Question 1

Use the following to answer question:
Figure 8.24  
-(Figure 8.24) Answer the following questions.

Accepted Answer

a. @#IMG-DLM& b. Producer surplus = TR - VC
TR = 1

Question 2

A perfectly competitive industry has 100 high-cost producers, each with a short-run supply curve given by QH = 16P, and 100 low-cost producers, each with a short-run supply curve given by QL = 24P. The industry demand curve is given by Qd = 100,000 - 1,000P. At market equilibrium, industry producer surplus is:

Accepted Answer

A)  $800,000. 
B)  $20,000. 
C)  $4,000. 
D)  $1.2 million. 
A)  $800,000. 
B)  $20,000. 
C)  $4,000. 
D)  $1.2 million.

Question 3

Use the following to answer question:
Figure 8.15  
-(Figure 8.15) Which of the following statements is (are) TRUE?

Accepted Answer

A)  I, II, and III 
B)  II 
C)  I and III 
D)  III 
A)  I, II, and III 
B)  II 
C)  I and III 
D)  III

Question 4

Pitch (a sticky black substance made from petroleum) is a key input in the production of clay targets. If the price of pitch falls, clay target manufacturers will encounter a(n) _____ shift of their marginal cost curve and a(n)_____ shift of their average variable cost.

Accepted Answer

A)  inward; inward 
B)  outward; outward 
C)  inward; outward 
D)  outward; inward 
A)  inward; inward 
B)  outward; outward 
C)  inward; outward 
D)  outward; inward

Question 5

Answer the following questions.

Accepted Answer

The answer of Answer the following questions.  ...

Question 6

Economists assume that firms maximize:

Accepted Answer

A)  the difference between marginal revenue and marginal cost. 
B)  TR = PQ. 
C)   $\pi$ = TR - TC. 
D)  P - ATC, the profit per unit of output. 
A)  the difference between marginal revenue and marginal cost. 
B)  TR = PQ. 
C)   $\pi$ = TR - TC. 
D)  P - ATC, the profit per unit of output.

Question 7

Suppose that a firm is earning a 12% return on capital in a perfectly competitive industry, and the market return outside the industry is 9.5%. Which of the following statements is (are) TRUE?

Accepted Answer

A)  In the short run, the firm is making a below-market return of 2.5%. 
B)  In the short run, the firm is making a negative return on capital of 2.5%. 
C)  In the long run, the firm's return on capital will be 0%. 
D)  In the long run, the firm's return on capital will be 9.5%. 
A)  In the short run, the firm is making a below-market return of 2.5%. 
B)  In the short run, the firm is making a negative return on capital of 2.5%. 
C)  In the long run, the firm's return on capital will be 0%. 
D)  In the long run, the firm's return on capital will be 9.5%.

Question 8

A March 25, 2010, article at SunSentinel.com reported, "Strawberry farmers in Florida are facing such a sharp collapse in prices for their berries that many are deciding to simply leave huge tracts of the berries to rot in the fields. . . . Wholesale prices that were $17 to $19 for a flat of eight containers have now fallen to $5 to $6 a flat."

Accepted Answer

a. Strawberry farmers are price takers;

Question 9

Suppose that the cost curves of the firms do not change when (identical) firms enter or exit the market. Under this scenario, a change in demand will _____ in a change in the market quantity because the number of firms will _____.

Accepted Answer

A)  not result; not change 
B)  result; not change 
C)  not result; change 
D)  result; change 
A)  not result; not change 
B)  result; not change 
C)  not result; change 
D)  result; change

Question 10

(Graph)   Using the nearby graphs, indicate the short-run equilibrium in this market and calculate any associated profits.

Accepted Answer

The market price will be $60,

Question 11

A firm should _____ output whenever MR exceeds MC because _____.

Accepted Answer

A)  reduce; revenues will rise by more than costs, increasing the firm's profit 
B)  reduce; total revenues exceed total costs 
C)  expand; revenues will rise by more than costs, increasing the firm's profit 
D)  not change; selling more output will increase marginal revenue by less than marginal cost 
A)  reduce; revenues will rise by more than costs, increasing the firm's profit 
B)  reduce; total revenues exceed total costs 
C)  expand; revenues will rise by more than costs, increasing the firm's profit 
D)  not change; selling more output will increase marginal revenue by less than marginal cost

Question 12

In a perfectly competitive market with 50 firms, output is zero at prices less than $20. At prices of $20 to $29.99, each firm will produce 1 unit of output. At any price of $30 or more, each firm will produce 3 units of output. At a price of $27, the industry produces _____ units, and at a price of $35, the industry produces _____units.

