Question 1

Why are perfectly competitive ranchers in Montana price takers?

Accepted Answer

Because one farmer's beef is identical t

Question 2

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces ________ units and makes an economic profit that is ________.

Accepted Answer

A)  more than 45; more than $400 
B)  40; more than $400 
C)  40; less than $400 
D)  30; equal to zero 
E)  30; more than $250 
A)  more than 45; more than $400 
B)  40; more than $400 
C)  40; less than $400 
D)  30; equal to zero 
E)  30; more than $250

Question 3

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 4

One requirement for an industry to be perfectly competitive is that

Accepted Answer

A)  there are no restrictions on entry into or exit from the market. 
B)  there are multiple restrictions on entry into or exit from the market. 
C)  there are many firms selling different products. 
D)  sellers and buyers have imperfect information about prices. 
E)  the many firms sell slightly different products. 
A)  there are no restrictions on entry into or exit from the market. 
B)  there are multiple restrictions on entry into or exit from the market. 
C)  there are many firms selling different products. 
D)  sellers and buyers have imperfect information about prices. 
E)  the many firms sell slightly different products.

Question 5

Which of the following is true if a firm shuts down?
i.The price is less than minimum average variable cost.
ii.The firm is able to avoid an economic loss.
iii.The firm incurs a loss equal to its total variable cost.

Accepted Answer

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

Question 6

When new firms enter the perfectly competitive Miami bagel market,the market

Accepted Answer

A)  supply curve shifts leftward. 
B)  supply curve does not change. 
C)  demand curve shifts rightward. 
D)  supply curve shifts rightward. 
E)  demand curve shifts leftward. 
A)  supply curve shifts leftward. 
B)  supply curve does not change. 
C)  demand curve shifts rightward. 
D)  supply curve shifts rightward. 
E)  demand curve shifts leftward.

Question 7

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 8

One part of a perfectly competitive trout farm's supply curve is its

Accepted Answer

A)  marginal cost curve below the shutdown point. 
B)  entire marginal cost curve. 
C)  marginal cost curve above the shutdown point. 
D)  average variable cost curve above the shutdown point. 
E)  marginal revenue curve above the demand curve. 
A)  marginal cost curve below the shutdown point. 
B)  entire marginal cost curve. 
C)  marginal cost curve above the shutdown point. 
D)  average variable cost curve above the shutdown point. 
E)  marginal revenue curve above the demand curve.

Question 9

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

Question 10

For the perfectly competitive broccoli producers in California,the market demand curve for broccoli is

Accepted Answer

A)  a horizontal line. 
B)  downward sloping. 
C)  nonexistent. 
D)  upward sloping. 
E)  the same as the demand curve each firm faces. 
A)  a horizontal line. 
B)  downward sloping. 
C)  nonexistent. 
D)  upward sloping. 
E)  the same as the demand curve each firm faces.

Question 11

Suppose that marginal revenue for a perfectly competitive firm is $20 .When the firm produces 10 units,its marginal cost is $20,its average total cost is $22,and its average variable cost is $17.Then to maximize its profit in the short run,the firm

Accepted Answer

A)  should stay open and incur an economic loss of $20. 
B)  must increase its output to increase its profit. 
C)  must decrease its output to increase its profit. 
D)  should shut down. 
E)  should not change its production because it is already maximizing its profit and is making an economic profit. 
A)  should stay open and incur an economic loss of $20. 
B)  must increase its output to increase its profit. 
C)  must decrease its output to increase its profit. 
D)  should shut down. 
E)  should not change its production because it is already maximizing its profit and is making an economic profit.

Question 12

Technological change allows perfectly competitive firms to ________ and leads to ________.

Accepted Answer

A)  lower their costs; lower prices for consumers 
B)  raise their prices; higher prices for consumers 
C)  lower their costs; higher prices so the firms can earn economic profits in the long run 
D)  raise their costs; higher prices and maximum profits in the long run 
E)  lower their costs; deadweight loss 
A)  lower their costs; lower prices for consumers 
B)  raise their prices; higher prices for consumers 
C)  lower their costs; higher prices so the firms can earn economic profits in the long run 
D)  raise their costs; higher prices and maximum profits in the long run 
E)  lower their costs; deadweight loss

Question 13

A perfectly competitive firm is producing 50 units of output,which it sells at the market price of $23 per unit.The firm's average total cost is $20.What is the firm's total revenue?

Accepted Answer

A)  $23 
B)  $150 
C)  $1,000 
D)  $1,150 
E)  $20 
A)  $23 
B)  $150 
C)  $1,000 
D)  $1,150 
E)  $20

Question 14

If a perfectly competitive seller is maximizing profit and is making zero economic profit,which of the following will this seller do?

Accepted Answer

A)  go to work in the next-best earning opportunity 
B)  shut down, with a loss equal to total fixed cost 
C)  continue at the current output, making zero economic profit 
D)  increase production in order to make an economic profit 
E)  remain open but decrease production in order to make an economic profit 
A)  go to work in the next-best earning opportunity 
B)  shut down, with a loss equal to total fixed cost 
C)  continue at the current output, making zero economic profit 
D)  increase production in order to make an economic profit 
E)  remain open but decrease production in order to make an economic profit

Question 15

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

Accepted Answer

The answer of If firms in a perfectly competitive industry...

