Question 1

The demand curve for an individual seller's product in perfect competition is

Accepted Answer

A) the same as market demand. 
B) downward sloping. 
C) vertical. 
D) horizontal. 
A) the same as market demand. 
B) downward sloping. 
C) vertical. 
D) horizontal.

Question 2

Table 9-1
   Table 9-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases.Assume that output can only be increased in batches of 100 units.
-Refer to Table 9-1.If the market price of each camera case is $8,what is the firm's total revenue?

Accepted Answer

A) $2,400 
B) $3,200 
C) $4000 
D) $4,800 
A) $2,400 
B) $3,200 
C) $4000 
D) $4,800

Question 3

Figure 9-9  
-Refer to Figure 9-9.Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity.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 4

Which of the following is a characteristic of an oligopolistic market structure?

Accepted Answer

A) There are few dominant sellers. 
B) Each firm sells a unique product. 
C) It is easy for new firms to enter the industry. 
D) Each firm need not react to the actions of rivals. 
A) There are few dominant sellers. 
B) Each firm sells a unique product. 
C) It is easy for new firms to enter the industry. 
D) Each firm need not react to the actions of rivals.

Question 5

If,for the last unit of a good produced by a perfectly competitive firm,MR > MC,then in producing it,the firm

Accepted Answer

A) added more to total costs than it added to total revenue. 
B) added more to total revenue than it added to total cost. 
C) is maximizing marginal profit. 
D) has minimized its losses. 
A) added more to total costs than it added to total revenue. 
B) added more to total revenue than it added to total cost. 
C) is maximizing marginal profit. 
D) has minimized its losses.

Question 6

Assume that the medical screening industry is perfectly competitive.Consider a typical firm that is making short-run losses.Suppose the medical screening industry runs an effective advertising campaign which convinces a large number of people that yearly CT scans are critical for good health.How will this affect a typical firm that remains in the industry?

Accepted Answer

A) The firm's supply curve shifts right and its marginal revenue curve shifts upwards as the market price rises and ultimately the firm starts making profits. 
B) The firm's marginal revenue curve and average cost curve shift upwards in response to the increase in market price and advertising expenditure.The firm increases output until it starts breaking even. 
C) The marginal revenue curve shifts upwards,the firm's output increases along its marginal cost curve,it expands production and eventually starts making profits. 
D) The marginal revenue curve shifts upwards,the firm's output increases along its marginal cost curve,it expands production until it breaks even. 
A) The firm's supply curve shifts right and its marginal revenue curve shifts upwards as the market price rises and ultimately the firm starts making profits. 
B) The firm's marginal revenue curve and average cost curve shift upwards in response to the increase in market price and advertising expenditure.The firm increases output until it starts breaking even. 
C) The marginal revenue curve shifts upwards,the firm's output increases along its marginal cost curve,it expands production and eventually starts making profits. 
D) The marginal revenue curve shifts upwards,the firm's output increases along its marginal cost curve,it expands production until it breaks even.

Question 7

Both individual buyers and sellers in perfect competition

Accepted Answer

A) can influence the market price by their own individual actions. 
B) can influence the market price by joining with a few of their competitors. 
C) have to take the market price as a given. 
D) have the market price dictated to them by government. 
A) can influence the market price by their own individual actions. 
B) can influence the market price by joining with a few of their competitors. 
C) have to take the market price as a given. 
D) have the market price dictated to them by government.

Question 8

A perfectly competitive firm earns a profit when price is

Accepted Answer

A) equal to minimum average total cost. 
B) above minimum average total cost. 
C) equal to minimum average variable cost. 
D) equal to minimum average fixed cost. 
A) equal to minimum average total cost. 
B) above minimum average total cost. 
C) equal to minimum average variable cost. 
D) equal to minimum average fixed cost.

Question 9

Which of the following is not true for a firm in perfect competition?

Accepted Answer

A) Profit equals total revenue minus total cost. 
B) Price equals average revenue. 
C) Average revenue is greater than marginal revenue. 
D) Marginal revenue equals the change in total revenue from selling one more unit. 
A) Profit equals total revenue minus total cost. 
B) Price equals average revenue. 
C) Average revenue is greater than marginal revenue. 
D) Marginal revenue equals the change in total revenue from selling one more unit.

Question 10

A perfectly competitive firm's horizontal demand curve implies that the firm does not have to lower its price to sell more output.

Accepted Answer

A) True 
 B)False

Question 11

If,in a perfectly competitive industry,the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost,then

Accepted Answer

A) firms are breaking even. 
B) new firms are attracted to the industry. 
C) existing firms will exit the industry. 
D) market supply will remain constant. 
A) firms are breaking even. 
B) new firms are attracted to the industry. 
C) existing firms will exit the industry. 
D) market supply will remain constant.

Question 12

Figure 9-6   Figure 9-6 shows cost and demand curves facing a profit-maximizing,perfectly competitive firm.
-Refer to Figure 9-6.At price P4,the firm would produce

Accepted Answer

A) Q3 units. 
B) Q4 units. 
C) Q5 units. 
D) Q6 units. 
A) Q3 units. 
B) Q4 units. 
C) Q5 units. 
D) Q6 units.

Question 13

An increase in demand for U.S.farm exports will ________ the market prices for these exports and ________ economic profit in these markets.

Accepted Answer

A) increase;decrease 
B) decrease;increase 
C) increase;increase 
D) decrease;decrease 
A) increase;decrease 
B) decrease;increase 
C) increase;increase 
D) decrease;decrease

Question 14

Figure 9-5   Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry.
-Refer to Figure 9-5.The figure shows the cost structure of a firm in a perfectly competitive market.If the firm's fixed cost increases by $1,000 due to a new environmental regulation,what happens to its profit-maximizing output level?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It remains the same. 
D) It could increase,decrease or remain constant,depending on whether the firm is able to cut costs somewhere else. 
A) It increases. 
B) It decreases. 
C) It remains the same. 
D) It could increase,decrease or remain constant,depending on whether the firm is able to cut costs somewhere else.

Question 15

Figure 9-5   Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry.
-Refer to Figure 9-5.If the firm's fixed cost increases by $1,000 due to a new environmental regulation,what happens in the diagram above?

Accepted Answer

A) All the cost curves shift upward. 
B) Only the average variable cost and average total cost curves shift upward;marginal cost is not affected. 
C) Only the average total cost curve shifts upward;the marginal cost and average variable cost curves are not affected. 
D) None of the curves shifts;only the fixed cost curve,which is not shown here,is affected. 
A) All the cost curves shift upward. 
B) Only the average variable cost and average total cost curves shift upward;marginal cost is not affected. 
C) Only the average total cost curve shifts upward;the marginal cost and average variable cost curves are not affected. 
D) None of the curves shifts;only the fixed cost curve,which is not shown here,is affected.

Question 16

The perfectly competitive market structure benefits consumers because

Accepted Answer

A) firms do not produce goods at the lowest possible price in the long run. 
B) firms are forced by competitive pressure to be as efficient as possible. 
C) firms add a much smaller markup over average cost than firms in any other type of market structure. 
D) firms produce high quality goods at low prices. 
A) firms do not produce goods at the lowest possible price in the long run. 
B) firms are forced by competitive pressure to be as efficient as possible. 
C) firms add a much smaller markup over average cost than firms in any other type of market structure. 
D) firms produce high quality goods at low prices.

Question 17

Table 9-1
   Table 9-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases.Assume that output can only be increased in batches of 100 units.
-Refer to Table 9-1.If the market price of each camera case is $8 and the firm maximizes profit,what is the amount of the firm's profit or loss?

Accepted Answer

A) $0 (it breaks even) 
B) loss of $1,000 
C) profit of $440 
D) loss of $440 
A) $0 (it breaks even) 
B) loss of $1,000 
C) profit of $440 
D) loss of $440

Question 18

Figure 9-2  
-Refer to Figure 9-2.The firm breaks even at an output level of

Accepted Answer

A) Q1 units. 
B) Q2 units. 
C) Q3 units. 
D) Q4 units. 
A) Q1 units. 
B) Q2 units. 
C) Q3 units. 
D) Q4 units.

