Question 1

Figure 12-2  Figure 12-2 shows the demand,marginal cost (MC)and average total cost (ATC)curves for Jason's House of Apples.
-Refer to Figure 12-2.To maximize his profit,Jason should produce the rate of output indicated by point

Accepted Answer

A) a. 
B) b. 
C) e. 
D) d.

Question 2

Figure 12-4 
-Refer to Figure 12-4.Suppose the market price is $120.Which of the following is true?

Accepted Answer

A) The firm earns a profit equal to the area A. 
B) The firm earns a profit equal to the area A + B. 
C) The firm suffers a loss equal to the area A. 
D) The firm will break even.

Question 3

Explain two different ways to determine the profit-maximizing level of output for a firm in a perfectly competitive market.

Accepted Answer

The answer of Explain two different ways to determine the...

Question 4

Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?

Accepted Answer

A) Restaurants do not sell identical products. 
B) Restaurants compete in small market areas - neighborhoods and cities - rather than in regional or national markets.Therefore,restaurants are not small relative to their market size. 
C) Restaurants usually have entry barriers in the form of zoning restrictions and health regulations. 
D) Restaurants have significant liability costs that perfectly competitive firms do not have; for example,customers may sue if they suffer from food poisoning.

Question 5

The market demand curve in a perfectly competitive market is downward-sloping.

Accepted Answer

A) True 
 B)False

Question 6

If a firm in a perfectly competitive industry experiences persistent losses,in the long run it should

Accepted Answer

A) shut down temporarily and wait for market conditions to change. 
B) exit the industry. 
C) raise its price to cover average total cost. 
D) continue to operate if it can raise the demand for its product through advertising and quality improvements.

Question 7

To maximize profit,a perfectly competitive firm

Accepted Answer

A) should sell the quantity of output determined by the interaction between industry demand and supply. 
B) should sell the quantity of output that results in a value for total revenue that is equal to total cost. 
C) should produce the quantity of output that results in the greatest difference between total revenue and total cost. 
D) should produce the quantity of output that results in the greatest difference between marginal revenue and marginal cost.

Question 8

Producing where marginal revenue equals marginal cost is equivalent to producing where

Accepted Answer

A) average total cost equals average revenue. 
B) average fixed cost is minimized. 
C) total revenue is equal to total cost. 
D) total profit is maximized.

Question 9

Being able to label products as organic becomes very important to a number of firms when demand for these products is increasing.The increase in demand allows a firm to

Accepted Answer

A) decrease the quantity supplied and block entry into the market. 
B) increase supply,which raises the market price. 
C) charge a higher market price and earn a larger economic profit. 
D) lower average total cost and marginal cost,thereby increasing economic profit.

Question 10

A perfectly competitive firm in long-run equilibrium produces output at the lowest possible average total cost.

Accepted Answer

A) True 
 B)False

Question 11

In the long run,perfectly competitive firms earn zero economic profit.Why do firms enter an industry when they know that in the long-run they will not earn any profit?

Accepted Answer

The answer of In the long run,perfectly competitive firms earn...

Question 12

A perfectly competitive firm's short-run supply curve is

Accepted Answer

A) upward sloping and is the portion of the marginal cost curve that lies above the average total cost curve. 
B) upward sloping and is the portion of the marginal cost curve that lies above the average variable cost curve. 
C) perfectly elastic at the market price. 
D) horizontal at the minimum average total cost.

Question 13

Which of the following is not an assumption of perfectly competitive markets?

Accepted Answer

A) There are many sellers and many buyers,all of which are small relative to the market. 
B) Each firm produces a similar but not identical product. 
C) There are no barriers to new firms entering the market. 
D) The products sold by all firms in the market are identical.

Question 14

Figure 12-5 
-Refer to Figure 12-5.The firm's short-run supply curve is its

Accepted Answer

A) marginal cost curve. 
B) marginal cost curve from b and above. 
C) marginal cost curve from c and above. 
D) marginal cost curve from d and above.

Question 15

Table 12-2
  Arnie sells basketballs in a perfectly competitive market.Table 12-2 summarizes Arnie's output per day (Q),total cost (TC),average total cost (ATC)and marginal cost (MC).
-Refer to Table 12-2.What will Arnie's output be and how much profit will he earn if the market price of basketballs is $5.00?

Accepted Answer

A) Q = 1; profit = -$10. 
B) Q = 3; profit = -$7.50 
C) Q = 0; profit = -$10.00 
D) Price and profit cannot be determined from the information given.

Question 16

Letters are used to represent the terms used to answer this question: price (P),quantity of output (Q),total cost (TC)and average total cost (ATC).Which of the following equations is equal to a firm's profit?

Accepted Answer

A) P - ATC 
B) (P × Q)- TC 
C) (P × Q)- (P × AT
C)  
D) P - TC

Question 17

Figure 12-2  Figure 12-2 shows the demand,marginal cost (MC)and average total cost (ATC)curves for Jason's House of Apples.
-Refer to Figure 12-2.If Jason maximizes his profit he will produce the output rate indicated by point ________ and his average profit will equal ________.

