Question 1

When a firm is operating in a price-taker market, marginal revenue is

Accepted Answer

A)  equal to price. 
B)  always less than price. 
C)  equal to zero when the market is in long-run equilibrium. 
D)  equal to the change in output divided by the change in total revenue. 
A)  equal to price. 
B)  always less than price. 
C)  equal to zero when the market is in long-run equilibrium. 
D)  equal to the change in output divided by the change in total revenue.

Question 2

The entry of new firms into a competitive market will

Accepted Answer

A)  increase market supply and increase market prices. 
B)  increase market supply and decrease market prices. 
C)  decrease market supply and increase market prices. 
D)  decrease market supply and decrease market prices. 
A)  increase market supply and increase market prices. 
B)  increase market supply and decrease market prices. 
C)  decrease market supply and increase market prices. 
D)  decrease market supply and decrease market prices.

Question 3

In a strike, what does the union have to lose? What does management lose?

Accepted Answer

The most important loss to the striking

Question 4

For a certain firm, the 100th unit of output that the firm produces has marginal revenue equal to $10 and a marginal cost of $7. It follows that

Accepted Answer

A)  the production of the 100th unit of output increases the firm's profit by $3. 
B)  the production of the 100th unit of output increases the firm's average total cost by $7. 
C)  the firm's profit-maximizing level of output is less than 100 units. 
D)  the production of the 110th unit of output must increase the firm's profit by less than $3. 
A)  the production of the 100th unit of output increases the firm's profit by $3. 
B)  the production of the 100th unit of output increases the firm's average total cost by $7. 
C)  the firm's profit-maximizing level of output is less than 100 units. 
D)  the production of the 110th unit of output must increase the firm's profit by less than $3.

Question 5

Profit-maximizing firms enter a competitive market when, for existing firms in that market,

Accepted Answer

A)  total revenue exceeds fixed costs. 
B)  total revenue exceeds total variable costs. 
C)  average total cost exceeds average revenue. 
D)  price exceeds average total cost. 
A)  total revenue exceeds fixed costs. 
B)  total revenue exceeds total variable costs. 
C)  average total cost exceeds average revenue. 
D)  price exceeds average total cost.

Question 6

Use the figure to answer the following question(s).
Figure 9-7  
-When the market price in Figure 9-7 is $4, the firm's maximum weekly profit will be approximately

Accepted Answer

A)  zero. 
B)  $40. 
C)  $6,000. 
D)  $40,000. 
A)  zero. 
B)  $40. 
C)  $6,000. 
D)  $40,000.

Question 7

Figure 9-14  
-Consider Figure 9-14. At which quantity will this firm maximize profit?

Accepted Answer

A)  point a 
B)  point b 
C)  point c 
D)  point d 
E)  point e 
A)  point a 
B)  point b 
C)  point c 
D)  point d 
E)  point e

Question 8

The supply curve of a price-taker firm in the short run is the

Accepted Answer

A)  firm's average variable cost curve. 
B)  portion of the firm's average total cost curve that lies above average variable cost curve. 
C)  portion of the firm's marginal cost curve that lies above average variable cost curve. 
D)  firm's marginal revenue curve. 
A)  firm's average variable cost curve. 
B)  portion of the firm's average total cost curve that lies above average variable cost curve. 
C)  portion of the firm's marginal cost curve that lies above average variable cost curve. 
D)  firm's marginal revenue curve.

Question 9

If a profit-maximizing firm shuts down in the short run, it must be true that before the shutdown, at all positive output levels,

Accepted Answer

A)  average total cost was less than average variable cost 
B)  fixed cost was greater than total revenue 
C)  variable cost was greater than total revenue 
D)  profit was zero 
E)  total cost plus total revenue was less than profit 
A)  average total cost was less than average variable cost 
B)  fixed cost was greater than total revenue 
C)  variable cost was greater than total revenue 
D)  profit was zero 
E)  total cost plus total revenue was less than profit

Question 10

Firms that can choose what price they will charge for their product and can increase the number of units sold by reducing price are called

Accepted Answer

A)  price searchers. 
B)  price leaders. 
C)  purely competitive. 
D)  price takers. 
A)  price searchers. 
B)  price leaders. 
C)  purely competitive. 
D)  price takers.

Question 11

The usefulness of the price-taker model requires that the firm's decision makers

Accepted Answer

A)  act to maximize their total revenue and fully understand marginal costs and marginal revenues. 
B)  be able to draw accurate marginal cost and marginal revenue curves. 
C)  place the social interest of the economy above their individual self interests. 
D)  seek to maximize the profits of the firm. 
A)  act to maximize their total revenue and fully understand marginal costs and marginal revenues. 
B)  be able to draw accurate marginal cost and marginal revenue curves. 
C)  place the social interest of the economy above their individual self interests. 
D)  seek to maximize the profits of the firm.

Question 12

The long-run supply curve for a product differs from the short-run supply curve in that the long-run supply curve is usually

Accepted Answer

A)  vertical. 
B)  more inelastic. 
C)  more elastic. 
D)  of unitary elasticity. 
A)  vertical. 
B)  more inelastic. 
C)  more elastic. 
D)  of unitary elasticity.

Question 13

As market price increases, in the short run, a profit-maximizing firm in a price-taker market will expand output along its

Accepted Answer

A)  marginal cost curve. 
B)  average total cost curve. 
C)  average variable cost curve. 
D)  market demand curve. 
A)  marginal cost curve. 
B)  average total cost curve. 
C)  average variable cost curve. 
D)  market demand curve.

Question 14

If factor prices rise as demand increases and the firms expand output, the long-run market supply curve will be upward sloping. In terms of economics, this describes

Accepted Answer

A)  an oligopolistic industry. 
B)  a constant cost industry. 
C)  an increasing cost industry. 
D)  a decreasing cost industry. 
A)  an oligopolistic industry. 
B)  a constant cost industry. 
C)  an increasing cost industry. 
D)  a decreasing cost industry.

Question 15

Which of the following states had the highest incidence of union membership as a percent of all wage and salary workers in recent years?

Accepted Answer

A)  New York, Hawaii, and Alaska 
B)  South Carolina, North Carolina, and Mississippi 
C)  Arkansas, North Carolina, and Texas 
D)  California, Florida, and Georgia 
A)  New York, Hawaii, and Alaska 
B)  South Carolina, North Carolina, and Mississippi 
C)  Arkansas, North Carolina, and Texas 
D)  California, Florida, and Georgia

Question 16

The price-taker firm should discontinue production immediately if

Accepted Answer

A)  the market price exceeds the firm's average total costs. 
B)  the market price is less than the firm's average variable costs. 
C)  the market price is less than the firm's average total costs but greater than its average variable cost. 
D)  its accounting statement indicates that it is suffering losses. 
A)  the market price exceeds the firm's average total costs. 
B)  the market price is less than the firm's average variable costs. 
C)  the market price is less than the firm's average total costs but greater than its average variable cost. 
D)  its accounting statement indicates that it is suffering losses.

Question 17

Use the figure to answer the following question(s).
Figure 9-11  
-Which of the following indicates the firm's profit (or loss) at the profit-maximizing output in Figure 9-11?

Accepted Answer

A)  profit BCFG 
B)  profit OCDM 
C)  zero economic profit 
D)  loss AEFC 
A)  profit BCFG 
B)  profit OCDM 
C)  zero economic profit 
D)  loss AEFC

Question 18

The demand for unionized labor will generally be more elastic, and it will be more difficult for the union to achieve above-equilibrium wages when

Accepted Answer

A)  there are many close substitutes for the unionized workers. 
B)  trade barriers limit the importation of the product produced by the unionized workers. 
C)  the cost of employing the unionized workers is a small part of the total cost of product that they produce. 
D)  the demand for the product produced by the unionized workers is highly inelastic. 
A)  there are many close substitutes for the unionized workers. 
B)  trade barriers limit the importation of the product produced by the unionized workers. 
C)  the cost of employing the unionized workers is a small part of the total cost of product that they produce. 
D)  the demand for the product produced by the unionized workers is highly inelastic.

Question 19

Use the figure to answer the following question(s).
Figure 9-4  
-Figure 9-4 indicates the cost conditions for a firm operating in a price-taker market. If the market price of the firm's product is $6, what action will maximize the firm's profit?

Accepted Answer

A)  go out of business since it cannot make a profit 
B)  produce an output of 3 million 
C)  produce an output of 5 million 
D)  produce an output of 6 million 
A)  go out of business since it cannot make a profit 
B)  produce an output of 3 million 
C)  produce an output of 5 million 
D)  produce an output of 6 million

Question 20

Use the figure to answer the following question(s).
Figure 9-4  
-At the market price of $6 in Figure 9-4, indicate the firm's total revenue and total cost at its profit-maximizing level of output.

