Question 1

Refer to the accompanying cost table. If price of the product were $30 per unit, the firm would

Accepted Answer

A) produce 5 units and realize a loss of $50. 
B) produce 6 units and realize a loss of $30. 
C) produce 7 units and realize a loss of $32. 
D) shut down in the short run. 
A) produce 5 units and realize a loss of $50. 
B) produce 6 units and realize a loss of $30. 
C) produce 7 units and realize a loss of $32. 
D) shut down in the short run.

Question 2

For an individual firm in pure competition, the firm's average revenue and marginal revenue at any output level are both equal to the product's price.

Accepted Answer

A) True 
 B)False

Question 3

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $32, the competitive firm should produce

Accepted Answer

A) 10 units at an economic profit of $4. 
B) 8 units at an economic profit of $2. 
C) 8 units at an economic profit of $16. 
D) 10 units at an economic profit of $20. 
A) 10 units at an economic profit of $4. 
B) 8 units at an economic profit of $2. 
C) 8 units at an economic profit of $16. 
D) 10 units at an economic profit of $20.

Question 4

Which of the following is true for a purely competitive firm in short-run equilibrium?

Accepted Answer

A) The firm is making only normal profits. 
B) The firm's marginal cost is greater than its marginal revenue. 
C) The firm's marginal revenue is equal to its marginal cost. 
D) A decrease in output would lead to a rise in profits. 
A) The firm is making only normal profits. 
B) The firm's marginal cost is greater than its marginal revenue. 
C) The firm's marginal revenue is equal to its marginal cost. 
D) A decrease in output would lead to a rise in profits.

Question 5

An industry comprising a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions, is called

Accepted Answer

A) monopolistic competition. 
B) oligopoly. 
C) pure monopoly. 
D) pure competition. 
A) monopolistic competition. 
B) oligopoly. 
C) pure monopoly. 
D) pure competition.

Question 6

The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______.

Accepted Answer

A) perfectly inelastic; perfectly elastic 
B) downsloping; perfectly elastic 
C) downsloping; perfectly inelastic 
D) perfectly elastic; downsloping 
A) perfectly inelastic; perfectly elastic 
B) downsloping; perfectly elastic 
C) downsloping; perfectly inelastic 
D) perfectly elastic; downsloping

Question 7

In pure competition, price is determined where the industry

Accepted Answer

A) demand and supply curves intersect. 
B) total cost is less than total revenue. 
C) demand intersects the individual firm's marginal cost curve. 
D) average total cost equals total variable cost. 
A) demand and supply curves intersect. 
B) total cost is less than total revenue. 
C) demand intersects the individual firm's marginal cost curve. 
D) average total cost equals total variable cost.

Question 8

In pure competition, the industry demand curve is infinitely price elastic.

Accepted Answer

A) True 
 B)False

Question 9

What is the shape of the total and marginal revenue curves for the individual competitive firm?

Accepted Answer

Total revenue (TR)is a straight line tha

Question 10

In which of the following industry structures is the entry of new firms the most difficult?

Accepted Answer

A) pure monopoly 
B) oligopoly 
C) monopolistic competition 
D) pure competition 
A) pure monopoly 
B) oligopoly 
C) monopolistic competition 
D) pure competition

Question 11

Refer to the accompanying diagram. The firm's supply curve is the segment of the

Accepted Answer

A) MC curve above its intersection with the AVC curve. 
B) MC curve above its intersection with the ATC curve. 
C) AVC curve above its intersection with the MC curve. 
D) ATC curve above its intersection with the MC curve. 
A) MC curve above its intersection with the AVC curve. 
B) MC curve above its intersection with the ATC curve. 
C) AVC curve above its intersection with the MC curve. 
D) ATC curve above its intersection with the MC curve.

Question 12

In pure competition, the demand for the product of a single firm is perfectly

Accepted Answer

A) elastic because the firm produces a unique product. 
B) inelastic because the firm produces a unique product. 
C) elastic because many other firms produce the same product. 
D) inelastic because many other firms produce the same product. 
A) elastic because the firm produces a unique product. 
B) inelastic because the firm produces a unique product. 
C) elastic because many other firms produce the same product. 
D) inelastic because many other firms produce the same product.

