Question 1

When new firms enter a competitive price-taker market,

Accepted Answer

A)  economic profits of existing firms will continue to be zero. 
B)  entering firms will earn zero economic profit upon entry into the market. 
C)  existing firms may see their costs rise as more firms compete for limited resources. 
D)  prices will rise as existing firms raise prices to keep new firms out of the market. 
A)  economic profits of existing firms will continue to be zero. 
B)  entering firms will earn zero economic profit upon entry into the market. 
C)  existing firms may see their costs rise as more firms compete for limited resources. 
D)  prices will rise as existing firms raise prices to keep new firms out of the market.

Question 2

Why is it that the airline pilots union will likely be stronger and more effective than the fruit pickers union?

Accepted Answer

First, airline pilots possess a highly s

Question 3

Use the figure to answer the following question(s).
Figure 9-11  
-If the current market price for the firm depicted in Figure 9-11 is A, given the firm's cost conditions, which output should it produce?

Accepted Answer

A)  OM 
B)  OL 
C)  OK 
D)  OI 
A)  OM 
B)  OL 
C)  OK 
D)  OI

Question 4

Use the figure to answer the following question(s).
Figure 9-7  
-The average total cost (ATC) and marginal costs (MC) of a firm producing in a price-taker industry are depicted in Figure 9-7. If the current market price of the firm's product is $3, what output should this firm produce per week?

Accepted Answer

A)  5,000 
B)  7,500 
C)  10,000 
D)  12,500 
A)  5,000 
B)  7,500 
C)  10,000 
D)  12,500

Question 5

What percentage of the non-farm labor force in the United States belonged to a labor union in recent years?

Accepted Answer

A)  Less than 10 percent. 
B)  Approximately 11 percent. 
C)  Approximately 28 percent. 
D)  More than 40 percent. 
A)  Less than 10 percent. 
B)  Approximately 11 percent. 
C)  Approximately 28 percent. 
D)  More than 40 percent.

Question 6

Figure 9-12  
-Figure 9-12 illustrates a

Accepted Answer

A)  competitive price-taker firm that is earning economic profit. 
B)  competitive price-taker firm that is only able to break even when it is maximizing economic profit. 
C)  firm that should shut down immediately. 
D)  competitive price-taker firm that is making economic losses. 
A)  competitive price-taker firm that is earning economic profit. 
B)  competitive price-taker firm that is only able to break even when it is maximizing economic profit. 
C)  firm that should shut down immediately. 
D)  competitive price-taker firm that is making economic losses.

Question 7

How does competition from nonunion firms and foreign producers affect the ability of a union to increase the wages of its members?

Accepted Answer

A)  Such competition makes it easier for the union to achieve wage increases. 
B)  Such competition reduces the ability of a union to achieve wage increases. 
C)  Such competition does not affect the ability of a union to achieve wage increases. 
D)  Such competition will increase the strength of a union if it produces a product sold in the domestic market but will reduce the strength of the union if it produces an export product. 
A)  Such competition makes it easier for the union to achieve wage increases. 
B)  Such competition reduces the ability of a union to achieve wage increases. 
C)  Such competition does not affect the ability of a union to achieve wage increases. 
D)  Such competition will increase the strength of a union if it produces a product sold in the domestic market but will reduce the strength of the union if it produces an export product.

Question 8

Over the last five decades, the proportion of workers belonging to a union

Accepted Answer

A)  decreased substantially in the private sector. 
B)  was approximately constant in the private sector. 
C)  decreased substantially in the government sector. 
D)  was approximately constant in the government sector. 
A)  decreased substantially in the private sector. 
B)  was approximately constant in the private sector. 
C)  decreased substantially in the government sector. 
D)  was approximately constant in the government sector.

Question 9

When the marginal cost of a price-taker firm is more than the market price of its product, the firm should

Accepted Answer

A)  expand output. 
B)  reduce output. 
C)  maintain output. 
D)  charge more than the market price. 
A)  expand output. 
B)  reduce output. 
C)  maintain output. 
D)  charge more than the market price.

Question 10

Use the table of expected cost and revenue data for the Tuckers Tomato Farm below to answer the following question(s). The Tuckers produce tomatoes in a greenhouse and sell them wholesale in a competitive price-taker market.
Table 9-1
  
-Refer to Table 9-1. If the Tuckers are profit maximizers, how many tomatoes should they produce when the market price is $500 per ton?

