Question 1

Based on the figure above,if the firm produces 7 cans per day,the firm ________ maximizing its profit and is ________.

Accepted Answer

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

Question 2

If a perfectly competitive firm finds that the price exceeds its ATC,then the firm

Accepted Answer

A)  will raise its price to increase its economic profit. 
B)  will lower its price to increase its economic profit. 
C)  is making an economic profit. 
D)  is incurring an economic loss. 
E)  is making zero economic profit. 
A)  will raise its price to increase its economic profit. 
B)  will lower its price to increase its economic profit. 
C)  is making an economic profit. 
D)  is incurring an economic loss. 
E)  is making zero economic profit.

Question 3

In a perfectly competitive industry,
i.entry by new firms shifts the market supply curve rightward.
ii.exit by existing firms shifts the market supply curve leftward.
iii.at all times existing firms make only zero economic profit.

Accepted Answer

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

Question 4

Technology reduces the average cost of production,so in the long run
i.perfectly competitive firms produce at a lower average cost.
ii.the market price of the good falls.
iii.firms with older plants either exit the market or adopt the new technology.

Accepted Answer

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

Question 5

Technological change brings a ________ to firms that adopt the new technology.

Accepted Answer

A)  permanent economic profit 
B)  temporary economic profit 
C)  permanent economic loss 
D)  temporary economic loss 
E)  temporary normal profit 
A)  permanent economic profit 
B)  temporary economic profit 
C)  permanent economic loss 
D)  temporary economic loss 
E)  temporary normal profit

Question 6

A perfectly competitive firm should shut down in the short-run if price falls below the minimum of

Accepted Answer

A)  marginal cost. 
B)  marginal revenue. 
C)  average total cost. 
D)  fixed costs. 
E)  average variable costs. 
A)  marginal cost. 
B)  marginal revenue. 
C)  average total cost. 
D)  fixed costs. 
E)  average variable costs.

Question 7

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC?,each produces 40 units,and the market price of the good is $20 per unit,then

Accepted Answer

A)  the firms incur an economic loss of $12 per unit. 
B)  firms will enter the industry and the number of firms increases. 
C)  the firms' ATC curves will eventually shift to become the same as ATC?. 
D)  firms will exit the industry and the number of firms decreases. 
E)  Both answers A and D are correct. 
A)  the firms incur an economic loss of $12 per unit. 
B)  firms will enter the industry and the number of firms increases. 
C)  the firms' ATC curves will eventually shift to become the same as ATC?. 
D)  firms will exit the industry and the number of firms decreases. 
E)  Both answers A and D are correct.

Question 8

In the long run,a perfectly competitive firm will

Accepted Answer

A)  be able to make an economic profit. 
B)  produce but incur an economic loss. 
C)  make zero economic profit. 
D)  not produce and will incur an economic loss equal to its total fixed cost. 
E)  not produce but not incur an economic loss. 
A)  be able to make an economic profit. 
B)  produce but incur an economic loss. 
C)  make zero economic profit. 
D)  not produce and will incur an economic loss equal to its total fixed cost. 
E)  not produce but not incur an economic loss.

Question 9

The largest loss a profit-maximizing perfectly competitive firm can incur in the short run equals its

Accepted Answer

A)  average variable cost multiplied by output. 
B)  total fixed cost. 
C)  marginal cost multiplied by the number of units produced. 
D)  average total cost multiplied by the number of units produced. 
E)  total variable cost. 
A)  average variable cost multiplied by output. 
B)  total fixed cost. 
C)  marginal cost multiplied by the number of units produced. 
D)  average total cost multiplied by the number of units produced. 
E)  total variable cost.

Question 10

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-Suppose the price of a can was $5.10.In this case,to maximize its profit,the firm illustrated in the figure above would

Accepted Answer

A)  decrease its production and would make an economic profit. 
B)  not change its production and would make zero economic profit. 
C)  not change its production and would make an economic profit. 
D)  decrease its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss. 
A)  decrease its production and would make an economic profit. 
B)  not change its production and would make zero economic profit. 
C)  not change its production and would make an economic profit. 
D)  decrease its production and would incur an economic loss. 
E)  not change its production and would incur an economic loss.

Question 11

John keeps beehives and sells 100 quarts of honey per month.The honey market is perfectly competitive,and the price of a quart of honey is $10.John has an average variable cost of $5 and an average fixed cost of $3.At 100 quarts per month,John's marginal cost is $10.
a.Is John maximizing his profit? If not,what should John do?
b.Calculate John's total revenue,total cost,and total economic profit or economic loss when he produces 100 quarts of honey.

Accepted Answer

a.Yes,John is maximizing his profit beca

Question 12

If it does not shut down,a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

Accepted Answer

A)  only in the short run. 
B)  only in the long run. 
C)  always to maximize its profit. 
D)  only if it is not possible to produce where price equals average variable cost. 
E)  only if it is not possible to produce where price is greater than average total cost. 
A)  only in the short run. 
B)  only in the long run. 
C)  always to maximize its profit. 
D)  only if it is not possible to produce where price equals average variable cost. 
E)  only if it is not possible to produce where price is greater than average total cost.

Question 13

Can a perfectly competitive firm make an economic profit in the short run? Can it incur an economic loss?

Accepted Answer

In the short run,a perfectly competitive

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 $4.00.What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

Accepted Answer

Acme's most profitable (which means,in t

Question 15

In the long run,perfectly competitive firms produce at the output level that has the minimum

Accepted Answer

A)  marginal cost. 
B)  average total cost. 
C)  average variable cost. 
D)  average fixed cost. 
E)  total revenue. 
A)  marginal cost. 
B)  average total cost. 
C)  average variable cost. 
D)  average fixed cost. 
E)  total revenue.

Question 16

How does the demand for any one seller's product in perfect competition compare to the market demand for that product?

Accepted Answer

A)  They are identical. 
B)  The demand for any one seller is proportionally smaller but otherwise identical to the market demand. 
C)  The demand for any one seller's product is perfectly elastic while the market demand curve is downward sloping. 
D)  There is no demand for any one seller's competitively sold product. 
E)  The demand for any one seller's product is not perfectly elastic while the market demand is perfectly elastic. 
A)  They are identical. 
B)  The demand for any one seller is proportionally smaller but otherwise identical to the market demand. 
C)  The demand for any one seller's product is perfectly elastic while the market demand curve is downward sloping. 
D)  There is no demand for any one seller's competitively sold product. 
E)  The demand for any one seller's product is not perfectly elastic while the market demand is perfectly elastic.

Question 17

The firm's supply curve is its

Accepted Answer

A)  marginal cost curve above the average variable cost curve. 
B)  marginal cost curve below the average variable cost curve. 
C)  average variable cost curve above the marginal cost curve. 
D)  average total cost curve above the marginal cost curve. 
E)  marginal revenue curve above the average total cost curve. 
A)  marginal cost curve above the average variable cost curve. 
B)  marginal cost curve below the average variable cost curve. 
C)  average variable cost curve above the marginal cost curve. 
D)  average total cost curve above the marginal cost curve. 
E)  marginal revenue curve above the average total cost curve.

Question 18

If a perfectly competitive wheat farmer is maximizing its profit and then increases its output,the farmer's

Accepted Answer

A)  total revenue increases, but total cost rises by more so that the farmer's total profit decreases. 
B)  total revenue decreases and total cost increases, both thereby decreasing the farmer's total profit. 
C)  total revenue does not change but total cost increases, thereby decreasing the farmer's total profit. 
D)  marginal revenue increases, but so does marginal cost, so that the farmer's total profit increases. 
E)  total revenue and total cost both rise, but the effect on the farmer's total profit is uncertain. 
A)  total revenue increases, but total cost rises by more so that the farmer's total profit decreases. 
B)  total revenue decreases and total cost increases, both thereby decreasing the farmer's total profit. 
C)  total revenue does not change but total cost increases, thereby decreasing the farmer's total profit. 
D)  marginal revenue increases, but so does marginal cost, so that the farmer's total profit increases. 
E)  total revenue and total cost both rise, but the effect on the farmer's total profit is uncertain.

