Question 1

The firm's over-riding objective is to

Accepted Answer

A)  earn a normal profit. 
B)  maximize normal profit. 
C)  maximize economic profit. 
D)  maximize total revenue. 
E)  avoid an economic loss. 
A)  earn a normal profit. 
B)  maximize normal profit. 
C)  maximize economic profit. 
D)  maximize total revenue. 
E)  avoid an economic loss.

Question 2

For a perfectly competitive sugar producer in Haiti,a short-run economic profit will occur if the price of each ton of sugar sold is

Accepted Answer

A)  greater than the average total cost of producing sugar. 
B)  equal to the average total cost of producing sugar. 
C)  less than the average total cost of producing sugar. 
D)  rising as more sugar is sold. 
E)  greater than the marginal revenue of each ton of sugar. 
A)  greater than the average total cost of producing sugar. 
B)  equal to the average total cost of producing sugar. 
C)  less than the average total cost of producing sugar. 
D)  rising as more sugar is sold. 
E)  greater than the marginal revenue of each ton of sugar.

Question 3

-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,the firm is

Accepted Answer

A)  making zero economic profit. 
B)  making an economic profit of $12,000 an hour. 
C)  incurring an economic loss of $2,800 an hour. 
D)  incurring an economic loss of $2,000 an hour. 
E)  making an economic profit of $2,400 an hour. 
A)  making zero economic profit. 
B)  making an economic profit of $12,000 an hour. 
C)  incurring an economic loss of $2,800 an hour. 
D)  incurring an economic loss of $2,000 an hour. 
E)  making an economic profit of $2,400 an hour.

Question 4

When firms in a perfectly competitive market are earning an economic profit,in the long run

Accepted Answer

A)  no new firms will enter the market. 
B)  new firms will enter the market. 
C)  firms will exit the market. 
D)  the long-run average cost curve shifts downward. 
E)  the initial firms continue to earn an economic profit. 
A)  no new firms will enter the market. 
B)  new firms will enter the market. 
C)  firms will exit the market. 
D)  the long-run average cost curve shifts downward. 
E)  the initial firms continue to earn an economic profit.

Question 5

If perfectly competitive firms are making an economic profit,the economic profit

Accepted Answer

A)  attracts entry by more firms, which lowers the price. 
B)  can be earned both in the short run and the long run. 
C)  is less than the normal profit. 
D)  leads to a decrease in market demand. 
E)  generally leads to firms exiting as they seek higher profit in other markets. 
A)  attracts entry by more firms, which lowers the price. 
B)  can be earned both in the short run and the long run. 
C)  is less than the normal profit. 
D)  leads to a decrease in market demand. 
E)  generally leads to firms exiting as they seek higher profit in other markets.

Question 6

Keith is a perfectly competitive carnation grower.The market price is $2 per dozen carnations.Keith's average total cost to grow carnations is $2.50 per dozen.In the long run,Keith will

Accepted Answer

A)  raise his price to more than $2.50 per dozen carnations. 
B)  raise his price to $2.50 per dozen carnations. 
C)  exit the industry if the price and his costs do not change. 
D)  incur an economic loss. 
E)  continue to make an economic profit. 
A)  raise his price to more than $2.50 per dozen carnations. 
B)  raise his price to $2.50 per dozen carnations. 
C)  exit the industry if the price and his costs do not change. 
D)  incur an economic loss. 
E)  continue to make an economic profit.

Question 7

Jerry's Jellybean Factory produces 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market.The marginal cost is $3 per pound,the average variable cost is $2 per pound,and the beans sell for $4 per pound.Jerry

Accepted Answer

A)  is maximizing profit. 
B)  is incurring an economic loss and should shut down. 
C)  could increase his profit by producing more beans. 
D)  could increase his profit by producing fewer beans. 
E)  could increase his profit by raising the price of his beans. 
A)  is maximizing profit. 
B)  is incurring an economic loss and should shut down. 
C)  could increase his profit by producing more beans. 
D)  could increase his profit by producing fewer beans. 
E)  could increase his profit by raising the price of his beans.