Accepted Answer

A)  16.67; 50 
B)  50; 150 
C)  30; 75 
D)  9; 45 
A)  16.67; 50 
B)  50; 150 
C)  30; 75 
D)  9; 45

Question 13

In the lemonade stand industry, Lucy is representative of a low-cost provider and Charlie is representative of a high-cost provider. The minimum average total cost of the high-cost producers is $5. The low-cost producers have a long-run total cost curve given by LTC = 5Q -1.5Q2 + 0.33Q3, where LMC = 5 - 3Q + Q2. How much economic rent does the low-cost producer, such as Lucy, earn?

Accepted Answer

The long-run market price will equal the

Question 14

Use the following to answer question:
Figure 8.4  
-(Figure 8.4) In a perfectly competitive market with 5,000 firms, the equilibrium price and quantity are $0.70 and 3.0 million units. The demand curve facing a firm in this market is represented by:

Accepted Answer

A)  panel a. 
B)  panel b. 
C)  panel c. 
D)  panel d. 
A)  panel a. 
B)  panel b. 
C)  panel c. 
D)  panel d.

Question 15

If the long-run total cost curve for each firm is given by TC = 1,000 + 100Q - 10Q2 + Q3, in the long run, the marginal cost is:

Accepted Answer

A)  1,000. 
B)  100Q - 10Q2 + Q3. 
C)  1,000/Q + 100 - 10Q + Q2. 
D)  100 - 20Q + 3Q2. 
A)  1,000. 
B)  100Q - 10Q2 + Q3. 
C)  1,000/Q + 100 - 10Q + Q2. 
D)  100 - 20Q + 3Q2.

Question 16

Use the following to answer question:
Figure 8.5  
-(Figure 8.5) The graph shows a firm's marginal cost curve. This firm operates in a perfectly competitive industry with market demand and supply curves given by Qd = 100 - 8P and QS = -20 + 2P, where Q is measured in millions of units. Based on the figure, how many units of output will the firm produce at the equilibrium price?

Accepted Answer

A)  1,100 
B)  800 
C)  1,200 
D)  400 
A)  1,100 
B)  800 
C)  1,200 
D)  400

Question 17

A street vendor's annual license fee was recently increased by the city. The street vendor's:

Accepted Answer

A)  marginal cost curve will shift out, along with her average variable cost curve. 
B)  marginal cost curve will shift in, along with her average variable cost curve. 
C)  marginal and average variable cost curves will not be affected. 
D)  total variable cost curve will rotate upward. 
A)  marginal cost curve will shift out, along with her average variable cost curve. 
B)  marginal cost curve will shift in, along with her average variable cost curve. 
C)  marginal and average variable cost curves will not be affected. 
D)  total variable cost curve will rotate upward.

Question 18

Use the following to answer question:
Figure 8.22  
-(Figure 8.22) Answer the following questions:

Accepted Answer

a. The competitive firm's supp

Question 19

Use the following to answer question:
Figure 8.21  
-(Figure 8.21) Answer each of the following questions.

Accepted Answer

a. It depicts a perfectly competitive fi

Question 20

If the long-run total cost curve for each firm is given by TC = 500Q - 20Q2 + Q3, where Q is the quantity of the product, in the long run, the marginal cost is:

Accepted Answer

A)  500Q - 20Q2 + Q3. 
B)  500 - 40Q + 3Q2. 
C)  500 - 20Q + Q2. 
D)  -20Q2 + Q3. 
A)  500Q - 20Q2 + Q3. 
B)  500 - 40Q + 3Q2. 
C)  500 - 20Q + Q2. 
D)  -20Q2 + Q3.

Use the following to answer question: Figure 8.24 -(Figure 8.24) Answer the following questions.

Use the following to answer question: Figure 8.15 -(Figure 8.15) Which of the following statements is (are) TRUE?

Pitch (a sticky black substance made from petroleum) is a key input in the production of clay targets. If the price of pitch falls, clay target manufacturers will encounter a(n) _ shift of their marginal cost curve and a(n)_ shift of their average variable cost.

