Question 1

If a firm shuts down,it

Accepted Answer

A)  makes zero economic profit. 
B)  incurs an economic loss equal to its total variable cost. 
C)  incurs an economic loss equal to its total fixed cost. 
D)  makes a normal profit. 
E)  might make an economic profit, zero economic profit, or incur an economic loss. 
A)  makes zero economic profit. 
B)  incurs an economic loss equal to its total variable cost. 
C)  incurs an economic loss equal to its total fixed cost. 
D)  makes a normal profit. 
E)  might make an economic profit, zero economic profit, or incur an economic loss.

Question 2

A perfectly competitive firm's short-run supply curve is

Accepted Answer

A)  horizontal at the market price. 
B)  its total cost curve above the AVC. 
C)  its marginal cost curve below the marginal revenue curve. 
D)  its marginal cost curve above the AVC curve. 
E)  its marginal revenue curve below the ATC curve. 
A)  horizontal at the market price. 
B)  its total cost curve above the AVC. 
C)  its marginal cost curve below the marginal revenue curve. 
D)  its marginal cost curve above the AVC curve. 
E)  its marginal revenue curve below the ATC curve.

Question 3

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

Accepted Answer

If a firm produces at a level where marg

Question 4

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 5

-As a perfectly competitive firm produces more and more of a good,its economic profit

Accepted Answer

A)  constantly increases. 
B)  constantly decreases. 
C)  first decreases, then increases. 
D)  first increases, then decreases. 
E)  does not change. 
A)  constantly increases. 
B)  constantly decreases. 
C)  first decreases, then increases. 
D)  first increases, then decreases. 
E)  does not change.

Question 6

Catfish farming is a perfectly competitive industry.Catfish farmers suffered tremendous economic losses in the late 2000s.As a result,

Accepted Answer

A)  some new catfish farmers entered the market. 
B)  some catfish farmers exited the market. 
C)  no catfish farmers entered or exited this market. 
D)  the supply of catfish increased in 2010. 
E)  new demanders entered the market after some firms had exited. 
A)  some new catfish farmers entered the market. 
B)  some catfish farmers exited the market. 
C)  no catfish farmers entered or exited this market. 
D)  the supply of catfish increased in 2010. 
E)  new demanders entered the market after some firms had exited.

Question 7

Suppose a farmer raising beef is making a normal profit.Then,because of a scare about mad cow disease,the demand for beef decreases drastically.What happens to the profits of the beef farmer in the short run and in the long run?

Accepted Answer

In the short run,the fall in beef prices

Question 8

For a perfectly competitive palm tree nursery in South Carolina,the total revenue curve is

Accepted Answer

A)  downward sloping. 
B)  a horizontal line. 
C)  upward sloping. 
D)  U-shaped. 
E)  undefined because the firm is perfectly competitive. 
A)  downward sloping. 
B)  a horizontal line. 
C)  upward sloping. 
D)  U-shaped. 
E)  undefined because the firm is perfectly competitive.

Question 9

Because perfectly competitive firms are price takers,each firm faces a demand that is

Accepted Answer

A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  highly inelastic but never is it perfectly inelastic. 
D)  unit elastic. 
E)  highly elastic but never is it perfectly elastic. 
A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  highly inelastic but never is it perfectly inelastic. 
D)  unit elastic. 
E)  highly elastic but never is it perfectly elastic.

Question 10

-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 11

Each firm in a perfectly competitive industry

Accepted Answer

A)  produces a good that is slightly different from that of the other firms. 
B)  produces a good that is identical to that of the other firms. 
C)  attains economies of scale so that its efficient size is large compared to the market as a whole. 
D)  has control over at least one unique resource to separate themselves from their competitors. 
E)  has an important influence on the market price of the good or service being produced. 
A)  produces a good that is slightly different from that of the other firms. 
B)  produces a good that is identical to that of the other firms. 
C)  attains economies of scale so that its efficient size is large compared to the market as a whole. 
D)  has control over at least one unique resource to separate themselves from their competitors. 
E)  has an important influence on the market price of the good or service being produced.

Question 12

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12.Then there is a permanent increase in demand.As a result,in the short run the market price ________ and in the long run the number of firms ________ and the price is ________ the price was in the short run.

Accepted Answer

A)  rises; does not change; is equal to 
B)  rises; increases; higher than 
C)  rises; does not change; lower than 
D)  falls; decreases; is equal to 
E)  rises; increases; lower than 
A)  rises; does not change; is equal to 
B)  rises; increases; higher than 
C)  rises; does not change; lower than 
D)  falls; decreases; is equal to 
E)  rises; increases; lower than

Question 13

-The above table gives the quantity of output and the total cost for a perfectly competitive firm that can sell all of its output at $9 per unit.
a.Find the profit maximizing level of output for this firm.
b.How much economic profit is the firm making?

