Question 1

Marginal revenue is

Accepted Answer

A)  the change in total revenue from a one-unit increase in the quantity sold. 
B)  another name for total revenue. 
C)  the change in total cost from producing an additional unit of output. 
D)  the economic profit from producing an additional unit of output. 
E)  less than price for a perfectly competitive firm. 
A)  the change in total revenue from a one-unit increase in the quantity sold. 
B)  another name for total revenue. 
C)  the change in total cost from producing an additional unit of output. 
D)  the economic profit from producing an additional unit of output. 
E)  less than price for a perfectly competitive firm.

Question 2

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 3

If a firm in a perfectly competitive market faces an equilibrium price of $5,its marginal revenue

Accepted Answer

A)  will be greater than $5. 
B)  will be less than $5. 
C)  maybe either greater or less than $5. 
D)  will also be $5. 
E)  will be any amount but $5. 
A)  will be greater than $5. 
B)  will be less than $5. 
C)  maybe either greater or less than $5. 
D)  will also be $5. 
E)  will be any amount but $5.

Question 4

Suppose the firm's marginal cost of producing a can increases by $1 per can.Then,based on the figure above,the firm would

Accepted Answer

A)  produce zero cans. 
B)  decrease the amount of cans it produces but not to zero cans. 
C)  not change the amount of cans it produces. 
D)  increase the amount of cans it produces. 
E)  More information is needed to determine what action the firm will take. 
A)  produce zero cans. 
B)  decrease the amount of cans it produces but not to zero cans. 
C)  not change the amount of cans it produces. 
D)  increase the amount of cans it produces. 
E)  More information is needed to determine what action the firm will take.

Question 5

Henry,a perfectly competitive lime grower in Southern California,notices that the market price of limes is greater than his marginal cost.What should Henry do?

Accepted Answer

A)  expand his output to increase profits 
B)  shut down and incur a loss equal to his total fixed cost 
C)  advertise his limes to be able to sell more output 
D)  look for the output level where marginal revenue minus marginal cost is maximized 
E)  shut down and earn no profit but also incur no loss 
A)  expand his output to increase profits 
B)  shut down and incur a loss equal to his total fixed cost 
C)  advertise his limes to be able to sell more output 
D)  look for the output level where marginal revenue minus marginal cost is maximized 
E)  shut down and earn no profit but also incur no loss

Question 6

The above figure shows some a firm's cost curves and its marginal revenue curve.
-The firm in the figure above has a total revenue equal to ________.

Accepted Answer

A)  $5.14 × 7 
B)  $3.00 × 7 
C)  ($5.14 - $3.00) × 7 
D)  ($3.00 - $5.14) × 7 
E)  None of the above answers is correct because more information is needed. 
A)  $5.14 × 7 
B)  $3.00 × 7 
C)  ($5.14 - $3.00) × 7 
D)  ($3.00 - $5.14) × 7 
E)  None of the above answers is correct because more information is needed.

Question 7

During the winter,theme parks in Orlando close earlier than in the summer.The reason the theme parks close early during the winter is because during that season the marginal revenue from staying open later is ________ the marginal cost.

Accepted Answer

A)  greater than 
B)  less than 
C)  equal to 
D)  zero compared to 
E)  not comparable to 
A)  greater than 
B)  less than 
C)  equal to 
D)  zero compared to 
E)  not comparable to

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

-The above figure shows a perfectly competitive firm.If the market price is $15,the firm

Accepted Answer

A)  is incurring an economic loss. 
B)  is making an economic profit. 
C)  is making zero economic profit. 
D)  will immediately shut down. 
E)  might shut down but more information is needed about the AVC. 
A)  is incurring an economic loss. 
B)  is making an economic profit. 
C)  is making zero economic profit. 
D)  will immediately shut down. 
E)  might shut down but more information is needed about the AVC.

Question 10

A perfectly competitive firm is earning an economic profit when total fixed costs increase.Assuming the firm does not shut down,in the short run the firm will

Accepted Answer

A)  charge a higher price. 
B)  produce more output so the extra revenue will cover the increased costs. 
C)  produce less output to decrease total costs. 
D)  continue producing the same quantity as before but will make less economic profit. 
E)  continue producing the same quantity as before and continue making the same economic profit as before. 
A)  charge a higher price. 
B)  produce more output so the extra revenue will cover the increased costs. 
C)  produce less output to decrease total costs. 
D)  continue producing the same quantity as before but will make less economic profit. 
E)  continue producing the same quantity as before and continue making the same economic profit as before.

Question 11

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,as it increases its output,its profit ________ and the price it can charge for its product ________.

Accepted Answer

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

Question 12

The marginal revenue curve for a perfectly competitive firm is

Accepted Answer

A)  horizontal. 
B)  vertical. 
C)  upward sloping. 
D)  downward sloping. 
E)  a straight line coming out of the origin with a 45 degree slope. 
A)  horizontal. 
B)  vertical. 
C)  upward sloping. 
D)  downward sloping. 
E)  a straight line coming out of the origin with a 45 degree slope.