Question 19

The above figure shows some 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)  $3.00 per can 
C)  $5.15 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)  $3.00 per can 
C)  $5.15 per can 
D)  None of the above prices is correct. 
E)  More information is needed to determine the price of a can.

Question 20

A perfectly competitive firm

Accepted Answer

A)  sells a product that has perfect substitutes. 
B)  has a perfectly inelastic demand. 
C)  has a perfectly elastic supply. 
D)  Answers A and B are correct. 
E)  Answers A and C are correct. 
A)  sells a product that has perfect substitutes. 
B)  has a perfectly inelastic demand. 
C)  has a perfectly elastic supply. 
D)  Answers A and B are correct. 
E)  Answers A and C are correct.

Based on the figure above,if the firm produces 7 cans per day,the firm maximizing its profit and is .

If a perfectly competitive firm finds that the price exceeds its ATC,then the firm

In a perfectly competitive industry, i.entry by new firms shifts the market supply curve rightward. ii.exit by existing firms shifts the market supply curve leftward. iii.at all times existing firms make only zero economic profit.

Technology reduces the average cost of production,so in the long run i.perfectly competitive firms produce at a lower average cost. ii.the market price of the good falls. iii.firms with older plants either exit the market or adopt the new technology.

Technological change brings a ________ to firms that adopt the new technology.

A perfectly competitive firm should shut down in the short-run if price falls below the minimum of

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC?,each produces 40 units,and the market price of the good is $20 per unit,then

In the long run,a perfectly competitive firm will

The largest loss a profit-maximizing perfectly competitive firm can incur in the short run equals its

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Suppose the price of a can was $5.10.In this case,to maximize its profit,the firm illustrated in the figure above would

If it does not shut down,a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

Can a perfectly competitive firm make an economic profit in the short run? Can it incur an economic loss?

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 $4.00.What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

In the long run,perfectly competitive firms produce at the output level that has the minimum

How does the demand for any one seller's product in perfect competition compare to the market demand for that product?

The firm's supply curve is its

If a perfectly competitive wheat farmer is maximizing its profit and then increases its output,the farmer's

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

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

Based on the figure above,if the firm produces 7 cans per day,the firm ________ maximizing its profit and is ________.

If a perfectly competitive firm finds that the price exceeds its ATC,then the firm

In a perfectly competitive industry, i.entry by new firms shifts the market supply curve rightward. ii.exit by existing firms shifts the market supply curve leftward. iii.at all times existing firms make only zero economic profit.

Technology reduces the average cost of production,so in the long run i.perfectly competitive firms produce at a lower average cost. ii.the market price of the good falls. iii.firms with older plants either exit the market or adopt the new technology.

Technological change brings a ________ to firms that adopt the new technology.

A perfectly competitive firm should shut down in the short-run if price falls below the minimum of

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC?,each produces 40 units,and the market price of the good is $20 per unit,then

In the long run,a perfectly competitive firm will

The largest loss a profit-maximizing perfectly competitive firm can incur in the short run equals its

The figure above shows some of a firm's cost curves and its marginal revenue curve. -Suppose the price of a can was $5.10.In this case,to maximize its profit,the firm illustrated in the figure above would

If it does not shut down,a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

Can a perfectly competitive firm make an economic profit in the short run? Can it incur an economic loss?

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 $4.00.What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?

In the long run,perfectly competitive firms produce at the output level that has the minimum

How does the demand for any one seller's product in perfect competition compare to the market demand for that product?

The firm's supply curve is its

If a perfectly competitive wheat farmer is maximizing its profit and then increases its output,the farmer's

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

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

Based on the figure above,if the firm produces 7 cans per day,the firm maximizing its profit and is .