Accepted Answer

@#IMG-DLM& 
a.Total revenue equals price times qua

Question 14

-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 15

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 16

For a perfectly competitive firm,the price of its good is equal to the firm's marginal revenue because

Accepted Answer

A)  information about price changes is hard to come by for small sellers. 
B)  price and marginal revenue are the same economic concepts. 
C)  individual perfectly competitive firms cannot influence the market price by changing their output. 
D)  the firm's total revenue cannot be changed by anything the firms can do. 
E)  there are only a small number of firms in the market. 
A)  information about price changes is hard to come by for small sellers. 
B)  price and marginal revenue are the same economic concepts. 
C)  individual perfectly competitive firms cannot influence the market price by changing their output. 
D)  the firm's total revenue cannot be changed by anything the firms can do. 
E)  there are only a small number of firms in the market.

Question 17

Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output.If the marginal cost of producing the 10th unit is $14,to maximize its profit the firm should

Accepted Answer

A)  do nothing because it is already maximizing its profit. 
B)  decrease its production. 
C)  increase its production. 
D)  shut down. 
E)  increase the price it charges for its product. 
A)  do nothing because it is already maximizing its profit. 
B)  decrease its production. 
C)  increase its production. 
D)  shut down. 
E)  increase the price it charges for its product.

Question 18

In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy?

Accepted Answer

A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly 
E)  perfect competition and monopolistic competition 
A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly 
E)  perfect competition and monopolistic competition

Question 19

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is false.A perfe

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

If a firm shuts down,it

A perfectly competitive firm's short-run supply curve is

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

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

-As a perfectly competitive firm produces more and more of a good,its economic profit

Catfish farming is a perfectly competitive industry.Catfish farmers suffered tremendous economic losses in the late 2000s.As a result,

Suppose a farmer raising beef is making a normal profit.Then,because of a scare about mad cow disease,the demand for beef decreases drastically.What happens to the profits of the beef farmer in the short run and in the long run?

For a perfectly competitive palm tree nursery in South Carolina,the total revenue curve is

Because perfectly competitive firms are price takers,each firm faces a demand that is

-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).

Each firm in a perfectly competitive industry

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12.Then there is a permanent increase in demand.As a result,in the short run the market price and in the long run the number of firms and the price is the price was in the short run.

-The above table gives the quantity of output and the total cost for a perfectly competitive firm that can sell all of its output at $9 per unit. a.Find the profit maximizing level of output for this firm. b.How much economic profit is the firm making?

-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?

A firm's marginal revenue is

For a perfectly competitive firm,the price of its good is equal to the firm's marginal revenue because

Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output.If the marginal cost of producing the 10th unit is $14,to maximize its profit the firm should

In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy?

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

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 U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 15: Perfect Competition

If a firm shuts down,it

A perfectly competitive firm's short-run supply curve is

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

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

-As a perfectly competitive firm produces more and more of a good,its economic profit

Catfish farming is a perfectly competitive industry.Catfish farmers suffered tremendous economic losses in the late 2000s.As a result,

Suppose a farmer raising beef is making a normal profit.Then,because of a scare about mad cow disease,the demand for beef decreases drastically.What happens to the profits of the beef farmer in the short run and in the long run?

For a perfectly competitive palm tree nursery in South Carolina,the total revenue curve is

Because perfectly competitive firms are price takers,each firm faces a demand that is

-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)________.

Each firm in a perfectly competitive industry

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12.Then there is a permanent increase in demand.As a result,in the short run the market price ________ and in the long run the number of firms ________ and the price is ________ the price was in the short run.

-The above table gives the quantity of output and the total cost for a perfectly competitive firm that can sell all of its output at $9 per unit. a.Find the profit maximizing level of output for this firm. b.How much economic profit is the firm making?

-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?

A firm's marginal revenue is

For a perfectly competitive firm,the price of its good is equal to the firm's marginal revenue because

Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output.If the marginal cost of producing the 10th unit is $14,to maximize its profit the firm should

In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy?

"A perfectly competitive firm is called a price maker because all the firms together must make the market price." Is the previous statement correct or incorrect? Briefly explain your answer.

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 U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-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).

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12.Then there is a permanent increase in demand.As a result,in the short run the market price and in the long run the number of firms and the price is the price was in the short run.