Answer the following questions.

Economists assume that firms maximize:

Suppose that a firm is earning a 12% return on capital in a perfectly competitive industry, and the market return outside the industry is 9.5%. Which of the following statements is (are) TRUE?

Suppose that the cost curves of the firms do not change when (identical) firms enter or exit the market. Under this scenario, a change in demand will _ in a change in the market quantity because the number of firms will _.

(Graph) Using the nearby graphs, indicate the short-run equilibrium in this market and calculate any associated profits.

A firm should _ output whenever MR exceeds MC because _.

Use the following to answer question: Figure 8.4 -(Figure 8.4) In a perfectly competitive market with 5,000 firms, the equilibrium price and quantity are $0.70 and 3.0 million units. The demand curve facing a firm in this market is represented by:

If the long-run total cost curve for each firm is given by TC = 1,000 + 100Q - 10Q² + Q³, in the long run, the marginal cost is:

A street vendor's annual license fee was recently increased by the city. The street vendor's:

Use the following to answer question: Figure 8.22 -(Figure 8.22) Answer the following questions:

Use the following to answer question: Figure 8.21 -(Figure 8.21) Answer each of the following questions.

If the long-run total cost curve for each firm is given by TC = 500Q - 20Q² + Q³, where Q is the quantity of the product, in the long run, the marginal cost is:

Supply and Demand

Using Supply and Demand to Analyze Markets

Consumer Behavior

Individual and Market Demand

Producer Behavior

Costs

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Game Theory

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

Exam 8: Supply in a Competitive Market

Use the following to answer question: Figure 8.24 -(Figure 8.24) Answer the following questions.

Use the following to answer question: Figure 8.15 -(Figure 8.15) Which of the following statements is (are) TRUE?

Pitch (a sticky black substance made from petroleum) is a key input in the production of clay targets. If the price of pitch falls, clay target manufacturers will encounter a(n) _____ shift of their marginal cost curve and a(n)_____ shift of their average variable cost.

Answer the following questions.

Economists assume that firms maximize:

Suppose that a firm is earning a 12% return on capital in a perfectly competitive industry, and the market return outside the industry is 9.5%. Which of the following statements is (are) TRUE?

Suppose that the cost curves of the firms do not change when (identical) firms enter or exit the market. Under this scenario, a change in demand will _____ in a change in the market quantity because the number of firms will _____.

(Graph) Using the nearby graphs, indicate the short-run equilibrium in this market and calculate any associated profits.

A firm should _____ output whenever MR exceeds MC because _____.

Use the following to answer question: Figure 8.4 -(Figure 8.4) In a perfectly competitive market with 5,000 firms, the equilibrium price and quantity are $0.70 and 3.0 million units. The demand curve facing a firm in this market is represented by:

If the long-run total cost curve for each firm is given by TC = 1,000 + 100Q - 10Q2 + Q3, in the long run, the marginal cost is:

A street vendor's annual license fee was recently increased by the city. The street vendor's:

Use the following to answer question: Figure 8.22 -(Figure 8.22) Answer the following questions:

Use the following to answer question: Figure 8.21 -(Figure 8.21) Answer each of the following questions.

If the long-run total cost curve for each firm is given by TC = 500Q - 20Q2 + Q3, where Q is the quantity of the product, in the long run, the marginal cost is:

Supply and Demand

Using Supply and Demand to Analyze Markets

Consumer Behavior

Individual and Market Demand

Producer Behavior

Costs

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Game Theory

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

Pitch (a sticky black substance made from petroleum) is a key input in the production of clay targets. If the price of pitch falls, clay target manufacturers will encounter a(n) _ shift of their marginal cost curve and a(n)_ shift of their average variable cost.

Suppose that the cost curves of the firms do not change when (identical) firms enter or exit the market. Under this scenario, a change in demand will _ in a change in the market quantity because the number of firms will _.

A firm should _ output whenever MR exceeds MC because _.

If the long-run total cost curve for each firm is given by TC = 1,000 + 100Q - 10Q² + Q³, in the long run, the marginal cost is:

If the long-run total cost curve for each firm is given by TC = 500Q - 20Q² + Q³, where Q is the quantity of the product, in the long run, the marginal cost is: