Question 1

Perfect competition is characterized by all of the following EXCEPT

Accepted Answer

A)  a large number of buyers and sellers. 
B)  no restrictions on entry into or exit from the industry. 
C)  considerable advertising by individual firms. 
D)  buyers and sellers are well informed about prices. 
E)  firms produce an identical product. 
A)  a large number of buyers and sellers. 
B)  no restrictions on entry into or exit from the industry. 
C)  considerable advertising by individual firms. 
D)  buyers and sellers are well informed about prices. 
E)  firms produce an identical product.

Question 2

-Bill owns a lawn-care company in Windermere,Florida,whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.At this price,how many lawns will Bill mow per week?

Accepted Answer

A)  more than 10 and less than 30 
B)  30 
C)  40 
D)  50 
E)  0 
A)  more than 10 and less than 30 
B)  30 
C)  40 
D)  50 
E)  0

Question 3

Describe how economic losses are eliminated in a perfectly competitive industry.

Accepted Answer

If firms are incurring economic losses,s

Question 4

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-Based on the figure above,what is the price of a can?

Accepted Answer

A)  $0 
B)  $8.00 per can 
C)  $5.10 per can 
D)  None of the above prices is correct. 
E)  More information is needed to determine the price of a can. 
A)  $0 
B)  $8.00 per can 
C)  $5.10 per can 
D)  None of the above prices is correct. 
E)  More information is needed to determine the price of a can.

Question 5

In which market structure are there a small number of firms competing?

Accepted Answer

A)  only monopoly 
B)  only oligopoly 
C)  perfect competition 
D)  monopolistic competition 
E)  either monopoly or oligopoly 
A)  only monopoly 
B)  only oligopoly 
C)  perfect competition 
D)  monopolistic competition 
E)  either monopoly or oligopoly

Question 6

In the long run,a perfectly competitive firm makes

Accepted Answer

A)  a positive economic profit. 
B)  zero economic profit. 
C)  negative economic profit, that is, an economic loss. 
D)  zero accounting profit. 
E)  either a positive economic profit or a normal profit. 
A)  a positive economic profit. 
B)  zero economic profit. 
C)  negative economic profit, that is, an economic loss. 
D)  zero accounting profit. 
E)  either a positive economic profit or a normal profit.

Question 7

A permanent decrease in demand definitely

Accepted Answer

A)  shifts a firm's average total cost curve downward. 
B)  creates diseconomies for individual firms. 
C)  lowers the market price. 
D)  decreases the number of firms in the industry. 
E)  shifts a firm's average total cost curve upward. 
A)  shifts a firm's average total cost curve downward. 
B)  creates diseconomies for individual firms. 
C)  lowers the market price. 
D)  decreases the number of firms in the industry. 
E)  shifts a firm's average total cost curve upward.

Question 8

A market is ________ when a small number of firms compete.

Accepted Answer

A)  a monopoly 
B)  perfectly competitive 
C)  monopolistically competitive 
D)  an oligopoly 
E)  either monopolistically competitive or an oligopoly 
A)  a monopoly 
B)  perfectly competitive 
C)  monopolistically competitive 
D)  an oligopoly 
E)  either monopolistically competitive or an oligopoly

Question 9

A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4.The price of the good is $5.To maximize its profit,this firm should

Accepted Answer

A)  raise its price. 
B)  lower its price. 
C)  increase its output. 
D)  decrease its output. 
E)  increase the price it charges for its product. 
A)  raise its price. 
B)  lower its price. 
C)  increase its output. 
D)  decrease its output. 
E)  increase the price it charges for its product.

Question 10

Suppose the price of a can was $5.14.In this case,to maximize its profit,the firm illustrated in the figure above would

Accepted Answer

A)  increase its production and would make an economic profit. 
B)  not change its production and would make a normal profit. 
C)  not change its production and would make an economic profit. 
D)  increase its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss. 
A)  increase its production and would make an economic profit. 
B)  not change its production and would make a normal profit. 
C)  not change its production and would make an economic profit. 
D)  increase its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss.

Question 11

If the market price of a product is $14 and all sellers are price takers,then which of the following is correct?

Accepted Answer

A)  Each seller's total revenue line is graphed as an upward-sloping straight line. 
B)  The demand curve for each seller's product is a downward-sloping straight line. 
C)  Each seller can earn more total revenue by raising the price he or she charges above $14. 
D)  The demand curve for each seller's product is a downward-sloping but not necessarily a straight line. 
E)  Each seller's total revenue is graphed as an upside-down U-shaped curve. 
A)  Each seller's total revenue line is graphed as an upward-sloping straight line. 
B)  The demand curve for each seller's product is a downward-sloping straight line. 
C)  Each seller can earn more total revenue by raising the price he or she charges above $14. 
D)  The demand curve for each seller's product is a downward-sloping but not necessarily a straight line. 
E)  Each seller's total revenue is graphed as an upside-down U-shaped curve.

Question 12

A market is classified as monopolistically competitive when

Accepted Answer

A)  there is a barrier that blocks entry by other firms. 
B)  a small number of firms compete. 
C)  many firms produce the same product. 
D)  many firms produce a slightly differentiated product. 
E)  there is one firm that sells a good or service with no close substitutes. 
A)  there is a barrier that blocks entry by other firms. 
B)  a small number of firms compete. 
C)  many firms produce the same product. 
D)  many firms produce a slightly differentiated product. 
E)  there is one firm that sells a good or service with no close substitutes.