Question 8

-The above figure shows a perfectly competitive firm.If the market price is $20 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 9

To eliminate losses in a perfectly competitive market,firms exit the industry.This exit results in

Accepted Answer

A)  an increase in market supply. 
B)  a decrease in market supply. 
C)  an increase in market demand. 
D)  a decrease in market demand. 
E)  a decrease in both the market supply and the market demand. 
A)  an increase in market supply. 
B)  a decrease in market supply. 
C)  an increase in market demand. 
D)  a decrease in market demand. 
E)  a decrease in both the market supply and the market demand.

Question 10

We know that a perfectly competitive firm is a price taker because

Accepted Answer

A)  its MC curve slopes upward. 
B)  its ATC curve is U-shaped. 
C)  its demand curve is horizontal. 
D)  MC and ATC are equal at the profit-maximizing amount of output. 
E)  it has no supply curve. 
A)  its MC curve slopes upward. 
B)  its ATC curve is U-shaped. 
C)  its demand curve is horizontal. 
D)  MC and ATC are equal at the profit-maximizing amount of output. 
E)  it has no supply curve.

Question 11

-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 produce 30 units,and the market price of the good is $16 per unit,then the firms

Accepted Answer

A)  make zero economic profit and new firms enter the market. 
B)  make zero economic profit and no firms enter or exit the market. 
C)  make zero economic profit and some firms exit the market. 
D)  incur an economic loss and some firms exit the market. 
E)  make an economic profit and new firms enter the market. 
A)  make zero economic profit and new firms enter the market. 
B)  make zero economic profit and no firms enter or exit the market. 
C)  make zero economic profit and some firms exit the market. 
D)  incur an economic loss and some firms exit the market. 
E)  make an economic profit and new firms enter the market.

Question 12

-The figure above shows a perfectly competitive firm.If the market price is $20 per unit,then the firm produces ________ units and makes an economic profit that is ________.

Accepted Answer

A)  more than 30; more than $100 
B)  30; more than $100 
C)  20; less than $400 
D)  0; zero 
E)  30; zero 
A)  more than 30; more than $100 
B)  30; more than $100 
C)  20; less than $400 
D)  0; zero 
E)  30; zero

Question 13

A perfectly competitive firm will maximize profit when the quantity produced is such that the

Accepted Answer

A)  firm's total revenue is equal to total cost. 
B)  firm's marginal revenue is equal to the price. 
C)  firm's marginal revenue is equal to its marginal cost. 
D)  price exceeds the firm's marginal cost by as much as possible. 
E)  firm's marginal revenue exceeds its marginal cost by the maximum amount possible. 
A)  firm's total revenue is equal to total cost. 
B)  firm's marginal revenue is equal to the price. 
C)  firm's marginal revenue is equal to its marginal cost. 
D)  price exceeds the firm's marginal cost by as much as possible. 
E)  firm's marginal revenue exceeds its marginal cost by the maximum amount possible.

Question 14

In a perfectly competitive market,one farmer's barley is

Accepted Answer

A)  completely different from another farmer's barley. 
B)  a perfect substitute for another farmer's barley. 
C)  a monopolized product in that farmer's local market. 
D)  a monopolized product in the national market. 
E)  slightly different from another farmer's barley. 
A)  completely different from another farmer's barley. 
B)  a perfect substitute for another farmer's barley. 
C)  a monopolized product in that farmer's local market. 
D)  a monopolized product in the national market. 
E)  slightly different from another farmer's barley.

Question 15

What four conditions define a perfectly competitive market?

Accepted Answer

The four conditions are that:
a.many fir

Question 16

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

Accepted Answer

A)  is making an economic profit. 
B)  is making zero economic profit. 
C)  will immediately shut down. 
D)  will not shut down. 
E)  might shut down but more information is needed about the AVC. 
A)  is making an economic profit. 
B)  is making zero economic profit. 
C)  will immediately shut down. 
D)  will not shut down. 
E)  might shut down but more information is needed about the AVC.

Question 17

The price charged by a perfectly competitive firm is

Accepted Answer

A)  the same as the market price. 
B)  different than the price charged by competing firms. 
C)  lower the more the firm produces. 
D)  higher the more the firm produces. 
E)  indeterminate. 
A)  the same as the market price. 
B)  different than the price charged by competing firms. 
C)  lower the more the firm produces. 
D)  higher the more the firm produces. 
E)  indeterminate.

