Question 1

Which of the following helps to classify an industry's market structure?

Accepted Answer

A) the long-run equilibrium price 
B) the impact of industry expansion on input prices 
C) the existence of barriers to entry 
D) the shape of the short-run average total cost curve 
E) the existence of economic profit in the short run 
A) the long-run equilibrium price 
B) the impact of industry expansion on input prices 
C) the existence of barriers to entry 
D) the shape of the short-run average total cost curve 
E) the existence of economic profit in the short run C

Question 2

A firm will shut down if

Accepted Answer

A) it earns too little economic profit 
B) there are a large number of buyers and sellers 
C) it suffers an economic loss 
D) there is a change in tastes and preferences 
E) price is everywhere less than average variable cost 
A) it earns too little economic profit 
B) there are a large number of buyers and sellers 
C) it suffers an economic loss 
D) there is a change in tastes and preferences 
E) price is everywhere less than average variable cost E

Question 3

A perfectly competitive firm produces in a market where the prevailing price is $25.At its current output level of 10,000 units,its average total cost equals $15.The firm is earning

Accepted Answer

A) a total money profit of $100,000 
B) a total economic profit of $100,000 
C) a total money profit of $250,000 
D) a total economic profit of $250,000 
E) both a total money profit and a total economic profit of $100,000 
A) a total money profit of $100,000 
B) a total economic profit of $100,000 
C) a total money profit of $250,000 
D) a total economic profit of $250,000 
E) both a total money profit and a total economic profit of $100,000 B

Question 4

If price exceeds average total cost in the short run,then in the long run the market demand curve will shift to the right.

Accepted Answer

A) True 
 B)False

Question 5

The long-run supply curve of a perfectly competitive industry is horizontal

Accepted Answer

A) in an increasing-cost industry 
B) in a decreasing-cost industry 
C) if the short-run supply curves for firms are upward-sloping 
D) if the short-run market supply curve is negatively sloped 
E) in a constant-cost industry 
A) in an increasing-cost industry 
B) in a decreasing-cost industry 
C) if the short-run supply curves for firms are upward-sloping 
D) if the short-run market supply curve is negatively sloped 
E) in a constant-cost industry

Question 6

In a market economy,the main market signal to competitive suppliers is

Accepted Answer

A) the number of consumers 
B) consumers' income 
C) the rate of inflation 
D) the price of the product 
E) the unemployment rate 
A) the number of consumers 
B) consumers' income 
C) the rate of inflation 
D) the price of the product 
E) the unemployment rate

Question 7

The perfectly competitive firm shown in Figure 9-6 is currently producing 180 units of output.To maximize profit,it should

Accepted Answer

A) increase output until ATC is maximized 
B) reduce output to 140 units 
C) reduce output to 100 units 
D) raise its price and lower its output 
E) raise its price and raise its output 
A) increase output until ATC is maximized 
B) reduce output to 140 units 
C) reduce output to 100 units 
D) raise its price and lower its output 
E) raise its price and raise its output

Question 8

A firm can maximize profits in the short run by producing output where

Accepted Answer

A) MC = MR and the MC curve crosses the MR curve from above (as long as P>AV
C)  
B) TC = TR 
C) MR - MC = TR - TC 
D) MC = MR and the MC curve crosses the MR curve from below (as long as P>AV
C)  
E) TR = TC and the TC curve crosses the TR curve from below 
A) MC = MR and the MC curve crosses the MR curve from above (as long as P>AV
C)  
B) TC = TR 
C) MR - MC = TR - TC 
D) MC = MR and the MC curve crosses the MR curve from below (as long as P>AV
C)  
E) TR = TC and the TC curve crosses the TR curve from below

Question 9

Figure 9-17
  
-Figure 9-17 shows that for this perfectly competitive firm,the profit-maximizing output level is

Accepted Answer

A) 0. 
B) 25. 
C) 75. 
D) 200. 
A) 0. 
B) 25. 
C) 75. 
D) 200.

Question 10

Tommy's Tires operates in a perfectly competitive market.If the market price equals $50 per tire and ATC = $60 per tire at the profit-maximizing level of output,then in the long run

Accepted Answer

A) more firms will enter the market 
B) the market supply curve will shift to the right 
C) the equilibrium price per tire will fall 
D) average total costs will rise 
E) the market supply curve will shift to the left 
A) more firms will enter the market 
B) the market supply curve will shift to the right 
C) the equilibrium price per tire will fall 
D) average total costs will rise 
E) the market supply curve will shift to the left

Question 11

In a constant-cost industry,the long-run market supply curve is

Accepted Answer

A) horizontal 
B) vertical 
C) upward sloping 
D) downward sloping 
E) the same slope as the typical firm's supply curve 
A) horizontal 
B) vertical 
C) upward sloping 
D) downward sloping 
E) the same slope as the typical firm's supply curve

Question 12

Profit per unit of output is

Accepted Answer

A) price minus average total cost 
B) marginal revenue minus marginal cost 
C) average total cost minus average variable cost 
D) total revenue minus total cost 
E) demand minus average variable cost 
A) price minus average total cost 
B) marginal revenue minus marginal cost 
C) average total cost minus average variable cost 
D) total revenue minus total cost 
E) demand minus average variable cost

Question 13

The firm will do best if it produces that quantity of output for which

Accepted Answer

A) marginal cost equals average cost 
B) profit per unit is greatest 
C) marginal revenue equals total revenue 
D) marginal revenue equals marginal cost 
E) marginal revenue exceeds marginal cost 
A) marginal cost equals average cost 
B) profit per unit is greatest 
C) marginal revenue equals total revenue 
D) marginal revenue equals marginal cost 
E) marginal revenue exceeds marginal cost

Question 14

The long-run supply curve is upward sloping in a(n)

Accepted Answer

A) decreasing-cost industry 
B) increasing-cost industry 
C) constant-cost industry 
D) labor-intensive industry 
E) capital-intensive industry 
A) decreasing-cost industry 
B) increasing-cost industry 
C) constant-cost industry 
D) labor-intensive industry 
E) capital-intensive industry

Question 15

When the average total cost curves for firms are unaffected by the entry of other firms,

Accepted Answer

A) it is an increasing-cost industry 
B) it is a decreasing-cost industry 
C) the market's equilibrium price will eventually be restored after the market demand increases 
D) firms will charge a higher price when demand rises 
E) the long-run supply curve is positively sloped 
A) it is an increasing-cost industry 
B) it is a decreasing-cost industry 
C) the market's equilibrium price will eventually be restored after the market demand increases 
D) firms will charge a higher price when demand rises 
E) the long-run supply curve is positively sloped

Question 16

The long-run supply curve is downward sloping in a(n)

Accepted Answer

A) decreasing-cost industry 
B) increasing-cost industry 
C) constant-cost industry 
D) labor-intensive industry 
E) capital-intensive industry 
A) decreasing-cost industry 
B) increasing-cost industry 
C) constant-cost industry 
D) labor-intensive industry 
E) capital-intensive industry

Question 17

In the long run,an entrepreneur who owns a perfectly competitive firm will earn an income just equal to what she could earn in the next best alternative use of her time.

Accepted Answer

A) True 
 B)False

Question 18

Assume that an inferior good is produced in a perfectly competitive,increasing-cost industry with external diseconomies.The market is initially in long-run equilibrium.After all long-run adjustments are made,which of the following would occur in this market as a result of an increase in consumers' incomes?

Accepted Answer

A) The market price would remain unchanged;the market quantity would rise. 
B) The market price would rise;the market quantity would fall. 
C) The market price would remain unchanged;the market quantity would fall. 
D) Both the market price and the market quantity would fall. 
E) Both the market price and the market quantity would rise. 
A) The market price would remain unchanged;the market quantity would rise. 
B) The market price would rise;the market quantity would fall. 
C) The market price would remain unchanged;the market quantity would fall. 
D) Both the market price and the market quantity would fall. 
E) Both the market price and the market quantity would rise.

Question 19

As long as price is greater than average variable cost,a firm maximizes its profit by producing that quantity of output for which

Accepted Answer

A) average revenue equals average total cost 
B) the price is the highest 
C) marginal revenue equals marginal cost 
D) average total cost is minimized 
E) average variable cost is minimized 
A) average revenue equals average total cost 
B) the price is the highest 
C) marginal revenue equals marginal cost 
D) average total cost is minimized 
E) average variable cost is minimized

Question 20

Firms in a perfectly competitive market cannot influence

Accepted Answer

A) the quantity of the good that they produce 
B) how much labor to use in production 
C) how much capital to employ in production 
D) the level of advertising that they use 
E) the price of the product they sell 
A) the quantity of the good that they produce 
B) how much labor to use in production 
C) how much capital to employ in production 
D) the level of advertising that they use 
E) the price of the product they sell

Which of the following helps to classify an industry's market structure?

A firm will shut down if

A perfectly competitive firm produces in a market where the prevailing price is $25.At its current output level of 10,000 units,its average total cost equals $15.The firm is earning

If price exceeds average total cost in the short run,then in the long run the market demand curve will shift to the right.

The long-run supply curve of a perfectly competitive industry is horizontal

In a market economy,the main market signal to competitive suppliers is

The perfectly competitive firm shown in Figure 9-6 is currently producing 180 units of output.To maximize profit,it should

A firm can maximize profits in the short run by producing output where

Figure 9-17 -Figure 9-17 shows that for this perfectly competitive firm,the profit-maximizing output level is

Tommy's Tires operates in a perfectly competitive market.If the market price equals $50 per tire and ATC = $60 per tire at the profit-maximizing level of output,then in the long run

In a constant-cost industry,the long-run market supply curve is

Profit per unit of output is

The firm will do best if it produces that quantity of output for which

The long-run supply curve is upward sloping in a(n)

When the average total cost curves for firms are unaffected by the entry of other firms,

The long-run supply curve is downward sloping in a(n)

In the long run,an entrepreneur who owns a perfectly competitive firm will earn an income just equal to what she could earn in the next best alternative use of her time.

As long as price is greater than average variable cost,a firm maximizes its profit by producing that quantity of output for which

Firms in a perfectly competitive market cannot influence

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 9: Perfect Competition

Which of the following helps to classify an industry's market structure?

A firm will shut down if

A perfectly competitive firm produces in a market where the prevailing price is $25.At its current output level of 10,000 units,its average total cost equals $15.The firm is earning

If price exceeds average total cost in the short run,then in the long run the market demand curve will shift to the right.

The long-run supply curve of a perfectly competitive industry is horizontal

In a market economy,the main market signal to competitive suppliers is

The perfectly competitive firm shown in Figure 9-6 is currently producing 180 units of output.To maximize profit,it should

A firm can maximize profits in the short run by producing output where

Figure 9-17 -Figure 9-17 shows that for this perfectly competitive firm,the profit-maximizing output level is

Tommy's Tires operates in a perfectly competitive market.If the market price equals $50 per tire and ATC = $60 per tire at the profit-maximizing level of output,then in the long run

In a constant-cost industry,the long-run market supply curve is

Profit per unit of output is

The firm will do best if it produces that quantity of output for which

The long-run supply curve is upward sloping in a(n)

When the average total cost curves for firms are unaffected by the entry of other firms,

The long-run supply curve is downward sloping in a(n)

In the long run,an entrepreneur who owns a perfectly competitive firm will earn an income just equal to what she could earn in the next best alternative use of her time.

As long as price is greater than average variable cost,a firm maximizes its profit by producing that quantity of output for which

Firms in a perfectly competitive market cannot influence

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters