Question 1

Use the following to answer questions  
-(Exhibit: Total Revenue, Total Costs, and Economic Profit)Total economic profit:

Accepted Answer

A) at its maximum is approximately $550. 
B) is at its maximum when output is approximately 4,300 pounds. 
C) is maximized at an output of approximately 1,500 pounds. 
D) is at a maximum at total revenue of $2,800 and an output of 10,000 pounds. 
A) at its maximum is approximately $550. 
B) is at its maximum when output is approximately 4,300 pounds. 
C) is maximized at an output of approximately 1,500 pounds. 
D) is at a maximum at total revenue of $2,800 and an output of 10,000 pounds.

Question 2

Provided that there are no external benefits or costs, resources are efficiently allocated when:

Accepted Answer

A) P = MR. 
B) P = AVC. 
C) P = MC. 
D) MC = AVC. 
A) P = MR. 
B) P = AVC. 
C) P = MC. 
D) MC = AVC.

Question 3

Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, and that the price of each candy cane is $0.10.Based on the information given, we can conclude that the marginal revenue for candy canes:

Accepted Answer

A) is less than $0.10. 
B) equals $0.10. 
C) is greater than $0.10. 
D) It is not possible to answer based on the information given. 
A) is less than $0.10. 
B) equals $0.10. 
C) is greater than $0.10. 
D) It is not possible to answer based on the information given.

Question 4

Perfect competition is best considered a:

Accepted Answer

A) realistic model that exists in the real world in thousands of different markets. 
B) realistic model that exists in the real world in only a handful of different markets. 
C) theoretical extreme that does not exist in the real world but that can provide useful insights. 
D) theoretical extreme that does not exist in the real world and that does not provide any useful insights. 
A) realistic model that exists in the real world in thousands of different markets. 
B) realistic model that exists in the real world in only a handful of different markets. 
C) theoretical extreme that does not exist in the real world but that can provide useful insights. 
D) theoretical extreme that does not exist in the real world and that does not provide any useful insights.

Question 5

Profit for the firm is maximized when the firm produces the level of output where MR = MC.

Accepted Answer

A) True 
 B)False

Question 6

Use the following to answer questions 129-135:
  
-A perfectly competitive firm will incur an economic loss but will continue producing the profit-maximizing quantity of output in the short run if price is:

Accepted Answer

A) less than marginal cost. 
B) less than average variable cost. 
C) greater than average total cost. 
D) greater than average variable cost and less than average total cost. 
A) less than marginal cost. 
B) less than average variable cost. 
C) greater than average total cost. 
D) greater than average variable cost and less than average total cost.

Question 7

Use the following to answer questions  
-(Exhibit: Profit Maximizing)The exhibit shows cost curves for a firm operating in a perfectly competitive market.If market price is P4, then average revenue is:

Accepted Answer

A) the same as TR. 
B) the area 0P4Aq4 divided by q4. 
C) the same as total cost. 
D) P4. 
A) the same as TR. 
B) the area 0P4Aq4 divided by q4. 
C) the same as total cost. 
D) P4.

Question 8

In the short run, a perfectly competitive firm produces output and incurs an economic loss if:

Accepted Answer

A) P > ATC. B) P P > ATC. D) AVC < P < ATC. A) P > ATC. B) P P > ATC. D) AVC < P < ATC.

Question 9

If an industry's long-run supply curve is upward sloping, the industry is characterized by:

Accepted Answer

A) increasing cost. 
B) decreasing cost. 
C) constant cost. 
D) high overhead cost. 
A) increasing cost. 
B) decreasing cost. 
C) constant cost. 
D) high overhead cost.

Question 10

Use the following to answer questions 23-28:  
-(Exhibit: The Market for Carrots)If demand is D1, the price of carrots will be _______ cents, the quantity demanded will be _______ , and the quantity supplied will be
_______ .

Accepted Answer

A) 20; 100; 90 
B) 20; 100; 100 
C) 30; 160;160 
D) 30; 100; 160 
A) 20; 100; 90 
B) 20; 100; 100 
C) 30; 160;160 
D) 30; 100; 160

Question 11

In perfect competition:

Accepted Answer

A) a firm's total revenue is found by multiplying market price by the firm's quantity of output. 
B) the firm's total revenue curve is a linear, upward-sloping line. 
C) at any price, the greater the quantity sold, the greater is a firm's total revenue. 
D) all of the above are true. 
A) a firm's total revenue is found by multiplying market price by the firm's quantity of output. 
B) the firm's total revenue curve is a linear, upward-sloping line. 
C) at any price, the greater the quantity sold, the greater is a firm's total revenue. 
D) all of the above are true.

Question 12

Use the following to answer questions $$\begin{array}{l}
\text { Total Cost for a Perfectly Competitive Firm }\\
\begin{array} { c c } 
\begin{array} { cc } 
\text { Quantity } \
\text { per } &
\end{array} & \text { Total }    \
\text { period }&\text { Cost } \
0 & \$ 10 \
1 & \$ 16 \
2 & \$ 20 \
3 & \$ 22 \
4 & \$ 24 \
5 & \$ 25 \
6 & \$ 27 \
7 & \$ 30 \
8 & \$ 34 \
9 & \$ 39 \
10 & \$ 45
\end{array}
\end{array}$$
-(Exhibit: Total Cost for a Perfectly Competitive Firm)The firm will stop production and shut down if the price is:

Accepted Answer

A) $2.50. 
B) $3.50. 
C) $4.50. 
D) $5.00. 
A) $2.50. 
B) $3.50. 
C) $4.50. 
D) $5.00.

