Question 1

In which one of the following situations will a perfectly competitive firm make an economic profit?

Accepted Answer

A) MR > AVC 
B) MR > ATC 
C) ATC > MC 
D) ATC > MR 
E) MC > AVC 
A) MR > AVC 
B) MR > ATC 
C) ATC > MC 
D) ATC > MR 
E) MC > AVC B

Question 2

Use the figure below to answer the following question.   Figure 11.2.1
-Refer to Figure 11.2.1,which shows a perfectly competitive firm's total revenue and total cost curves.Which one of the following statements is false?

Accepted Answer

A) Economic profit is the vertical distance between the total revenue curve and the total cost curve. 
B) At an output of Q1 units a day,the firm makes zero economic profit. 
C) At an output greater than Q3 units a day,the firm incurs an economic loss. 
D) At an output of Q2 units a day,the firm incurs an economic loss. 
E) At an output less than Q1 units a day,the firm incurs an economic loss. 
A) Economic profit is the vertical distance between the total revenue curve and the total cost curve. 
B) At an output of Q1 units a day,the firm makes zero economic profit. 
C) At an output greater than Q3 units a day,the firm incurs an economic loss. 
D) At an output of Q2 units a day,the firm incurs an economic loss. 
E) At an output less than Q1 units a day,the firm incurs an economic loss. D

Question 3

Use the figure below to answer the following questions.   Figure 11.3.1
-Refer to Figure 11.3.1,which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive industry.In the short run,if the market price of the good is $10,the firm produces ________ units of output and ________.

Accepted Answer

A) 10;incurs an economic loss of $20 
B) 10;incurs an economic loss of $40 
C) less than 10;incurs an economic loss of $20 
D) 10;makes an economic profit of $20 
E) less than 10;incurs an economic loss of less than $20 
A) 10;incurs an economic loss of $20 
B) 10;incurs an economic loss of $40 
C) less than 10;incurs an economic loss of $20 
D) 10;makes an economic profit of $20 
E) less than 10;incurs an economic loss of less than $20 E

Question 4

Use the figure below to answer the following questions.   Figure 11.2.2
-Refer to Figure 11.2.2,which shows a perfectly competitive firm's economic profit and loss.The firm is breaking even at points

Accepted Answer

A) A and C. 
B) A and D. 
C) B and C. 
D) B and D. 
E) C and D. 
A) A and C. 
B) A and D. 
C) B and C. 
D) B and D. 
E) C and D.

Question 5

Use the table below to answer the following question.
Table 11.2.4
    
-Refer to Table 11.2.4.The market is perfectly competitive and there are 1,000 firms that produce paper. The top table sets out the market demand schedule for paper.
Each producer of paper has the costs shown in the bottom table when it uses its least-cost plant size.
The market price is ________ a box and the market output is ________ boxes.The output produced by each firm is ________ boxes.Each firm ________.

Accepted Answer

A) $7.00;250,000;250;incurs an economic loss of $1,000 a week 
B) $8.40;350,000;350;makes zero economic profit 
C) $7.65;300,000;300;incurs an economic loss of $834 a week 
D) $8.40;350,000;350;incurs an economic loss of $581 a week 
E) $7.65;350,000;300;makes zero economic profit 
A) $7.00;250,000;250;incurs an economic loss of $1,000 a week 
B) $8.40;350,000;350;makes zero economic profit 
C) $7.65;300,000;300;incurs an economic loss of $834 a week 
D) $8.40;350,000;350;incurs an economic loss of $581 a week 
E) $7.65;350,000;300;makes zero economic profit

Question 6

Assume that the leather market is a perfectly competitive market.The market demand curve for leather is ________ and each individual leather producer's demand curve is ________.

Accepted Answer

A) vertical;downward sloping 
B) downward sloping;horizontal 
C) downward sloping;vertical 
D) horizontal;horizontal 
E) horizontal;downward sloping 
A) vertical;downward sloping 
B) downward sloping;horizontal 
C) downward sloping;vertical 
D) horizontal;horizontal 
E) horizontal;downward sloping

Question 7

Use the figure below to answer the following questions.   Figure 11.1.1
-Refer to Figure 11.1.1.The firm competes in a perfectly competitive market.The total revenue curve is a straight line because the firm

Accepted Answer

A) is a price taker. 
B) faces constant returns to scale. 
C) wants to maximize profits. 
D) has perfect information. 
E) has constant marginal cost. 
A) is a price taker. 
B) faces constant returns to scale. 
C) wants to maximize profits. 
D) has perfect information. 
E) has constant marginal cost.

Question 8

Firms will stop exiting a market only when

Accepted Answer

A) marginal revenue equals price. 
B) marginal revenue equals marginal cost. 
C) all remaining firms are making an economic profit. 
D) all remaining firms are making zero economic profit. 
E) marginal revenue equals average fixed cost. 
A) marginal revenue equals price. 
B) marginal revenue equals marginal cost. 
C) all remaining firms are making an economic profit. 
D) all remaining firms are making zero economic profit. 
E) marginal revenue equals average fixed cost.

Question 9

A firm that temporarily shuts down and produces no output incurs a loss equal to its

Accepted Answer

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

Question 10

Initially,a perfectly competitive market that has 1,000 firms is in long-run equilibrium.Then 100 firms in the industry adopt a new technology that reduces the average cost of producing the good.In the short run,the price ________,firms with the new technology make ________ economic profit,and firms with the old technology ________.

Accepted Answer

A) remains the same;zero;incur an economic loss 
B) remains the same;positive;break even 
C) falls;positive;incur an economic loss 
D) remains the same;positive;incur an economic loss 
E) falls;break even;incur an economic loss 
A) remains the same;zero;incur an economic loss 
B) remains the same;positive;break even 
C) falls;positive;incur an economic loss 
D) remains the same;positive;incur an economic loss 
E) falls;break even;incur an economic loss

Question 11

Which one of the following does not occur in perfect competition?

Accepted Answer

A) No single firm can exert a significant influence on the market price of the good. 
B) There are many buyers. 
C) There are significant restrictions on entry into the market. 
D) Sellers and buyers are well informed about prices. 
E) Established firms have no advantage over new ones. 
A) No single firm can exert a significant influence on the market price of the good. 
B) There are many buyers. 
C) There are significant restrictions on entry into the market. 
D) Sellers and buyers are well informed about prices. 
E) Established firms have no advantage over new ones.

Question 12

Use the figure below to answer the following question.   Figure 11.4.4
-Refer to Figure 11.4.4,which shows the cost curves for a perfectly competitive firm.If all firms in the market have the same cost curves and the price is $16 per unit,

Accepted Answer

A) the market is in long-run equilibrium. 
B) in the long run,firms will leave this market. 
C) in the long run,the price will fall as new firms enter the market. 
D) the firm is making zero economic profit. 
E) none of the above 
A) the market is in long-run equilibrium. 
B) in the long run,firms will leave this market. 
C) in the long run,the price will fall as new firms enter the market. 
D) the firm is making zero economic profit. 
E) none of the above

Question 13

In a perfectly competitive market,a firm maximizes its profit by producing the quantity of output at which

Accepted Answer

A) market price equals average fixed cost. 
B) market price equals marginal cost. 
C) average variable cost equals average fixed cost. 
D) market price equals minimum average variable cost. 
E) market price equals marginal revenue. 
A) market price equals average fixed cost. 
B) market price equals marginal cost. 
C) average variable cost equals average fixed cost. 
D) market price equals minimum average variable cost. 
E) market price equals marginal revenue.

Question 14

If a profit-maximizing firm in a perfectly competitive market is making an economic profit,then it must be producing a level of output where

Accepted Answer

A) price is greater than marginal cost. 
B) price is greater than marginal revenue. 
C) marginal cost is greater than marginal revenue. 
D) marginal cost is greater than average total cost. 
E) average total cost is greater than marginal cost. 
A) price is greater than marginal cost. 
B) price is greater than marginal revenue. 
C) marginal cost is greater than marginal revenue. 
D) marginal cost is greater than average total cost. 
E) average total cost is greater than marginal cost.

Question 15

If price falls below minimum average variable cost,the best a firm can do is

Accepted Answer

A) increase production and incur a loss equal to total variable cost. 
B) increase production and incur a loss equal to total fixed cost. 
C) stop production and incur a loss equal to total fixed cost. 
D) stop production and incur a loss equal to total variable cost. 
E) stay at the same production level and incur a loss equal to the difference between total cost and total revenue. 
A) increase production and incur a loss equal to total variable cost. 
B) increase production and incur a loss equal to total fixed cost. 
C) stop production and incur a loss equal to total fixed cost. 
D) stop production and incur a loss equal to total variable cost. 
E) stay at the same production level and incur a loss equal to the difference between total cost and total revenue.

Question 16

Use the table below to answer the following questions.
Table 11.2.3  
-Refer to Table 11.2.3,which gives the total cost schedule for Brenda's Balloon Shop,a perfectly competitive firm.The marginal cost of increasing production from 4 balloons an hour to 5 balloons an hour is

Accepted Answer

A) $1.00. 
B) $4.50. 
C) $4.70. 
D) $4.80. 
E) $4.40. 
A) $1.00. 
B) $4.50. 
C) $4.70. 
D) $4.80. 
E) $4.40.

Question 17

Use the figure below to answer the following questions.   Figure 11.4.1
-Refer to Figure 11.4.1,which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market.In the long run,

Accepted Answer

A) firms that remain in the market will expand production. 
B) market demand will increase. 
C) market supply will increase. 
D) firms will enter the market. 
E) firms that remain in the market will reduce production. 
A) firms that remain in the market will expand production. 
B) market demand will increase. 
C) market supply will increase. 
D) firms will enter the market. 
E) firms that remain in the market will reduce production.

Question 18

Use the information below to answer the following questions.
Fact 11.4.1
Franklin is a fiddlehead farmer.He sold 10 bags of fiddleheads last month,with total fixed cost of $100 and total variable cost of $50.
-Refer to Fact 11.4.1.If the price of fiddleheads last month was $15 per bag,Franklin

Accepted Answer

A) should have shut down because total revenue did not cover total variable cost. 
B) incurred an economic loss of $135. 
C) made zero economic profit. 
D) made an economic profit of $50. 
E) made an economic profit of $100. 
A) should have shut down because total revenue did not cover total variable cost. 
B) incurred an economic loss of $135. 
C) made zero economic profit. 
D) made an economic profit of $50. 
E) made an economic profit of $100.

Question 19

In a perfectly competitive market,which of the following increases the price that the firms charge in the short run?

Accepted Answer

A) an increase in the number of firms 
B) an increase in the price of a good that is a complement of the good produced in this market 
C) an increase in market supply 
D) a decrease in the price of a good that is a substitute for the good produced in this market 
E) an increase in market demand 
A) an increase in the number of firms 
B) an increase in the price of a good that is a complement of the good produced in this market 
C) an increase in market supply 
D) a decrease in the price of a good that is a substitute for the good produced in this market 
E) an increase in market demand

Question 20

Use the table below to answer the following questions.
Table 11.2.3  
-Refer to Table 11.2.3,which gives the total cost schedule for Brenda's Balloon Shop,a perfectly competitive firm.The average fixed cost of producing the 4th balloon is

Accepted Answer

A) $4.30. 
B) $4.80. 
C) $4.70. 
D) $4.50. 
E) $1.00. 
A) $4.30. 
B) $4.80. 
C) $4.70. 
D) $4.50. 
E) $1.00.

In which one of the following situations will a perfectly competitive firm make an economic profit?

Use the figure below to answer the following question. Figure 11.2.1 -Refer to Figure 11.2.1,which shows a perfectly competitive firm's total revenue and total cost curves.Which one of the following statements is false?

Use the figure below to answer the following questions. Figure 11.3.1 -Refer to Figure 11.3.1,which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive industry.In the short run,if the market price of the good is $10,the firm produces units of output and .

Use the figure below to answer the following questions. Figure 11.2.2 -Refer to Figure 11.2.2,which shows a perfectly competitive firm's economic profit and loss.The firm is breaking even at points

Assume that the leather market is a perfectly competitive market.The market demand curve for leather is and each individual leather producer's demand curve is .

Use the figure below to answer the following questions. Figure 11.1.1 -Refer to Figure 11.1.1.The firm competes in a perfectly competitive market.The total revenue curve is a straight line because the firm

Firms will stop exiting a market only when

A firm that temporarily shuts down and produces no output incurs a loss equal to its

Which one of the following does not occur in perfect competition?

Use the figure below to answer the following question. Figure 11.4.4 -Refer to Figure 11.4.4,which shows the cost curves for a perfectly competitive firm.If all firms in the market have the same cost curves and the price is $16 per unit,

In a perfectly competitive market,a firm maximizes its profit by producing the quantity of output at which

If a profit-maximizing firm in a perfectly competitive market is making an economic profit,then it must be producing a level of output where

If price falls below minimum average variable cost,the best a firm can do is

Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3,which gives the total cost schedule for Brenda's Balloon Shop,a perfectly competitive firm.The marginal cost of increasing production from 4 balloons an hour to 5 balloons an hour is

Use the figure below to answer the following questions. Figure 11.4.1 -Refer to Figure 11.4.1,which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market.In the long run,

Use the information below to answer the following questions. Fact 11.4.1 Franklin is a fiddlehead farmer.He sold 10 bags of fiddleheads last month,with total fixed cost of $100 and total variable cost of $50. -Refer to Fact 11.4.1.If the price of fiddleheads last month was $15 per bag,Franklin

In a perfectly competitive market,which of the following increases the price that the firms charge in the short run?

Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3,which gives the total cost schedule for Brenda's Balloon Shop,a perfectly competitive firm.The average fixed cost of producing the 4th balloon is

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 11: Perfect Competition

In which one of the following situations will a perfectly competitive firm make an economic profit?

Use the figure below to answer the following question. Figure 11.2.1 -Refer to Figure 11.2.1,which shows a perfectly competitive firm's total revenue and total cost curves.Which one of the following statements is false?

Use the figure below to answer the following questions. Figure 11.2.2 -Refer to Figure 11.2.2,which shows a perfectly competitive firm's economic profit and loss.The firm is breaking even at points

Assume that the leather market is a perfectly competitive market.The market demand curve for leather is ________ and each individual leather producer's demand curve is ________.

Use the figure below to answer the following questions. Figure 11.1.1 -Refer to Figure 11.1.1.The firm competes in a perfectly competitive market.The total revenue curve is a straight line because the firm

Firms will stop exiting a market only when

A firm that temporarily shuts down and produces no output incurs a loss equal to its

Which one of the following does not occur in perfect competition?

Use the figure below to answer the following question. Figure 11.4.4 -Refer to Figure 11.4.4,which shows the cost curves for a perfectly competitive firm.If all firms in the market have the same cost curves and the price is $16 per unit,

In a perfectly competitive market,a firm maximizes its profit by producing the quantity of output at which

If a profit-maximizing firm in a perfectly competitive market is making an economic profit,then it must be producing a level of output where

If price falls below minimum average variable cost,the best a firm can do is

Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3,which gives the total cost schedule for Brenda's Balloon Shop,a perfectly competitive firm.The marginal cost of increasing production from 4 balloons an hour to 5 balloons an hour is

Use the figure below to answer the following questions. Figure 11.4.1 -Refer to Figure 11.4.1,which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market.In the long run,

Use the information below to answer the following questions. Fact 11.4.1 Franklin is a fiddlehead farmer.He sold 10 bags of fiddleheads last month,with total fixed cost of $100 and total variable cost of $50. -Refer to Fact 11.4.1.If the price of fiddleheads last month was $15 per bag,Franklin

In a perfectly competitive market,which of the following increases the price that the firms charge in the short run?

Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3,which gives the total cost schedule for Brenda's Balloon Shop,a perfectly competitive firm.The average fixed cost of producing the 4th balloon is

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Assume that the leather market is a perfectly competitive market.The market demand curve for leather is and each individual leather producer's demand curve is .