Question 1

Use the table Costs for a Perfectly Competitive Firm I. What price would make this firm willing to produce five units? Explain. How much profit or loss would the firm make at that price and quantity? Show your work.
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Accepted Answer

The answer of Use the table Costs for a Perfectly...

Question 2

A firm is a price _____ if it accepts the market price as a given.

Accepted Answer

A)  maker 
B)  taker 
C)  faker 
D)  staker

Question 3

The decision to shut down a firm depends on whether the market price allows the firm to cover its:

Accepted Answer

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

Question 4

What is a key difference between a perfectly competitive market and a monopolistically competitive market?

Accepted Answer

A)  Perfectly competitive markets have identical products, but monopolistically competitive markets have slightly differentiated products. 
B)  Perfectly competitive markets have difficult entry and exit, but monopolistically competitive markets have easy entry and exit. 
C)  Perfectly competitive markets have many buyers and sellers, but monopolistically competitive markets have only a few sellers. 
D)  Perfectly competitive markets have imperfect information, but monopolistically competitive markets have perfect information.

Question 5

The market price of plunckets is $10, and the market for plunckets is perfectly competitive. If a firm in this market is choosing its optimal quantity of 98 plunckets, which of the following is NOT correct?

Accepted Answer

A)  The marginal cost of the 98th unit is zero. 
B)  The marginal cost of the 97th unit is less than $10. 
C)  The marginal cost of the 99th unit is more than $10. 
D)  The marginal revenue of the 98th unit is $10.

Question 6

Spangles are sold in a perfectly competitive market, and the market price of a spangle is $10. A firm in this market can produce 100 spangles at a cost of $4 each. What does this firm's demand curve look like?

Accepted Answer

A)  a horizontal line at $4 
B)  a vertical line at $14 
C)  a horizontal line at $6 
D)  a horizontal line at $10

Question 7

Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $18, what profit (or loss) will this firm earn?
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Accepted Answer

A)  a profit of $12 
B)  a loss of $60 
C)  a loss of $12 
D)  a profit of $60

Question 8

Suppose that Pumice Motor Company has total revenue of $800,000, fixed costs of $200,000, and variable costs of $900,000. If Pumice Motor company is known to be in a perfectly competitive market, which of the following is true?

Accepted Answer

A)  This market is in long-run equilibrium. 
B)  Firms will enter this market. 
C)  Firms will exit this market. 
D)  Pumice Motor Company's average total cost is as low as it can be.

Question 9

Suppose that Pumice Motor Company has total revenue of $800,000, fixed costs of $200,000, and variable costs of $600,000. If Pumice Motor company is known to be in a perfectly competitive market, which of the following is true?

Accepted Answer

A)  This market is in long-run equilibrium. 
B)  Firms will enter this market. 
C)  Firms will exit this market. 
D)  Magma's average total cost is as low as it can be.

Question 10

What happens if price is less than average total cost in a perfectly competitive market?

Accepted Answer

A)  Firms will be attracted to the market, and the market supply curve increases. 
B)  Firms experience losses. 
C)  Firms experience economic profit equal to zero. 
D)  Firms experience economic profits.

Question 11

Use the figure A Perfectly Competitive Market in the Short Run II. If the price in this market persists, what will happen in the long run?
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Figure: A Perfectly Competitive Market in the Short Run II

Accepted Answer

A)  Firms will enter the market, and the market supply curve shifts to the right, lowering the price. 
B)  Firms will exit the market, and the average total cost curve shifts down, returning the firm to profit. 
C)  Firms will exit the market, and the market supply curve shifts to the left, raising the price. 
D)  Firms will enter the market, raising the marginal cost curve and increasing profits.

Question 12

What role does information play in the ability of firms in perfectly competitive markets to charge a price higher than the market price?

Accepted Answer

The answer of What role does information play in the...

Question 13

When perfectly competitive firms are in long-run equilibrium:

Accepted Answer

A)  P = MR = MC = AVC. 
B)  P > MR > MC > ATC. 
C)  P = MR = MC = ATC. 
D)  P > MR = MC > ATC.

Question 14

Which of the following statements about market structures is NOT true?

Accepted Answer

A)  Perfect competition and monopoly are opposite extremes of competition. 
B)  Market structures vary based on number of firms, ease of entry and exit, and product differentiation. 
C)  Horizontal demand curves exist in all four market structures. 
D)  A duopoly has more firms than a monopoly.

Question 15

How many buyers are there in a perfectly competitive market?

Accepted Answer

A)  one 
B)  two 
C)  many 
D)  a few

Question 16

What is the shape of the market demand curve for a perfectly competitive market? What is the shape of the individual firm's demand curve in a perfectly competitive market? Explain why they are different.

Accepted Answer

The answer of What is the shape of the market...

Question 17

In the market for empanadas, there are many buyers and sellers. However, Malini's empanadas have a unique seasoning that people are willing to pay more for. What feature of perfect competition does this market violate?

Accepted Answer

A)  many sellers 
B)  perfect information 
C)  standardized product 
D)  easy entry and exit

Question 18

In a perfectly competitive market, the market price is $2, and firms are producing 100 units. At a quantity of 100 units, average total cost is $4, and average variable cost is $3. In the short run, firms will:

Accepted Answer

A)  shut down, but the price will remain at $2. 
B)  exit the market, increasing the price to $3. 
C)  enter the market, increasing the price to $4. 
D)  exit the market, increasing the price to $4.

Question 19

A firm pays $500,000 per year on costs that it cannot alter in the short run. This year, it expects to produce 100 units, and it will pay $400,000 on the inputs to produce those 100 units. What is this firm's average variable cost?

Accepted Answer

A)  $5,000 
B)  $9,000 
C)  $4,000 
D)  $1,000

Question 20

Alpha, Inc. knows that its lowest average variable cost is $400 and its lowest average total cost is $1,000. What price would make Alpha, Inc. willing to produce in the short run but not in the long run?

Accepted Answer

A)  $300 
B)  $420 
C)  $1,001 
D)  $1,400

Exam 9: Perfect Competition

Use the table Costs for a Perfectly Competitive Firm I. What price would make this firm willing to produce five units? Explain. How much profit or loss would the firm make at that price and quantity? Show your work.

A firm is a price _____ if it accepts the market price as a given.

The decision to shut down a firm depends on whether the market price allows the firm to cover its:

What is a key difference between a perfectly competitive market and a monopolistically competitive market?

The market price of plunckets is $10, and the market for plunckets is perfectly competitive. If a firm in this market is choosing its optimal quantity of 98 plunckets, which of the following is NOT correct?

Spangles are sold in a perfectly competitive market, and the market price of a spangle is $10. A firm in this market can produce 100 spangles at a cost of $4 each. What does this firm's demand curve look like?

Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $18, what profit (or loss) will this firm earn?

Suppose that Pumice Motor Company has total revenue of $800,000, fixed costs of $200,000, and variable costs of $900,000. If Pumice Motor company is known to be in a perfectly competitive market, which of the following is true?

Suppose that Pumice Motor Company has total revenue of $800,000, fixed costs of $200,000, and variable costs of $600,000. If Pumice Motor company is known to be in a perfectly competitive market, which of the following is true?

What happens if price is less than average total cost in a perfectly competitive market?

Use the figure A Perfectly Competitive Market in the Short Run II. If the price in this market persists, what will happen in the long run? Figure: A Perfectly Competitive Market in the Short Run II

What role does information play in the ability of firms in perfectly competitive markets to charge a price higher than the market price?

When perfectly competitive firms are in long-run equilibrium:

Which of the following statements about market structures is NOT true?

How many buyers are there in a perfectly competitive market?

What is the shape of the market demand curve for a perfectly competitive market? What is the shape of the individual firm's demand curve in a perfectly competitive market? Explain why they are different.

In the market for empanadas, there are many buyers and sellers. However, Malini's empanadas have a unique seasoning that people are willing to pay more for. What feature of perfect competition does this market violate?

In a perfectly competitive market, the market price is $2, and firms are producing 100 units. At a quantity of 100 units, average total cost is $4, and average variable cost is $3. In the short run, firms will:

A firm pays $500,000 per year on costs that it cannot alter in the short run. This year, it expects to produce 100 units, and it will pay $400,000 on the inputs to produce those 100 units. What is this firm's average variable cost?

Alpha, Inc. knows that its lowest average variable cost is $400 and its lowest average total cost is $1,000. What price would make Alpha, Inc. willing to produce in the short run but not in the long run?

Exam 9: Perfect Competition

Use the table Costs for a Perfectly Competitive Firm I. What price would make this firm willing to produce five units? Explain. How much profit or loss would the firm make at that price and quantity? Show your work. ​ ​

A firm is a price _____ if it accepts the market price as a given.

The decision to shut down a firm depends on whether the market price allows the firm to cover its:

What is a key difference between a perfectly competitive market and a monopolistically competitive market?

The market price of plunckets is $10, and the market for plunckets is perfectly competitive. If a firm in this market is choosing its optimal quantity of 98 plunckets, which of the following is NOT correct?

Spangles are sold in a perfectly competitive market, and the market price of a spangle is $10. A firm in this market can produce 100 spangles at a cost of $4 each. What does this firm's demand curve look like?

Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $18, what profit (or loss) will this firm earn? ​

Suppose that Pumice Motor Company has total revenue of $800,000, fixed costs of $200,000, and variable costs of $900,000. If Pumice Motor company is known to be in a perfectly competitive market, which of the following is true?

Suppose that Pumice Motor Company has total revenue of $800,000, fixed costs of $200,000, and variable costs of $600,000. If Pumice Motor company is known to be in a perfectly competitive market, which of the following is true?

What happens if price is less than average total cost in a perfectly competitive market?

Use the figure A Perfectly Competitive Market in the Short Run II. If the price in this market persists, what will happen in the long run? ​ Figure: A Perfectly Competitive Market in the Short Run II

What role does information play in the ability of firms in perfectly competitive markets to charge a price higher than the market price?

When perfectly competitive firms are in long-run equilibrium:

Which of the following statements about market structures is NOT true?

How many buyers are there in a perfectly competitive market?

What is the shape of the market demand curve for a perfectly competitive market? What is the shape of the individual firm's demand curve in a perfectly competitive market? Explain why they are different.

In the market for empanadas, there are many buyers and sellers. However, Malini's empanadas have a unique seasoning that people are willing to pay more for. What feature of perfect competition does this market violate?

In a perfectly competitive market, the market price is $2, and firms are producing 100 units. At a quantity of 100 units, average total cost is $4, and average variable cost is $3. In the short run, firms will:

A firm pays $500,000 per year on costs that it cannot alter in the short run. This year, it expects to produce 100 units, and it will pay $400,000 on the inputs to produce those 100 units. What is this firm's average variable cost?

Alpha, Inc. knows that its lowest average variable cost is $400 and its lowest average total cost is $1,000. What price would make Alpha, Inc. willing to produce in the short run but not in the long run?

Use the table Costs for a Perfectly Competitive Firm I. What price would make this firm willing to produce five units? Explain. How much profit or loss would the firm make at that price and quantity? Show your work.

Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $18, what profit (or loss) will this firm earn?

Use the figure A Perfectly Competitive Market in the Short Run II. If the price in this market persists, what will happen in the long run? Figure: A Perfectly Competitive Market in the Short Run II