Question 13

Suppose the bobby pin industry is perfectly competitive.The price of a packet of bobby pins is $2.00.Pins and Needles,Inc.is a firm in this industry and is producing 1,000 packets of bobby pins per day at the point where the MC = MR.The average cost of production at this output level is $1.50 per packet.
a.What is the marginal cost of the 1,000th packet?
b.Is this firm making an economic profit,zero economic profit,or an economic loss? How much?
c.Is the firm in long-run equilibrium? Why or why not?

Accepted Answer

a.The price per packet is $2,which is al

Question 14

If Henry,a perfectly competitive lime grower in Southern California,can sell his limes at a price greater than his average total cost,Henry will

Accepted Answer

A)  incur an economic loss. 
B)  incur an accounting loss. 
C)  have an incentive to shut down. 
D)  make an economic profit. 
E)  make zero economic profit. 
A)  incur an economic loss. 
B)  incur an accounting loss. 
C)  have an incentive to shut down. 
D)  make an economic profit. 
E)  make zero economic profit.

Question 15

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 16

The figure above shows a firm's total revenue and total cost curves.
-Based on the figure above,when the firm maximizes its profit,it produces ________ cans per day.

Accepted Answer

A)  0 
B)  more than 0 and less than 5 
C)  5 or more but less than 10 
D)  10 
E)  more than 10 
A)  0 
B)  more than 0 and less than 5 
C)  5 or more but less than 10 
D)  10 
E)  more than 10

Question 17

Which of the following market types has the fewest number of firms?

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 18

For a perfectly competitive corn grower in Nebraska,the marginal revenue curve is

Accepted Answer

A)  downward sloping. 
B)  the same as its demand curve. 
C)  upward sloping. 
D)  U-shaped. 
E)  vertical at the profit maximizing quantity of production. 
A)  downward sloping. 
B)  the same as its demand curve. 
C)  upward sloping. 
D)  U-shaped. 
E)  vertical at the profit maximizing quantity of production.

Question 19

If a perfectly competitive firm manufacturing chairs produces 100 more chairs,what happens to the market price of a chair?

Accepted Answer

The price will not change.Any one perfec

Question 20

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.

Marginal revenue is

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?

If a firm in a perfectly competitive market faces an equilibrium price of $5,its marginal revenue

Suppose the firm's marginal cost of producing a can increases by $1 per can.Then,based on the figure above,the firm would

Henry,a perfectly competitive lime grower in Southern California,notices that the market price of limes is greater than his marginal cost.What should Henry do?

The above figure shows some a firm's cost curves and its marginal revenue curve. -The firm in the figure above has a total revenue equal to ________.

During the winter,theme parks in Orlando close earlier than in the summer.The reason the theme parks close early during the winter is because during that season the marginal revenue from staying open later is ________ the marginal cost.

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

-The above figure shows a perfectly competitive firm.If the market price is $15,the firm

A perfectly competitive firm is earning an economic profit when total fixed costs increase.Assuming the firm does not shut down,in the short run the firm will

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,as it increases its output,its profit and the price it can charge for its product .

The marginal revenue curve for a perfectly competitive firm is

If Henry,a perfectly competitive lime grower in Southern California,can sell his limes at a price greater than his average total cost,Henry will

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.

The figure above shows a firm's total revenue and total cost curves. -Based on the figure above,when the firm maximizes its profit,it produces ________ cans per day.

Which of the following market types has the fewest number of firms?

For a perfectly competitive corn grower in Nebraska,the marginal revenue curve is

If a perfectly competitive firm manufacturing chairs produces 100 more chairs,what happens to the market price of a chair?

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

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

Marginal revenue is

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?

If a firm in a perfectly competitive market faces an equilibrium price of $5,its marginal revenue

Suppose the firm's marginal cost of producing a can increases by $1 per can.Then,based on the figure above,the firm would

Henry,a perfectly competitive lime grower in Southern California,notices that the market price of limes is greater than his marginal cost.What should Henry do?

The above figure shows some a firm's cost curves and its marginal revenue curve. -The firm in the figure above has a total revenue equal to ________.

During the winter,theme parks in Orlando close earlier than in the summer.The reason the theme parks close early during the winter is because during that season the marginal revenue from staying open later is ________ the marginal cost.

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

-The above figure shows a perfectly competitive firm.If the market price is $15,the firm

A perfectly competitive firm is earning an economic profit when total fixed costs increase.Assuming the firm does not shut down,in the short run the firm will

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,as it increases its output,its profit ________ and the price it can charge for its product ________.

The marginal revenue curve for a perfectly competitive firm is

If Henry,a perfectly competitive lime grower in Southern California,can sell his limes at a price greater than his average total cost,Henry will

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.

The figure above shows a firm's total revenue and total cost curves. -Based on the figure above,when the firm maximizes its profit,it produces ________ cans per day.

Which of the following market types has the fewest number of firms?

For a perfectly competitive corn grower in Nebraska,the marginal revenue curve is

If a perfectly competitive firm manufacturing chairs produces 100 more chairs,what happens to the market price of a chair?

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

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

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

If a perfectly competitive firm's marginal revenue is greater than its marginal cost,as it increases its output,its profit and the price it can charge for its product .

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.