Question 1

Farm incomes tend to be unstable because of:

Accepted Answer

A)  the inelastic demand for food. 
B)  changes in government farm-support programs. 
C)  the elastic demand for farm products. 
D)  the fluctuating demand for food. 
A)  the inelastic demand for food. 
B)  changes in government farm-support programs. 
C)  the elastic demand for farm products. 
D)  the fluctuating demand for food.

Question 2

The cobweb theorem explains why the price gets further and further from the equilibrium price when:

Accepted Answer

A)  the price elasticity of supply exceeds that of demand. 
B)  the demand and supply elasticities are not identical. 
C)  the demand and supply elasticities are identical. 
D)  the price elasticity of demand exceeds that of supply. 
A)  the price elasticity of supply exceeds that of demand. 
B)  the demand and supply elasticities are not identical. 
C)  the demand and supply elasticities are identical. 
D)  the price elasticity of demand exceeds that of supply.

Question 3

Which of the following is true for firm in perfect competition?

Accepted Answer

A)  it can increase the market price 
B)  it chooses output only 
C)  it chooses output and price 
D)  it can decrease the market price 
A)  it can increase the market price 
B)  it chooses output only 
C)  it chooses output and price 
D)  it can decrease the market price

Question 4

A perfectly competitive firm finds itself in the following situation: TR = $6000; TC = $8000; FC = $3888; P = $8; and MC = $8. The firm should:

Accepted Answer

A)  continue to produce as it is now. 
B)  decrease production, but not shut down. 
C)  increase production. 
D)  shut down. 
A)  continue to produce as it is now. 
B)  decrease production, but not shut down. 
C)  increase production. 
D)  shut down.

Question 5

A firm is currently maximizing profits by producing at an output level at which marginal revenue is $5 and average total cost is $5.25, the firm should:

Accepted Answer

A)  increase its price to $5.25 
B)  continue to operate as long as the average variable cost is less than $5 
C)  decrease its production until average total cost is equal to $5 
D)  shut-down at the current output level 
A)  increase its price to $5.25 
B)  continue to operate as long as the average variable cost is less than $5 
C)  decrease its production until average total cost is equal to $5 
D)  shut-down at the current output level

Question 6

Which of the following statements about Canadian farming is false?

Accepted Answer

A)  The number of Canadians who work on farms has decreased by about 50% since the Second World War. 
B)  Wheat is not used to manufacture wallboard, toothpaste, plastics, and disposable diapers. 
C)  Net farm income in Canada has decreased by 77% between 1975 and 2000. 
D)  In Saskatchewan, farm income represented 20% of total income in 1998 as compared to 50% in 1959. 
A)  The number of Canadians who work on farms has decreased by about 50% since the Second World War. 
B)  Wheat is not used to manufacture wallboard, toothpaste, plastics, and disposable diapers. 
C)  Net farm income in Canada has decreased by 77% between 1975 and 2000. 
D)  In Saskatchewan, farm income represented 20% of total income in 1998 as compared to 50% in 1959.

Question 7

A firm that is maximizing profits by producing at an output level at which marginal revenue, marginal cost and average variable cost are equal to $20, then that firm:

Accepted Answer

A)  is just breaking even. 
B)  should increase production in order to reduce average total cost. 
C)  should shut down. 
D)  should reduce production in order to raise the price of the product. 
A)  is just breaking even. 
B)  should increase production in order to reduce average total cost. 
C)  should shut down. 
D)  should reduce production in order to raise the price of the product.

Question 8

If, for a perfectly competitive firm, the price exceeds average total cost:

Accepted Answer

A)  the firm will increase production until average costs are equal to the price. 
B)  new firms will be attracted into the industry. 
C)  the firm will undertake non-price competition in order to maintain its advantageous position. 
D)  the firm will increase production in order to increase profits. 
A)  the firm will increase production until average costs are equal to the price. 
B)  new firms will be attracted into the industry. 
C)  the firm will undertake non-price competition in order to maintain its advantageous position. 
D)  the firm will increase production in order to increase profits.

Farm incomes tend to be unstable because of:

The cobweb theorem explains why the price gets further and further from the equilibrium price when:

Which of the following is true for firm in perfect competition?

A perfectly competitive firm finds itself in the following situation: TR = $6000; TC = $8000; FC = $3888; P = $8; and MC = $8. The firm should:

A firm is currently maximizing profits by producing at an output level at which marginal revenue is $5 and average total cost is $5.25, the firm should:

Which of the following statements about Canadian farming is false?

A firm that is maximizing profits by producing at an output level at which marginal revenue, marginal cost and average variable cost are equal to $20, then that firm:

If, for a perfectly competitive firm, the price exceeds average total cost:

Introductory Concepts

The Operation of a Market

The Role of Government in a Market Economy

Government in Canada

Economic Indicators

Determination of National Income

Money and the Canadian Banking System

Stabilization Policy

International Economics

Industrial Organization in Canada

Production Costs

How Imperfect Competition Functions

The Labour Market

Filters

Exam 12: Perfect Competition : Theory and Practice

Farm incomes tend to be unstable because of:

The cobweb theorem explains why the price gets further and further from the equilibrium price when:

Which of the following is true for firm in perfect competition?

A perfectly competitive firm finds itself in the following situation: TR = $6000; TC = $8000; FC = $3888; P = $8; and MC = $8. The firm should:

A firm is currently maximizing profits by producing at an output level at which marginal revenue is $5 and average total cost is $5.25, the firm should:

Which of the following statements about Canadian farming is false?

A firm that is maximizing profits by producing at an output level at which marginal revenue, marginal cost and average variable cost are equal to $20, then that firm:

If, for a perfectly competitive firm, the price exceeds average total cost:

Introductory Concepts

The Operation of a Market

The Role of Government in a Market Economy

Government in Canada

Economic Indicators

Determination of National Income

Money and the Canadian Banking System

Stabilization Policy

International Economics

Industrial Organization in Canada

Production Costs

How Imperfect Competition Functions

The Labour Market

Filters