Question 1

The figure above shows some of a firm's cost curves and its marginal revenue curve.
-The firm in the figure above has a total cost equal to ________.

Accepted Answer

A)  $5.10 × 10 
B)  $8.00 × 10 
C)  ($5.10 - $8.00) × 10 
D)  ($8.00 - $5.10) × 10 
E)  None of the above answers is correct because more information is needed. 
A)  $5.10 × 10 
B)  $8.00 × 10 
C)  ($5.10 - $8.00) × 10 
D)  ($8.00 - $5.10) × 10 
E)  None of the above answers is correct because more information is needed. A

Question 2

If a firm shuts down,it

Accepted Answer

A)  makes zero economic profit. 
B)  incurs an economic loss equal to its total variable cost. 
C)  incurs an economic loss equal to its total fixed cost. 
D)  makes a normal profit. 
E)  might make an economic profit, zero economic profit, or incur an economic loss. 
A)  makes zero economic profit. 
B)  incurs an economic loss equal to its total variable cost. 
C)  incurs an economic loss equal to its total fixed cost. 
D)  makes a normal profit. 
E)  might make an economic profit, zero economic profit, or incur an economic loss. C

Question 3

To maximize its profit,in the short run a perfectly competitive firm decides

Accepted Answer

A)  what price to charge for its product. 
B)  what quantity of output to produce. 
C)  whether to exit the market. 
D)  whether to increase the size of its plant. 
E)  how much advertising it should undertake. 
A)  what price to charge for its product. 
B)  what quantity of output to produce. 
C)  whether to exit the market. 
D)  whether to increase the size of its plant. 
E)  how much advertising it should undertake. B

Question 4

If the market price of a product is $14 and all sellers are price takers,then which of the following is correct?

Accepted Answer

A)  Each seller's total revenue line is graphed as an upward-sloping straight line. 
B)  The demand curve for each seller's product is a downward-sloping straight line. 
C)  Each seller can earn more total revenue by raising the price he or she charges above $14. 
D)  The demand curve for each seller's product is a downward-sloping but not necessarily a straight line. 
E)  Each seller's total revenue is graphed as an upside-down U-shaped curve. 
A)  Each seller's total revenue line is graphed as an upward-sloping straight line. 
B)  The demand curve for each seller's product is a downward-sloping straight line. 
C)  Each seller can earn more total revenue by raising the price he or she charges above $14. 
D)  The demand curve for each seller's product is a downward-sloping but not necessarily a straight line. 
E)  Each seller's total revenue is graphed as an upside-down U-shaped curve.

Question 5

The market supply in the short run for the perfectly competitive industry is

Accepted Answer

A)  the same as each producer's supply. 
B)  the sum of the supply schedules of all firms. 
C)  divided up according to each firm's selling price. 
D)  set at the maximum price a buyer will pay for one unit. 
E)  equal to the average of each firm's supply schedule. 
A)  the same as each producer's supply. 
B)  the sum of the supply schedules of all firms. 
C)  divided up according to each firm's selling price. 
D)  set at the maximum price a buyer will pay for one unit. 
E)  equal to the average of each firm's supply schedule.

Question 6

-In the above,a marginal revenue curve for a perfectly competitive firm is shown in Figure ________.

Accepted Answer

A)  W 
B)  X 
C)  Y 
D)  Z 
E)  X and Figure Z 
A)  W 
B)  X 
C)  Y 
D)  Z 
E)  X and Figure Z

Question 7

Which of the following market types has only a few competing firms?

Accepted Answer

A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly 
E)  perfect competition and monopolistic competition 
A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly 
E)  perfect competition and monopolistic competition

Question 8

-The above figure illustrates a perfectly competitive firm.Curve C represents the

Accepted Answer

A)  MR curve. 
B)  ATC curve. 
C)  MC curve. 
D)  market demand curve. 
E)  AFC curve. 
A)  MR curve. 
B)  ATC curve. 
C)  MC curve. 
D)  market demand curve. 
E)  AFC curve.

Question 9

A perfectly competitive firm will continue to operate in the short run when the market price is below its average total cost if the

Accepted Answer

A)  marginal revenue is greater than marginal cost. 
B)  price is at least equal to the minimum average variable cost. 
C)  total fixed costs are less than total revenue. 
D)  marginal cost is minimized. 
E)  price is also less than the minimum average variable cost. 
A)  marginal revenue is greater than marginal cost. 
B)  price is at least equal to the minimum average variable cost. 
C)  total fixed costs are less than total revenue. 
D)  marginal cost is minimized. 
E)  price is also less than the minimum average variable cost.