Question 19

A perfectly competitive firm's supply curve is its

Accepted Answer

A) marginal cost curve. 
B) marginal cost curve above its minimum average total cost. 
C) marginal cost curve above its minimum average variable cost. 
D) marginal cost curve above its minimum average fixed cost. 
A) marginal cost curve. 
B) marginal cost curve above its minimum average total cost. 
C) marginal cost curve above its minimum average variable cost. 
D) marginal cost curve above its minimum average fixed cost.

Question 20

Figure 9-5   Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry.
-Refer to Figure 9-5.If the market price is $20,what is the amount of the firm's profit?

Accepted Answer

A) $5,400 
B) $6,750 
C) $8,100 
D) $16,200 
A) $5,400 
B) $6,750 
C) $8,100 
D) $16,200

The demand curve for an individual seller's product in perfect competition is

Table 9-1 Table 9-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases.Assume that output can only be increased in batches of 100 units. -Refer to Table 9-1.If the market price of each camera case is $8,what is the firm's total revenue?

Figure 9-9 -Refer to Figure 9-9.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimizing quantity.In the long-run equilibrium,

Which of the following is a characteristic of an oligopolistic market structure?

If,for the last unit of a good produced by a perfectly competitive firm,MR > MC,then in producing it,the firm

Both individual buyers and sellers in perfect competition

A perfectly competitive firm earns a profit when price is

Which of the following is not true for a firm in perfect competition?

A perfectly competitive firm's horizontal demand curve implies that the firm does not have to lower its price to sell more output.

If,in a perfectly competitive industry,the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost,then

Figure 9-6 Figure 9-6 shows cost and demand curves facing a profit-maximizing,perfectly competitive firm. -Refer to Figure 9-6.At price P₄,the firm would produce

An increase in demand for U.S.farm exports will the market prices for these exports and economic profit in these markets.

Figure 9-5 Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 9-5.If the firm's fixed cost increases by $1,000 due to a new environmental regulation,what happens in the diagram above?

The perfectly competitive market structure benefits consumers because

Figure 9-2 -Refer to Figure 9-2.The firm breaks even at an output level of

A perfectly competitive firm's supply curve is its

Figure 9-5 Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 9-5.If the market price is $20,what is the amount of the firm's profit?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 9: Firms in Perfectly Competitive Markets

The demand curve for an individual seller's product in perfect competition is

Table 9-1 Table 9-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases.Assume that output can only be increased in batches of 100 units. -Refer to Table 9-1.If the market price of each camera case is $8,what is the firm's total revenue?

Figure 9-9 -Refer to Figure 9-9.Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity.In the long-run equilibrium,

Which of the following is a characteristic of an oligopolistic market structure?

If,for the last unit of a good produced by a perfectly competitive firm,MR > MC,then in producing it,the firm

Both individual buyers and sellers in perfect competition

A perfectly competitive firm earns a profit when price is

Which of the following is not true for a firm in perfect competition?

A perfectly competitive firm's horizontal demand curve implies that the firm does not have to lower its price to sell more output.

If,in a perfectly competitive industry,the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost,then

Figure 9-6 Figure 9-6 shows cost and demand curves facing a profit-maximizing,perfectly competitive firm. -Refer to Figure 9-6.At price P4,the firm would produce

An increase in demand for U.S.farm exports will ________ the market prices for these exports and ________ economic profit in these markets.

Figure 9-5 Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 9-5.If the firm's fixed cost increases by $1,000 due to a new environmental regulation,what happens in the diagram above?

The perfectly competitive market structure benefits consumers because

Figure 9-2 -Refer to Figure 9-2.The firm breaks even at an output level of

A perfectly competitive firm's supply curve is its

Figure 9-5 Figure 9-5 shows cost and demand curves facing a typical firm in a constant-cost,perfectly competitive industry. -Refer to Figure 9-5.If the market price is $20,what is the amount of the firm's profit?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Figure 9-9 -Refer to Figure 9-9.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimizing quantity.In the long-run equilibrium,

Figure 9-6 Figure 9-6 shows cost and demand curves facing a profit-maximizing,perfectly competitive firm. -Refer to Figure 9-6.At price P₄,the firm would produce

An increase in demand for U.S.farm exports will the market prices for these exports and economic profit in these markets.