Accepted Answer

A) d; $3 minus ATC at point d 
B) b; $3 minus ATC at point b 
C) e; $3 minus ATC at point e 
D) a; $3

Question 18

Why would a company continue to operate for many years while never once turning a profit rather than shut down immediately? Using revenue and cost analysis,explain when the company would shut down.

Accepted Answer

The answer of Why would a company continue to operate...

Question 19

For a firm in a perfectly competitive market,price is

Accepted Answer

A) equal to both average revenue and marginal revenue. 
B) equal to average revenue but greater than marginal revenue. 
C) greater than marginal revenue but less than average revenue. 
D) less than both average revenue and marginal revenue.

Question 20

Table 12-1
  Table 12-1 lists the various pounds (lbs.)of apples that Margie Stattler can sell.Assume that Margie operates in a perfectly competitive market.
-Refer to Table 12-1.What is Margie's total revenue if she sells 250 pounds of apples?

Accepted Answer

A) $250 
B) $500 
C) $750 
D) There is not enough information in the table to determine Margie's total revenue.

Exam 12: Firms in Perfectly Competitive Markets

Figure 12-2 Figure 12-2 shows the demand,marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 12-2.To maximize his profit,Jason should produce the rate of output indicated by point

Figure 12-4 -Refer to Figure 12-4.Suppose the market price is $120.Which of the following is true?

Explain two different ways to determine the profit-maximizing level of output for a firm in a perfectly competitive market.

Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?

The market demand curve in a perfectly competitive market is downward-sloping.

If a firm in a perfectly competitive industry experiences persistent losses,in the long run it should

To maximize profit,a perfectly competitive firm

Producing where marginal revenue equals marginal cost is equivalent to producing where

Being able to label products as organic becomes very important to a number of firms when demand for these products is increasing.The increase in demand allows a firm to

A perfectly competitive firm in long-run equilibrium produces output at the lowest possible average total cost.

In the long run,perfectly competitive firms earn zero economic profit.Why do firms enter an industry when they know that in the long-run they will not earn any profit?

A perfectly competitive firm's short-run supply curve is

Which of the following is not an assumption of perfectly competitive markets?

Figure 12-5 -Refer to Figure 12-5.The firm's short-run supply curve is its

Letters are used to represent the terms used to answer this question: price (P) ,quantity of output (Q) ,total cost (TC) and average total cost (ATC) .Which of the following equations is equal to a firm's profit?

Figure 12-2 Figure 12-2 shows the demand,marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 12-2.If Jason maximizes his profit he will produce the output rate indicated by point and his average profit will equal .

Why would a company continue to operate for many years while never once turning a profit rather than shut down immediately? Using revenue and cost analysis,explain when the company would shut down.

For a firm in a perfectly competitive market,price is

Table 12-1 Table 12-1 lists the various pounds (lbs.) of apples that Margie Stattler can sell.Assume that Margie operates in a perfectly competitive market. -Refer to Table 12-1.What is Margie's total revenue if she sells 250 pounds of apples?

Exam 12: Firms in Perfectly Competitive Markets

Figure 12-2 Figure 12-2 shows the demand,marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 12-2.To maximize his profit,Jason should produce the rate of output indicated by point

Figure 12-4 -Refer to Figure 12-4.Suppose the market price is $120.Which of the following is true?

Explain two different ways to determine the profit-maximizing level of output for a firm in a perfectly competitive market.

Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?

The market demand curve in a perfectly competitive market is downward-sloping.

If a firm in a perfectly competitive industry experiences persistent losses,in the long run it should

To maximize profit,a perfectly competitive firm

Producing where marginal revenue equals marginal cost is equivalent to producing where

Being able to label products as organic becomes very important to a number of firms when demand for these products is increasing.The increase in demand allows a firm to

A perfectly competitive firm in long-run equilibrium produces output at the lowest possible average total cost.

In the long run,perfectly competitive firms earn zero economic profit.Why do firms enter an industry when they know that in the long-run they will not earn any profit?

A perfectly competitive firm's short-run supply curve is

Which of the following is not an assumption of perfectly competitive markets?

Figure 12-5 -Refer to Figure 12-5.The firm's short-run supply curve is its

Letters are used to represent the terms used to answer this question: price (P) ,quantity of output (Q) ,total cost (TC) and average total cost (ATC) .Which of the following equations is equal to a firm's profit?

Figure 12-2 Figure 12-2 shows the demand,marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 12-2.If Jason maximizes his profit he will produce the output rate indicated by point ________ and his average profit will equal ________.

Why would a company continue to operate for many years while never once turning a profit rather than shut down immediately? Using revenue and cost analysis,explain when the company would shut down.

For a firm in a perfectly competitive market,price is

Table 12-1 Table 12-1 lists the various pounds (lbs.) of apples that Margie Stattler can sell.Assume that Margie operates in a perfectly competitive market. -Refer to Table 12-1.What is Margie's total revenue if she sells 250 pounds of apples?

Figure 12-2 Figure 12-2 shows the demand,marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. -Refer to Figure 12-2.If Jason maximizes his profit he will produce the output rate indicated by point and his average profit will equal .