Question 16

-The above table has the total revenue and total cost schedule for Omar,a perfectly competitive grower of rutabagas.When Omar maximizes his profit,Omar's profit equals

Accepted Answer

A)  $80. 
B)  $11. 
C)  $30. 
D)  $16. 
E)  $105. 
A)  $80. 
B)  $11. 
C)  $30. 
D)  $16. 
E)  $105.

Question 17

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit,to maximize its profit (or minimize its loss)the firm should

Accepted Answer

A)  shut down. 
B)  produce between 10 and less than 30 units. 
C)  produce 30 units. 
D)  produce more than 30 units and less than 40 units. 
E)  produce 40 units. 
A)  shut down. 
B)  produce between 10 and less than 30 units. 
C)  produce 30 units. 
D)  produce more than 30 units and less than 40 units. 
E)  produce 40 units.

Question 18

For a perfectly competitive firm,profit is maximized at the output level where
i.total revenue exceeds total cost by the largest amount.
ii.marginal revenue equals marginal cost.
iii.price equals marginal cost.

Accepted Answer

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

Question 19

In the short run,a perfectly competitive firm

Accepted Answer

A)  can make only zero economic profit. 
B)  can possibly make an economic profit or possibly incur an economic loss. 
C)  produces the level of output that sets the average total cost equal to the market price. 
D)  can vary all its inputs. 
E)  can change only its fixed inputs. 
A)  can make only zero economic profit. 
B)  can possibly make an economic profit or possibly incur an economic loss. 
C)  produces the level of output that sets the average total cost equal to the market price. 
D)  can vary all its inputs. 
E)  can change only its fixed inputs.

Question 20

-Pete is a perfectly competitive rose grower.The above table gives quantities and the price for which Pete can sell his roses.
a.What is Pete's total revenue if he sells 1 dozen roses? 2 dozen roses? 3 dozen roses? 4 dozen roses?
b.What is the marginal revenue of the 2nd dozen roses sold? Of the 3rd dozen? Of the 4th dozen?

Accepted Answer

a.The total revenue when 1 dozen roses i

Why are perfectly competitive ranchers in Montana price takers?

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces units and makes an economic profit that is .

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

One requirement for an industry to be perfectly competitive is that

Which of the following is true if a firm shuts down? i.The price is less than minimum average variable cost. ii.The firm is able to avoid an economic loss. iii.The firm incurs a loss equal to its total variable cost.

When new firms enter the perfectly competitive Miami bagel market,the market

Perfect competition an efficient outcome because .

One part of a perfectly competitive trout farm's supply curve is its

For the perfectly competitive broccoli producers in California,the market demand curve for broccoli is

Suppose that marginal revenue for a perfectly competitive firm is $20 .When the firm produces 10 units,its marginal cost is $20,its average total cost is $22,and its average variable cost is $17.Then to maximize its profit in the short run,the firm

Technological change allows perfectly competitive firms to and leads to .

A perfectly competitive firm is producing 50 units of output,which it sells at the market price of $23 per unit.The firm's average total cost is $20.What is the firm's total revenue?

If a perfectly competitive seller is maximizing profit and is making zero economic profit,which of the following will this seller do?

-The above table has the total revenue and total cost schedule for Omar,a perfectly competitive grower of rutabagas.When Omar maximizes his profit,Omar's profit equals

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit,to maximize its profit (or minimize its loss)the firm should

For a perfectly competitive firm,profit is maximized at the output level where i.total revenue exceeds total cost by the largest amount. ii.marginal revenue equals marginal cost. iii.price equals marginal cost.

In the short run,a perfectly competitive firm

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

Why are perfectly competitive ranchers in Montana price takers?

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces ________ units and makes an economic profit that is ________.

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

One requirement for an industry to be perfectly competitive is that

Which of the following is true if a firm shuts down? i.The price is less than minimum average variable cost. ii.The firm is able to avoid an economic loss. iii.The firm incurs a loss equal to its total variable cost.

When new firms enter the perfectly competitive Miami bagel market,the market

Perfect competition ________ an efficient outcome because ________.

One part of a perfectly competitive trout farm's supply curve is its

For the perfectly competitive broccoli producers in California,the market demand curve for broccoli is

Suppose that marginal revenue for a perfectly competitive firm is $20 .When the firm produces 10 units,its marginal cost is $20,its average total cost is $22,and its average variable cost is $17.Then to maximize its profit in the short run,the firm

Technological change allows perfectly competitive firms to ________ and leads to ________.

A perfectly competitive firm is producing 50 units of output,which it sells at the market price of $23 per unit.The firm's average total cost is $20.What is the firm's total revenue?

If a perfectly competitive seller is maximizing profit and is making zero economic profit,which of the following will this seller do?

-The above table has the total revenue and total cost schedule for Omar,a perfectly competitive grower of rutabagas.When Omar maximizes his profit,Omar's profit equals

-The above figure illustrates a perfectly competitive firm.If the market price is $10 a unit,to maximize its profit (or minimize its loss)the firm should

For a perfectly competitive firm,profit is maximized at the output level where i.total revenue exceeds total cost by the largest amount. ii.marginal revenue equals marginal cost. iii.price equals marginal cost.

In the short run,a perfectly competitive firm

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

-The figure above shows a perfectly competitive firm.If the market price is $40 per unit,then the firm produces units and makes an economic profit that is .

Perfect competition an efficient outcome because .

Technological change allows perfectly competitive firms to and leads to .