Question 10

A market is initially in a long-run equilibrium and there is a permanent increase in demand.After the new long-run equilibrium is reached,there

Accepted Answer

A)  are more firms in the market. 
B)  are fewer firms in the market. 
C)  are the same number of firms in the market. 
D)  probably is a different number of firms in the market, but more information is needed to determine if the number of firms rises, falls, or perhaps does not change. 
E)  is no change in the market. 
A)  are more firms in the market. 
B)  are fewer firms in the market. 
C)  are the same number of firms in the market. 
D)  probably is a different number of firms in the market, but more information is needed to determine if the number of firms rises, falls, or perhaps does not change. 
E)  is no change in the market.

Question 11

The figure above shows a firm's marginal revenue and marginal cost curves.
-The firm in the figure above is ________ that is equal to ________.

Accepted Answer

A)  making an economic profit; $5.14 × 7 
B)  making an economic profit; $3.00 × 7 
C)  incurring an economic loss; $5.14 × 7 
D)  incurring an economic loss; ($5.14 - $3.00) × 7 
E)  making an economic profit; ($5.14 - $3.00) × 7 
A)  making an economic profit; $5.14 × 7 
B)  making an economic profit; $3.00 × 7 
C)  incurring an economic loss; $5.14 × 7 
D)  incurring an economic loss; ($5.14 - $3.00) × 7 
E)  making an economic profit; ($5.14 - $3.00) × 7

Question 12

In the long run,a firm in a perfectly competitive market will

Accepted Answer

A)  make zero economic profit, so that its owners earn a normal profit. 
B)  make zero normal profit but its owners will make an economic profit. 
C)  remove all competitors and become a monopolistically competitive firm. 
D)  incur an economic normal loss but not earn a positive economic profit. 
E)  remove all competitors and become a monopoly. 
A)  make zero economic profit, so that its owners earn a normal profit. 
B)  make zero normal profit but its owners will make an economic profit. 
C)  remove all competitors and become a monopolistically competitive firm. 
D)  incur an economic normal loss but not earn a positive economic profit. 
E)  remove all competitors and become a monopoly.

Question 13

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

Accepted Answer

If a firm produces at a level where marg

Question 14

For a perfectly competitive corn grower in Nebraska,the marginal revenue curve is

Accepted Answer

A)  downward sloping. 
B)  the same as its demand curve. 
C)  upward sloping. 
D)  U-shaped. 
E)  vertical at the profit maximizing quantity of production. 
A)  downward sloping. 
B)  the same as its demand curve. 
C)  upward sloping. 
D)  U-shaped. 
E)  vertical at the profit maximizing quantity of production.

Question 15

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

Accepted Answer

A)  when it is making a normal profit 
B)  whenever its marginal cost is less than its marginal revenue 
C)  when the price is less than its minimum average variable cost 
D)  whenever its total cost is greater than its total revenue 
E)  when the price is less than its minimum average total cost 
A)  when it is making a normal profit 
B)  whenever its marginal cost is less than its marginal revenue 
C)  when the price is less than its minimum average variable cost 
D)  whenever its total cost is greater than its total revenue 
E)  when the price is less than its minimum average total cost

Question 16

$$\begin{array}{l}
\text { Quantity } \quad \text { Average variable cost Average total cost }\
\begin{array} { c c c } 
\text { (wafers per hour) } & \text { (dollars) } & \text { (dollars) } \
\hline 0 & 0 & \
1 & 1900 & 7900 \
2 & 1400 & 4400 \
3 & 1300 & 3300 \
4 & 1400 & 2900 \
5 & 1600 & 2800 \
6 & 2000 & 3000
\end{array}
\end{array}$$
-Computer memory chips are produced on wafers,each wafer having many separate chips that are separated and sold.The above table shows costs for a perfectly competitive producer of computer memory chips.This firm will produce as long as the market price of a wafer is above

Accepted Answer

A)  $1,300. 
B)  $1,400. 
C)  $7,900. 
D)  $2,800. 
E)  $9,800. 
A)  $1,300. 
B)  $1,400. 
C)  $7,900. 
D)  $2,800. 
E)  $9,800.

Question 17

Elsie is a perfectly competitive dairy farmer.The market price of milk was $2.40 but just fell to $2.20 a gallon.Elsie

Accepted Answer

A)  can sell as much milk as she wants at $2.20 a gallon. 
B)  will have to charge some customers $2.40 a gallon to stay in business. 
C)  will produce the same amount of milk at both prices. 
D)  can sell more at the lower price because the quantity demanded is higher at lower prices. 
E)  will be able to charge her initial customers $2.40 a gallon. 
A)  can sell as much milk as she wants at $2.20 a gallon. 
B)  will have to charge some customers $2.40 a gallon to stay in business. 
C)  will produce the same amount of milk at both prices. 
D)  can sell more at the lower price because the quantity demanded is higher at lower prices. 
E)  will be able to charge her initial customers $2.40 a gallon.

Question 18

The market for watermelons in Alabama is perfectly competitive.A watermelon producer making zero economic profit could make an economic profit if the

Accepted Answer

A)  average total cost of selling watermelons does not change. 
B)  average total cost of selling watermelons rises. 
C)  average total cost of selling watermelons falls. 
D)  marginal cost of selling watermelons does not change. 
E)  marginal cost of selling watermelons rises. 
A)  average total cost of selling watermelons does not change. 
B)  average total cost of selling watermelons rises. 
C)  average total cost of selling watermelons falls. 
D)  marginal cost of selling watermelons does not change. 
E)  marginal cost of selling watermelons rises.

Question 19

In the long run,perfectly competitive firms will exit the market if the price is

Accepted Answer

A)  higher than average variable cost. 
B)  equal to average total cost. 
C)  less than average total cost. 
D)  equal to average fixed cost. 
E)  equal to marginal revenue. 
A)  higher than average variable cost. 
B)  equal to average total cost. 
C)  less than average total cost. 
D)  equal to average fixed cost. 
E)  equal to marginal revenue.

Question 20

Does a perfectly competitive producer have any incentive to lower its price so it is below the current market price? Explain your answer

Accepted Answer

A perfectly competitive producer has no

The figure above shows some of a firm's cost curves and its marginal revenue curve. -The firm in the figure above has a total cost equal to ________.

If a firm shuts down,it

To maximize its profit,in the short run a perfectly competitive firm decides

If the market price of a product is $14 and all sellers are price takers,then which of the following is correct?

The market supply in the short run for the perfectly competitive industry is

-In the above,a marginal revenue curve for a perfectly competitive firm is shown in Figure ________.

Which of the following market types has only a few competing firms?

-The above figure illustrates a perfectly competitive firm.Curve C represents the

A perfectly competitive firm will continue to operate in the short run when the market price is below its average total cost if the

A market is initially in a long-run equilibrium and there is a permanent increase in demand.After the new long-run equilibrium is reached,there

The figure above shows a firm's marginal revenue and marginal cost curves. -The firm in the figure above is that is equal to .

In the long run,a firm in a perfectly competitive market will

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

For a perfectly competitive corn grower in Nebraska,the marginal revenue curve is

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

Elsie is a perfectly competitive dairy farmer.The market price of milk was $2.40 but just fell to $2.20 a gallon.Elsie

The market for watermelons in Alabama is perfectly competitive.A watermelon producer making zero economic profit could make an economic profit if the

In the long run,perfectly competitive firms will exit the market if the price is

Does a perfectly competitive producer have any incentive to lower its price so it is below the current market price? Explain your answer

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 15: Perfect Competition

The figure above shows some of a firm's cost curves and its marginal revenue curve. -The firm in the figure above has a total cost equal to ________.

If a firm shuts down,it

To maximize its profit,in the short run a perfectly competitive firm decides

If the market price of a product is $14 and all sellers are price takers,then which of the following is correct?

The market supply in the short run for the perfectly competitive industry is

-In the above,a marginal revenue curve for a perfectly competitive firm is shown in Figure ________.

Which of the following market types has only a few competing firms?

-The above figure illustrates a perfectly competitive firm.Curve C represents the

A perfectly competitive firm will continue to operate in the short run when the market price is below its average total cost if the

A market is initially in a long-run equilibrium and there is a permanent increase in demand.After the new long-run equilibrium is reached,there

The figure above shows a firm's marginal revenue and marginal cost curves. -The firm in the figure above is ________ that is equal to ________.

In the long run,a firm in a perfectly competitive market will

Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?

For a perfectly competitive corn grower in Nebraska,the marginal revenue curve is

Under which of the following conditions will a profit-maximizing perfectly competitive firm shut down in the short run?

Elsie is a perfectly competitive dairy farmer.The market price of milk was $2.40 but just fell to $2.20 a gallon.Elsie

The market for watermelons in Alabama is perfectly competitive.A watermelon producer making zero economic profit could make an economic profit if the

In the long run,perfectly competitive firms will exit the market if the price is

Does a perfectly competitive producer have any incentive to lower its price so it is below the current market price? Explain your answer

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

The figure above shows a firm's marginal revenue and marginal cost curves. -The firm in the figure above is that is equal to .