Question 13

The supply curve found by summing up the short-run supply curves of all the firms in a perfectly competitive industry is called the:

Accepted Answer

A) firm's marginal cost curve. 
B) short-run market supply curve. 
C) the interim market supply curve. 
D) competitive curve. 
A) firm's marginal cost curve. 
B) short-run market supply curve. 
C) the interim market supply curve. 
D) competitive curve.

Question 14

In a perfectly competitive industry in long-run equilibrium, all firms will have:

Accepted Answer

A) identical plant sizes but may be producing different levels of output. 
B) equal marginal costs. 
C) equal fixed costs. 
D) marginal cost equal average fixed cost. 
A) identical plant sizes but may be producing different levels of output. 
B) equal marginal costs. 
C) equal fixed costs. 
D) marginal cost equal average fixed cost.

Question 15

If a perfectly competitive firm increases production from 10 units to 11 units, and the market price is $20 per unit, total revenue for 11 units is:

Accepted Answer

A) $10. 
B) $20. 
C) $200. 
D) $220. 
A) $10. 
B) $20. 
C) $200. 
D) $220.

Question 16

The shutdown point is where MC = minimum AVC.

Accepted Answer

A) True 
 B)False

Question 17

An assumption of the model of perfect competition is:

Accepted Answer

A) discrimination. 
B) ease of entry and exit. 
C) few buyers and sellers. 
D) limited information. 
A) discrimination. 
B) ease of entry and exit. 
C) few buyers and sellers. 
D) limited information.

Question 18

If an industry experiences constant costs as industry output expands, the long-run industry supply curve will be:

Accepted Answer

A) downward sloping. 
B) upward sloping. 
C) horizontal 
D) vertical. 
A) downward sloping. 
B) upward sloping. 
C) horizontal 
D) vertical.

Question 19

The slope of the total revenue curve is marginal revenue.

Accepted Answer

A) True 
 B)False

Question 20

Use the following to answer questions $$\begin{array}{l}
\text { Total Cost for a Perfectly Competitive Firm }\\
\begin{array} { c c } 
\begin{array} { cc } 
\text { Quantity } \
\text { per } &
\end{array} & \text { Total }    \
\text { period }&\text { Cost } \
0 & \$ 10 \
1 & \$ 16 \
2 & \$ 20 \
3 & \$ 22 \
4 & \$ 24 \
5 & \$ 25 \
6 & \$ 27 \
7 & \$ 30 \
8 & \$ 34 \
9 & \$ 39 \
10 & \$ 45
\end{array}
\end{array}$$
-(Exhibit: Total Cost for a Perfectly Competitive Firm)If the market price is $3.50, profit at the profit-maximizing quantity of output is:

Accepted Answer

A) -$7.50. 
B) -$6.00. 
C) -$5.50. 
D) $4.50. 
A) -$7.50. 
B) -$6.00. 
C) -$5.50. 
D) $4.50.

Exam 9: The Nature and Creation of Money

Use the following to answer questions -(Exhibit: Total Revenue, Total Costs, and Economic Profit)Total economic profit:

Provided that there are no external benefits or costs, resources are efficiently allocated when:

Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, and that the price of each candy cane is $0.10.Based on the information given, we can conclude that the marginal revenue for candy canes:

Perfect competition is best considered a:

Profit for the firm is maximized when the firm produces the level of output where MR = MC.

Use the following to answer questions 129-135: -A perfectly competitive firm will incur an economic loss but will continue producing the profit-maximizing quantity of output in the short run if price is:

Use the following to answer questions -(Exhibit: Profit Maximizing)The exhibit shows cost curves for a firm operating in a perfectly competitive market.If market price is P4, then average revenue is:

In the short run, a perfectly competitive firm produces output and incurs an economic loss if:

If an industry's long-run supply curve is upward sloping, the industry is characterized by:

Use the following to answer questions 23-28: -(Exhibit: The Market for Carrots)If demand is D1, the price of carrots will be _______ cents, the quantity demanded will be _______ , and the quantity supplied will be _______ .

In perfect competition:

The supply curve found by summing up the short-run supply curves of all the firms in a perfectly competitive industry is called the:

In a perfectly competitive industry in long-run equilibrium, all firms will have:

If a perfectly competitive firm increases production from 10 units to 11 units, and the market price is $20 per unit, total revenue for 11 units is:

The shutdown point is where MC = minimum AVC.

An assumption of the model of perfect competition is:

If an industry experiences constant costs as industry output expands, the long-run industry supply curve will be:

The slope of the total revenue curve is marginal revenue.

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Inflation and Unemployment

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Macroeconomics: the Big Picture

Measuring Total Income and Output

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Macro Inflation and Unemployment

Macro a Brief History of Macroeconomic Thought and Policy

Economic Development

Socialist Economies in Transition

Filters

Use the following to answer questions -(Exhibit: Profit Maximizing)The exhibit shows cost curves for a firm operating in a perfectly competitive market.If market price is P₄, then average revenue is:

Use the following to answer questions 23-28: -(Exhibit: The Market for Carrots)If demand is D₁, the price of carrots will be ___ cents, the quantity demanded will be _ , and the quantity supplied will be _____ .