Question 13

On a per-unit basis, economic profit can be determined as the difference between

Accepted Answer

A) marginal revenue and product price. 
B) product price and average total cost. 
C) marginal revenue and marginal cost. 
D) average fixed cost and product price. 
A) marginal revenue and product price. 
B) product price and average total cost. 
C) marginal revenue and marginal cost. 
D) average fixed cost and product price.

Question 14

Competitive firms are price takers largely because of intensive advertising by their competitors.

Accepted Answer

A) True 
 B)False

Question 15

The accompanying graph shows short-run cost curves for a competitive firm. At what price would the firm face the same profit or loss whether it chooses to produce or not?

Accepted Answer

A) P₁ 
B) P₂ 
C) P₃ 
D) P₄ 
A) P₁ 
B) P₂ 
C) P₃ 
D) P₄

Question 16

Refer to the accompanying diagram. The firm will realize an economic profit if price is

Accepted Answer

A) P₁. 
B) P₂. 
C) P₃. 
D) P₄. 
A) P₁. 
B) P₂. 
C) P₃. 
D) P₄.

Question 17

The resource cost falls in a purely competitive industry. This change will result in a(n)

Accepted Answer

A) increase in marginal cost for firms in the industry and an increase in the industry supply curve. 
B) decrease in marginal cost for firms in the industry and a decrease in the industry supply curve. 
C) decrease in marginal cost for firms in the industry and an increase in the industry supply curve. 
D) increase in marginal cost at each output level for firms in the industry and an increase in the industry supply curve. 
A) increase in marginal cost for firms in the industry and an increase in the industry supply curve. 
B) decrease in marginal cost for firms in the industry and a decrease in the industry supply curve. 
C) decrease in marginal cost for firms in the industry and an increase in the industry supply curve. 
D) increase in marginal cost at each output level for firms in the industry and an increase in the industry supply curve.

Question 18

If a purely competitive firm shuts down in the short run,

Accepted Answer

A) its loss will be zero. 
B) it will realize a loss equal to its total variable costs. 
C) it will realize a loss equal to its total fixed costs. 
D) it will realize a loss equal to its explicit costs. 
A) its loss will be zero. 
B) it will realize a loss equal to its total variable costs. 
C) it will realize a loss equal to its total fixed costs. 
D) it will realize a loss equal to its explicit costs.

Question 19

In the provided diagram, the profit-maximizing output

Accepted Answer

A) is n. 
B) is k. 
C) is h. 
D) cannot be determined from the information given. 
A) is n. 
B) is k. 
C) is h. 
D) cannot be determined from the information given.

Question 20

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $35, it will produce

Accepted Answer

A) 6 units at a loss of $150. 
B) 6 units at a loss of $90. 
C) 9 units at an economic profit of $281.97. 
D) 8 units at an economic profit of $130.72. 
A) 6 units at a loss of $150. 
B) 6 units at a loss of $90. 
C) 9 units at an economic profit of $281.97. 
D) 8 units at an economic profit of $130.72.

Exam 10: Pure Competition in the Short Run

Refer to the accompanying cost table. If price of the product were $30 per unit, the firm would

For an individual firm in pure competition, the firm's average revenue and marginal revenue at any output level are both equal to the product's price.

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $32, the competitive firm should produce

Which of the following is true for a purely competitive firm in short-run equilibrium?

An industry comprising a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions, is called

The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______.

In pure competition, price is determined where the industry

In pure competition, the industry demand curve is infinitely price elastic.

What is the shape of the total and marginal revenue curves for the individual competitive firm?

In which of the following industry structures is the entry of new firms the most difficult?

Refer to the accompanying diagram. The firm's supply curve is the segment of the

In pure competition, the demand for the product of a single firm is perfectly

On a per-unit basis, economic profit can be determined as the difference between

Competitive firms are price takers largely because of intensive advertising by their competitors.

The accompanying graph shows short-run cost curves for a competitive firm. At what price would the firm face the same profit or loss whether it chooses to produce or not?

Refer to the accompanying diagram. The firm will realize an economic profit if price is

The resource cost falls in a purely competitive industry. This change will result in a(n)

If a purely competitive firm shuts down in the short run,

In the provided diagram, the profit-maximizing output

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $35, it will produce

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

The demand curve in a purely competitive industry is , while the demand curve to a single firm in that industry is .