Question 13

-The above figure illustrates a perfectly competitive wheat farmer.
a.What will be the firm's profit-maximizing price and output?
b.When the farmer produces 25,000 bushels of wheat,the difference between the firm's average total cost and the price is at its maximum.Explain why this amount of wheat either is or is not the profit-maximizing quantity.

Accepted Answer

a.The firm will maximize its profits by

Question 14

-The above figure shows a perfectly competitive firm.If the market price is $5 per unit,the firm

Accepted Answer

A)  will definitely shut down to minimize its losses. 
B)  will stay open to produce and will make zero economic profit. 
C)  will stay open to produce and will incur an economic loss. 
D)  will stay open to produce and will make an economic profit. 
E)  might shut down but more information is needed about the fixed cost. 
A)  will definitely shut down to minimize its losses. 
B)  will stay open to produce and will make zero economic profit. 
C)  will stay open to produce and will incur an economic loss. 
D)  will stay open to produce and will make an economic profit. 
E)  might shut down but more information is needed about the fixed cost.

Question 15

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.If the market price of a wafer is $2,400 dollars,how many wafers will the firm produce?

Accepted Answer

A)  0 
B)  4 or 5 
C)  3 or 4 
D)  1 or 2 
E)  6 
A)  0 
B)  4 or 5 
C)  3 or 4 
D)  1 or 2 
E)  6

Question 16

If the market price faced by a perfectly competitive firm increases,in the short run how does the firm respond?

Accepted Answer

If the market price rises,a pe

Question 17

If perfectly competitive firms are making an economic profit,then

Accepted Answer

A)  the market must be in long-run equilibrium but cannot be in a short-run equilibrium. 
B)  some firms will exit the market. 
C)  new firms will enter the market. 
D)  the market might be in a long-run equilibrium but not a short-run equilibrium. 
E)  the market cannot be in either a short-run or a long-run equilibrium. 
A)  the market must be in long-run equilibrium but cannot be in a short-run equilibrium. 
B)  some firms will exit the market. 
C)  new firms will enter the market. 
D)  the market might be in a long-run equilibrium but not a short-run equilibrium. 
E)  the market cannot be in either a short-run or a long-run equilibrium.

Question 18

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-Based on the figure above,if the firm produces 10 cans per day,the firm ________ maximizing its profit and is ________.

Accepted Answer

A)  is; incurring an economic loss 
B)  is; making zero economic profit 
C)  is; making an economic profit 
D)  is not; incurring an economic loss 
E)  is not; making zero economic profit 
A)  is; incurring an economic loss 
B)  is; making zero economic profit 
C)  is; making an economic profit 
D)  is not; incurring an economic loss 
E)  is not; making zero economic profit

Question 19

The table below shows the total cost schedule for a perfectly competitive firm.The market price is $250 per unit.Complete the table.

Accepted Answer

@#IMG-DLM& The compl

Question 20

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23.The firm's average total cost is $20.What is the firm's total cost?

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

Perfect competition is characterized by all of the following EXCEPT

-Bill owns a lawn-care company in Windermere,Florida,whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.At this price,how many lawns will Bill mow per week?

Describe how economic losses are eliminated in a perfectly competitive industry.

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,what is the price of a can?

In which market structure are there a small number of firms competing?

In the long run,a perfectly competitive firm makes

A permanent decrease in demand definitely

A market is ________ when a small number of firms compete.

A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4.The price of the good is $5.To maximize its profit,this firm should

Suppose the price of a can was $5.14.In this case,to maximize its profit,the firm illustrated in the figure above would

If the market price of a product is $14 and all sellers are price takers,then which of the following is correct?

A market is classified as monopolistically competitive when

-The above figure shows a perfectly competitive firm.If the market price is $5 per unit,the firm

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.If the market price of a wafer is $2,400 dollars,how many wafers will the firm produce?

If the market price faced by a perfectly competitive firm increases,in the short run how does the firm respond?

If perfectly competitive firms are making an economic profit,then

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,if the firm produces 10 cans per day,the firm maximizing its profit and is .

The table below shows the total cost schedule for a perfectly competitive firm.The market price is $250 per unit.Complete the table.

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23.The firm's average total cost is $20.What is the firm's total cost?

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

Perfect competition is characterized by all of the following EXCEPT

-Bill owns a lawn-care company in Windermere,Florida,whose cost curves are illustrated in the above figure.The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed.At this price,how many lawns will Bill mow per week?

Describe how economic losses are eliminated in a perfectly competitive industry.

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,what is the price of a can?

In which market structure are there a small number of firms competing?

In the long run,a perfectly competitive firm makes

A permanent decrease in demand definitely

A market is ________ when a small number of firms compete.

A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4.The price of the good is $5.To maximize its profit,this firm should

Suppose the price of a can was $5.14.In this case,to maximize its profit,the firm illustrated in the figure above would

If the market price of a product is $14 and all sellers are price takers,then which of the following is correct?

A market is classified as monopolistically competitive when

-The above figure shows a perfectly competitive firm.If the market price is $5 per unit,the firm

-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.If the market price of a wafer is $2,400 dollars,how many wafers will the firm produce?

If the market price faced by a perfectly competitive firm increases,in the short run how does the firm respond?

If perfectly competitive firms are making an economic profit,then

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,if the firm produces 10 cans per day,the firm ________ maximizing its profit and is ________.

The table below shows the total cost schedule for a perfectly competitive firm.The market price is $250 per unit.Complete the table.

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23.The firm's average total cost is $20.What is the firm's total cost?

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 some of a firm's cost curves and its marginal revenue curve. -Based on the figure above,if the firm produces 10 cans per day,the firm maximizing its profit and is .