Accepted Answer

A)  6 
B)  7 
C)  8 
D)  9 
A)  6 
B)  7 
C)  8 
D)  9

Question 11

Why is it considered "ideal" for price to just equal marginal cost?

Accepted Answer

When price equals marginal cost, the cos

Question 12

In short-run equilibrium, a competitive price-taker firm

Accepted Answer

A)  may earn a profit or a loss. 
B)  always earns a profit. 
C)  never earns a profit. 
D)  earns a profit only if the firm has no fixed cost. 
A)  may earn a profit or a loss. 
B)  always earns a profit. 
C)  never earns a profit. 
D)  earns a profit only if the firm has no fixed cost.

Question 13

Suppose antitheft auto alarms are produced in a price-taker market that is initially in long-run equilibrium. It is estimated that only 23 percent of all autos have alarms. Due to rising auto theft, Congress mandates alarms in every vehicle. Assume complete compliance. If the industry is an increasing cost industry, price will

Accepted Answer

A)  increase in both the short run and long run. 
B)  decrease in both the short run and long run. 
C)  increase in the short run but not in the long run. 
D)  decrease in the short run but not in the long run. 
A)  increase in both the short run and long run. 
B)  decrease in both the short run and long run. 
C)  increase in the short run but not in the long run. 
D)  decrease in the short run but not in the long run.

Question 14

The competitive price-taker model is usually used to illustrate the competitive process. If firms cannot choose their price, where is the competition?

Accepted Answer

This is a good question. The firms do no

Question 15

Which of the following factors will make it easier for a labor union to increase the wages of its members?

Accepted Answer

A)  A highly inelastic demand for the products produced by the union labor. 
B)  A readily available supply of similar products produced by nonunion labor. 
C)  Low tariffs and strong competition from foreign firms producing the products supplied by the union labor. 
D)  A reduction in the demand for the products produced by the union labor. 
A)  A highly inelastic demand for the products produced by the union labor. 
B)  A readily available supply of similar products produced by nonunion labor. 
C)  Low tariffs and strong competition from foreign firms producing the products supplied by the union labor. 
D)  A reduction in the demand for the products produced by the union labor.

Question 16

Use the table of expected cost and revenue data for the Tuckers Tomato Farm below to answer the following question(s). The Tuckers produce tomatoes in a greenhouse and sell them wholesale in a competitive price-taker market.
Table 9-1
  
-Refer to Table 9-1. If the market price is $500, what is the maximum economic profit per month the Tuckers can earn?

Accepted Answer

A)  −$50 
B)  zero 
C)  $50 
D)  $100 
A)  −$50 
B)  zero 
C)  $50 
D)  $100

Question 17

Which of the following conditions will be present when a price-taker market is in long-run equilibrium?

Accepted Answer

A)  Price will exceed marginal revenue. 
B)  Firms will earn economic profit. 
C)  Marginal revenue will exceed marginal cost. 
D)  Average total cost will be at a minimum. 
A)  Price will exceed marginal revenue. 
B)  Firms will earn economic profit. 
C)  Marginal revenue will exceed marginal cost. 
D)  Average total cost will be at a minimum.

Question 18

Which of the following products would most closely fit the competitive price-taker model?

Accepted Answer

A)  stereo systems-there are many reputable brands. 
B)  beer-it has many consumers. 
C)  eggs-there are many producers of this relatively homogeneous product. 
D)  automobiles-there are substantial economies of scale in production. 
A)  stereo systems-there are many reputable brands. 
B)  beer-it has many consumers. 
C)  eggs-there are many producers of this relatively homogeneous product. 
D)  automobiles-there are substantial economies of scale in production.

Question 19

Which of the following is a reason to study the decisions of price takers?

Accepted Answer

A)  While there are not many price-taker markets, these few markets dominate the economy. 
B)  The decision making of both price searchers and price takers is identical. 
C)  The price-taker model enhances our knowledge of competition as a dynamic process. 
D)  Price takers are the most common type of business in the real world. 
A)  While there are not many price-taker markets, these few markets dominate the economy. 
B)  The decision making of both price searchers and price takers is identical. 
C)  The price-taker model enhances our knowledge of competition as a dynamic process. 
D)  Price takers are the most common type of business in the real world.

Question 20

A Wisconsin farmer sells her crops in a competitive price-taker market. If she produces 500 bushels for total revenue of $2,500 and if harvesting the 501st bushel would raise her total cost from $2,500 to $2,505, her

Accepted Answer

A)  revenue will increase by $10 if she harvests the 501st bushel 
B)  revenue will fall by $5 if she harvests the 501st bushel 
C)  average fixed cost will rise if she harvests the 501st bushel 
D)  profit will fall by $10 if she harvests the 501st bushel 
E)  profit will remain unchanged if she harvests the 501st bushel 
A)  revenue will increase by $10 if she harvests the 501st bushel 
B)  revenue will fall by $5 if she harvests the 501st bushel 
C)  average fixed cost will rise if she harvests the 501st bushel 
D)  profit will fall by $10 if she harvests the 501st bushel 
E)  profit will remain unchanged if she harvests the 501st bushel

When new firms enter a competitive price-taker market,

Why is it that the airline pilots union will likely be stronger and more effective than the fruit pickers union?

Use the figure to answer the following question(s). Figure 9-11 -If the current market price for the firm depicted in Figure 9-11 is A, given the firm's cost conditions, which output should it produce?

Use the figure to answer the following question(s). Figure 9-7 -The average total cost (ATC) and marginal costs (MC) of a firm producing in a price-taker industry are depicted in Figure 9-7. If the current market price of the firm's product is $3, what output should this firm produce per week?

What percentage of the non-farm labor force in the United States belonged to a labor union in recent years?

Figure 9-12 -Figure 9-12 illustrates a

How does competition from nonunion firms and foreign producers affect the ability of a union to increase the wages of its members?

Over the last five decades, the proportion of workers belonging to a union

When the marginal cost of a price-taker firm is more than the market price of its product, the firm should

Why is it considered "ideal" for price to just equal marginal cost?

In short-run equilibrium, a competitive price-taker firm

The competitive price-taker model is usually used to illustrate the competitive process. If firms cannot choose their price, where is the competition?

Which of the following factors will make it easier for a labor union to increase the wages of its members?

Which of the following conditions will be present when a price-taker market is in long-run equilibrium?

Which of the following products would most closely fit the competitive price-taker model?

Which of the following is a reason to study the decisions of price takers?

A Wisconsin farmer sells her crops in a competitive price-taker market. If she produces 500 bushels for total revenue of $2,500 and if harvesting the 501st bushel would raise her total cost from $2,500 to $2,505, her

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

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Exam 9: Price Takers and the Competitive Process

When new firms enter a competitive price-taker market,

Why is it that the airline pilots union will likely be stronger and more effective than the fruit pickers union?

Use the figure to answer the following question(s). Figure 9-11 -If the current market price for the firm depicted in Figure 9-11 is A, given the firm's cost conditions, which output should it produce?

Use the figure to answer the following question(s). Figure 9-7 -The average total cost (ATC) and marginal costs (MC) of a firm producing in a price-taker industry are depicted in Figure 9-7. If the current market price of the firm's product is $3, what output should this firm produce per week?

What percentage of the non-farm labor force in the United States belonged to a labor union in recent years?

Figure 9-12 -Figure 9-12 illustrates a

How does competition from nonunion firms and foreign producers affect the ability of a union to increase the wages of its members?

Over the last five decades, the proportion of workers belonging to a union

When the marginal cost of a price-taker firm is more than the market price of its product, the firm should

Why is it considered "ideal" for price to just equal marginal cost?

In short-run equilibrium, a competitive price-taker firm

The competitive price-taker model is usually used to illustrate the competitive process. If firms cannot choose their price, where is the competition?

Which of the following factors will make it easier for a labor union to increase the wages of its members?

Which of the following conditions will be present when a price-taker market is in long-run equilibrium?

Which of the following products would most closely fit the competitive price-taker model?

Which of the following is a reason to study the decisions of price takers?

A Wisconsin farmer sells her crops in a competitive price-taker market. If she produces 500 bushels for total revenue of $2,500 and if harvesting the 501st bushel would raise her total cost from $2,500 to $2,505, her

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