Accepted Answer

A)  total revenue, $30 million; total cost, $22.5 million (approx.) 
B)  total revenue, $30 million; total cost, $30 million 
C)  total revenue, $40 million; total cost, $30 million 
D)  total revenue, $48 million; total cost, $38 million (approx.) 
A)  total revenue, $30 million; total cost, $22.5 million (approx.) 
B)  total revenue, $30 million; total cost, $30 million 
C)  total revenue, $40 million; total cost, $30 million 
D)  total revenue, $48 million; total cost, $38 million (approx.)

When a firm is operating in a price-taker market, marginal revenue is

The entry of new firms into a competitive market will

In a strike, what does the union have to lose? What does management lose?

For a certain firm, the 100th unit of output that the firm produces has marginal revenue equal to $10 and a marginal cost of $7. It follows that

Profit-maximizing firms enter a competitive market when, for existing firms in that market,

Use the figure to answer the following question(s). Figure 9-7 -When the market price in Figure 9-7 is $4, the firm's maximum weekly profit will be approximately

Figure 9-14 -Consider Figure 9-14. At which quantity will this firm maximize profit?

The supply curve of a price-taker firm in the short run is the

If a profit-maximizing firm shuts down in the short run, it must be true that before the shutdown, at all positive output levels,

Firms that can choose what price they will charge for their product and can increase the number of units sold by reducing price are called

The usefulness of the price-taker model requires that the firm's decision makers

The long-run supply curve for a product differs from the short-run supply curve in that the long-run supply curve is usually

As market price increases, in the short run, a profit-maximizing firm in a price-taker market will expand output along its

If factor prices rise as demand increases and the firms expand output, the long-run market supply curve will be upward sloping. In terms of economics, this describes

Which of the following states had the highest incidence of union membership as a percent of all wage and salary workers in recent years?

The price-taker firm should discontinue production immediately if

Use the figure to answer the following question(s). Figure 9-11 -Which of the following indicates the firm's profit (or loss) at the profit-maximizing output in Figure 9-11?

The demand for unionized labor will generally be more elastic, and it will be more difficult for the union to achieve above-equilibrium wages when

Use the figure to answer the following question(s). Figure 9-4 -Figure 9-4 indicates the cost conditions for a firm operating in a price-taker market. If the market price of the firm's product is $6, what action will maximize the firm's profit?

Use the figure to answer the following question(s). Figure 9-4 -At the market price of $6 in Figure 9-4, indicate the firm's total revenue and total cost at its profit-maximizing level of output.

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 9: Price Takers and the Competitive Process

When a firm is operating in a price-taker market, marginal revenue is

The entry of new firms into a competitive market will

In a strike, what does the union have to lose? What does management lose?

For a certain firm, the 100th unit of output that the firm produces has marginal revenue equal to $10 and a marginal cost of $7. It follows that

Profit-maximizing firms enter a competitive market when, for existing firms in that market,

Use the figure to answer the following question(s). Figure 9-7 -When the market price in Figure 9-7 is $4, the firm's maximum weekly profit will be approximately

Figure 9-14 -Consider Figure 9-14. At which quantity will this firm maximize profit?

The supply curve of a price-taker firm in the short run is the

If a profit-maximizing firm shuts down in the short run, it must be true that before the shutdown, at all positive output levels,

Firms that can choose what price they will charge for their product and can increase the number of units sold by reducing price are called

The usefulness of the price-taker model requires that the firm's decision makers

The long-run supply curve for a product differs from the short-run supply curve in that the long-run supply curve is usually

As market price increases, in the short run, a profit-maximizing firm in a price-taker market will expand output along its

If factor prices rise as demand increases and the firms expand output, the long-run market supply curve will be upward sloping. In terms of economics, this describes

Which of the following states had the highest incidence of union membership as a percent of all wage and salary workers in recent years?

The price-taker firm should discontinue production immediately if

Use the figure to answer the following question(s). Figure 9-11 -Which of the following indicates the firm's profit (or loss) at the profit-maximizing output in Figure 9-11?

The demand for unionized labor will generally be more elastic, and it will be more difficult for the union to achieve above-equilibrium wages when

Use the figure to answer the following question(s). Figure 9-4 -Figure 9-4 indicates the cost conditions for a firm operating in a price-taker market. If the market price of the firm's product is $6, what action will maximize the firm's profit?

Use the figure to answer the following question(s). Figure 9-4 -At the market price of $6 in Figure 9-4, indicate the firm's total revenue and total cost at its profit-maximizing level of output.

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters