase a perfectly competitive seller's short-run supply and shift the firm's short-run supply curve rightward?

Accepted Answer

A) an increase in the market price 
B) a decrease in average fixed costs 
C) a decrease in marginal cost 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) an increase in the market price 
B) a decrease in average fixed costs 
C) a decrease in marginal cost 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 17

Shama is producing candles in a perfectly competitive market.When she produces 500 candles,her total cost is $250.If she produces one additional candle,her total cost increases to $260.In order to maximize her profit,she should produce the additional candle

Accepted Answer

A) if the market price for a candle is $12. 
B) only if the market price exceeds $260 for a candle. 
C) only if the market price exceeds $250 for a candle. 
D) if the market price for a candle exceeds $0.50. 
E) if her price exceeds her average total cost. 
A) if the market price for a candle is $12. 
B) only if the market price exceeds $260 for a candle. 
C) only if the market price exceeds $250 for a candle. 
D) if the market price for a candle exceeds $0.50. 
E) if her price exceeds her average total cost.

Question 18

A firm's marginal revenue is

Accepted Answer

A) the change in total revenue that results from a one-unit increase in the quantity sold. 
B) total revenue minus total cost. 
C) the change in total revenue minus the change in total cost. 
D) the change in total revenue that results from an increase in the demand for the good or service. 
E) less than the market price for a perfectly competitive firm. 
A) the change in total revenue that results from a one-unit increase in the quantity sold. 
B) total revenue minus total cost. 
C) the change in total revenue minus the change in total cost. 
D) the change in total revenue that results from an increase in the demand for the good or service. 
E) less than the market price for a perfectly competitive firm.

Question 19

-Acme is a perfectly competitive firm.It has the cost schedules given in the above table and has a fixed cost of $12.00.The price of Acme's product is $14.20.What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

Accepted Answer

The profit maximizing level of output is

Question 20

In the short run,a perfectly competitive firm can experience which of the following?
I.an economic profit
Ii.an economic loss but it continues to stay open
Iii.an economic loss equal to its total fixed cost when it shuts down

Accepted Answer

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

A perfectly competitive firm definitely makes an economic profit in the short run if price is

A market is classified as an oligopoly when

What is the difference between perfect competition and monopolistic competition?

The firm in the figure above has a total revenue equal to ________.

Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies,the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit,Jennifer should

If a perfectly competitive firm is maximizing its profit and is making an economic profit,which of the following is correct? I.Price equals marginal revenue. Ii.Marginal revenue equals marginal cost. Iii.Price is greater than average total cost.

As a perfectly competitive firm's output increases,its total revenue and its total cost .

In the long run,perfectly competitive firms will exit the market if the price is

If concerns about mad-cow disease impose economic losses on the perfectly competitive cattle ranchers,exit by the ranchers combined with no further changes in the demand for beef will force the price of beef to

-Use the figure above to answer this question.Consider a perfectly competitive firm in a short run equilibrium.Figure shows a firm in bad times because the firm produces units and makes a(n).

For a perfectly competitive rancher in Wyoming,if the price does not change,an economic profit could turn into an economic loss if the

The market demand curve in a perfectly competitive market is and the demand curve for a perfectly competitive firm's output is .

If perfectly competitive firms are maximizing their profit and are making an economic profit,the market in a short-run equilibrium and in a long-run equilibrium.

If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel,how many bushels would Farmer Brown sell?

Which of the following will increase a perfectly competitive seller's short-run supply and shift the firm's short-run supply curve rightward?

Shama is producing candles in a perfectly competitive market.When she produces 500 candles,her total cost is $250.If she produces one additional candle,her total cost increases to $260.In order to maximize her profit,she should produce the additional candle

A firm's marginal revenue is

-Acme is a perfectly competitive firm.It has the cost schedules given in the above table and has a fixed cost of $12.00.The price of Acme's product is $14.20.What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

In the short run,a perfectly competitive firm can experience which of the following? I.an economic profit Ii.an economic loss but it continues to stay open Iii.an economic loss equal to its total fixed cost when it shuts down

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

A perfectly competitive firm definitely makes an economic profit in the short run if price is

A market is classified as an oligopoly when

What is the difference between perfect competition and monopolistic competition?

The firm in the figure above has a total revenue equal to ________.

Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market.If Jennifer decides to produce her 100th batch of cookies,the marginal cost is $120.She can sell this batch of cookies at a market price of $110.To maximize her profit,Jennifer should

If a perfectly competitive firm is maximizing its profit and is making an economic profit,which of the following is correct? I.Price equals marginal revenue. Ii.Marginal revenue equals marginal cost. Iii.Price is greater than average total cost.

As a perfectly competitive firm's output increases,its total revenue ________ and its total cost ________.

In the long run,perfectly competitive firms will exit the market if the price is

If concerns about mad-cow disease impose economic losses on the perfectly competitive cattle ranchers,exit by the ranchers combined with no further changes in the demand for beef will force the price of beef to

-Use the figure above to answer this question.Consider a perfectly competitive firm in a short run equilibrium.Figure ________ shows a firm in bad times because the firm produces ________ units and makes a(n)________.

For a perfectly competitive rancher in Wyoming,if the price does not change,an economic profit could turn into an economic loss if the

The market demand curve in a perfectly competitive market is ________ and the demand curve for a perfectly competitive firm's output is ________.

If perfectly competitive firms are maximizing their profit and are making an economic profit,the market ________ in a short-run equilibrium and ________ in a long-run equilibrium.

If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel,how many bushels would Farmer Brown sell?

Which of the following will increase a perfectly competitive seller's short-run supply and shift the firm's short-run supply curve rightward?

Shama is producing candles in a perfectly competitive market.When she produces 500 candles,her total cost is $250.If she produces one additional candle,her total cost increases to $260.In order to maximize her profit,she should produce the additional candle

A firm's marginal revenue is

-Acme is a perfectly competitive firm.It has the cost schedules given in the above table and has a fixed cost of $12.00.The price of Acme's product is $14.20.What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

In the short run,a perfectly competitive firm can experience which of the following? I.an economic profit Ii.an economic loss but it continues to stay open Iii.an economic loss equal to its total fixed cost when it shuts down

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

As a perfectly competitive firm's output increases,its total revenue and its total cost .

-Use the figure above to answer this question.Consider a perfectly competitive firm in a short run equilibrium.Figure shows a firm in bad times because the firm produces units and makes a(n).

The market demand curve in a perfectly competitive market is and the demand curve for a perfectly competitive firm's output is .

If perfectly competitive firms are maximizing their profit and are making an economic profit,the market in a short-run equilibrium and in a long-run equilibrium.