Question 18

When a firm adopts new technology,generally its

Accepted Answer

A)  cost curves shift upward. 
B)  cost curves shift downward. 
C)  cost curves are unaffected. 
D)  supply curve shifts leftward. 
E)  production permanently decreases. 
A)  cost curves shift upward. 
B)  cost curves shift downward. 
C)  cost curves are unaffected. 
D)  supply curve shifts leftward. 
E)  production permanently decreases.

Question 19

If the market price is less than a perfectly competitive firm's average total cost,what sort of profit or loss is the firm earning?

Accepted Answer

If the price is less

Question 20

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

Accepted Answer

A)  when it is making a normal profit 
B)  whenever its marginal cost is less than its marginal revenue 
C)  when the price is less than its minimum average variable cost 
D)  whenever its total cost is greater than its total revenue 
E)  when the price is less than its minimum average total cost 
A)  when it is making a normal profit 
B)  whenever its marginal cost is less than its marginal revenue 
C)  when the price is less than its minimum average variable cost 
D)  whenever its total cost is greater than its total revenue 
E)  when the price is less than its minimum average total cost

The firm's over-riding objective is to

For a perfectly competitive sugar producer in Haiti,a short-run economic profit will occur if the price of each ton of sugar sold is

-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,the firm is

When firms in a perfectly competitive market are earning an economic profit,in the long run

If perfectly competitive firms are making an economic profit,the economic profit

Keith is a perfectly competitive carnation grower.The market price is $2 per dozen carnations.Keith's average total cost to grow carnations is $2.50 per dozen.In the long run,Keith will

Jerry's Jellybean Factory produces 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market.The marginal cost is $3 per pound,the average variable cost is $2 per pound,and the beans sell for $4 per pound.Jerry

-The above figure shows a perfectly competitive firm.If the market price is $20 per unit,the firm

To eliminate losses in a perfectly competitive market,firms exit the industry.This exit results in

We know that a perfectly competitive firm is a price taker because

-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 produce 30 units,and the market price of the good is $16 per unit,then the firms

-The figure above shows a perfectly competitive firm.If the market price is $20 per unit,then the firm produces units and makes an economic profit that is .

A perfectly competitive firm will maximize profit when the quantity produced is such that the

In a perfectly competitive market,one farmer's barley is

What four conditions define a perfectly competitive market?

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

The price charged by a perfectly competitive firm is

When a firm adopts new technology,generally its

If the market price is less than a perfectly competitive firm's average total cost,what sort of profit or loss is the firm earning?

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

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

The firm's over-riding objective is to

For a perfectly competitive sugar producer in Haiti,a short-run economic profit will occur if the price of each ton of sugar sold is

-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,the firm is

When firms in a perfectly competitive market are earning an economic profit,in the long run

If perfectly competitive firms are making an economic profit,the economic profit

Keith is a perfectly competitive carnation grower.The market price is $2 per dozen carnations.Keith's average total cost to grow carnations is $2.50 per dozen.In the long run,Keith will

Jerry's Jellybean Factory produces 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market.The marginal cost is $3 per pound,the average variable cost is $2 per pound,and the beans sell for $4 per pound.Jerry

-The above figure shows a perfectly competitive firm.If the market price is $20 per unit,the firm

To eliminate losses in a perfectly competitive market,firms exit the industry.This exit results in

We know that a perfectly competitive firm is a price taker because

-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 produce 30 units,and the market price of the good is $16 per unit,then the firms

-The figure above shows a perfectly competitive firm.If the market price is $20 per unit,then the firm produces ________ units and makes an economic profit that is ________.

A perfectly competitive firm will maximize profit when the quantity produced is such that the

In a perfectly competitive market,one farmer's barley is

What four conditions define a perfectly competitive market?

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

The price charged by a perfectly competitive firm is

When a firm adopts new technology,generally its

If the market price is less than a perfectly competitive firm's average total cost,what sort of profit or loss is the firm earning?

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

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 $20 per unit,then the firm produces units and makes an economic profit that is .