Question 1

If perfectly competitive firms are making an economic profit, then

Accepted Answer

A) the market must be in long-run equilibrium but cannot be in a short-run equilibrium. 
B) some firms will exit the market. 
C) new firms will enter the market. 
D) the market might be in a long-run equilibrium but not a short-run equilibrium. 
E) the market cannot be in either a short-run or a long-run equilibrium. 
A) the market must be in long-run equilibrium but cannot be in a short-run equilibrium. 
B) some firms will exit the market. 
C) new firms will enter the market. 
D) the market might be in a long-run equilibrium but not a short-run equilibrium. 
E) the market cannot be in either a short-run or a long-run equilibrium. C

Question 2

-The above figure shows a perfectly competitive firm.If the market price is more than $20 per unit, the firm

Accepted Answer

A) will definitely shut down to minimize its losses. 
B) will stay open to produce and will make zero economic profit. 
C) will stay open to produce and will incur an economic loss. 
D) will stay open to produce and will make an economic profit. 
E) might shut down but more information is needed about the fixed cost. 
A) will definitely shut down to minimize its losses. 
B) will stay open to produce and will make zero economic profit. 
C) will stay open to produce and will incur an economic loss. 
D) will stay open to produce and will make an economic profit. 
E) might shut down but more information is needed about the fixed cost. D

Question 3

A perfectly competitive firm's short-run supply curve is

Accepted Answer

A) horizontal at the market price. 
B) its total cost curve above the AVC. 
C) its marginal cost curve below the marginal revenue curve. 
D) its marginal cost curve above the AVC curve. 
E) its marginal revenue curve below the ATC curve. 
A) horizontal at the market price. 
B) its total cost curve above the AVC. 
C) its marginal cost curve below the marginal revenue curve. 
D) its marginal cost curve above the AVC curve. 
E) its marginal revenue curve below the ATC curve. D

Question 4

-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 5

The above figure shows some a firm's cost curves and its marginal revenue curve.
-Based on the figure above, if the firm produces 7 cans per day, the firm ________ maximizing its profit and is ________.

Accepted Answer

A) is; incurring an economic loss 
B) is; making zero economic profit 
C) is; making an economic profit 
D) is not; incurring an economic loss 
E) is not; making zero economic profit 
A) is; incurring an economic loss 
B) is; making zero economic profit 
C) is; making an economic profit 
D) is not; incurring an economic loss 
E) is not; making zero economic profit

Question 6

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 7

Entry by competitive firms decreases the market price, while exit by competitive firms increases the market price.Explain why firms enter or exit an industry and why these price changes occur.

Accepted Answer

Competitive firms will enter an industry

Question 8

If a perfectly competitive firm's marginal revenue is greater than its marginal cost, as it increases its output, its profit ________ and the price it can charge for its product ________.

Accepted Answer

A) increases; does not change 
B) decreases; falls 
C) increases; falls 
D) decreases; rises 
E) decreases; does not change 
A) increases; does not change 
B) decreases; falls 
C) increases; falls 
D) decreases; rises 
E) decreases; does not change

Question 9

-The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas.Omar's total profit is maximized when he produces ________ bushels of rutabagas.

Accepted Answer

A) 3 
B) 5 
C) 6 
D) 8 
E) 7 
A) 3 
B) 5 
C) 6 
D) 8 
E) 7

Question 10

-Suppose the bobby pin industry is perfectly competitive.The price of a packet of bobby pins is $2.00.Pins and Needles, Inc.is a firm in this industry and is producing 1,000 packets of bobby pins per day at the point where the MC = MR.The average cost of production at this output level is $1.50 per packet.
a∙What is the marginal cost of the 1,000th packet?
b∙Is this firm making an economic profit, zero economic profit, or an economic loss? How much?
c∙Is the firm in long-run equilibrium? Why or why not?

Accepted Answer

a∙The price per packet is $2, which is a

Question 11

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 12

If demand for a seller's product is perfectly elastic, which of the following is true?
I∙The firm will sell no output if it sets the price its product above the market price.
Ii∙There are many perfect substitutes for the seller's product.
Iii∙The firm will sell no output if it sets the price its product below the market price.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) ii and iii 
A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) ii and iii

Question 13

The U-pick berry market is perfectly competitive.Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit.What happens as time passes? What is the long-run equilibrium outcome?

Accepted Answer

The presence of economic profit attracts

Question 14

The table below shows the total cost schedule for a perfectly competitive firm.The market price is $250 per unit.Complete the table.

Accepted Answer

@#IMG-DLM& The compl

Question 15

Firms exit a competitive market when they incur an economic loss.In the long run, this exit means that the economic losses of the surviving firms

Accepted Answer

A) increase. 
B) decrease until they equal zero. 
C) decrease until economic profits are earned. 
D) do not change. 
E) might change but more information is needed about what happens to the price of the good as the firms exit. 
A) increase. 
B) decrease until they equal zero. 
C) decrease until economic profits are earned. 
D) do not change. 
E) might change but more information is needed about what happens to the price of the good as the firms exit.

Question 16

If perfectly firms are making an economic profit, then

Accepted Answer

A) the market is in its long-run equilibrium. 
B) new firms enter the market and the equilibrium profit of the firms already in the market decreases. 
C) new firms enter the market and the equilibrium profit of the firms already in the market increases. 
D) firms exit the market and the economic profit of the surviving firms in the market decreases. 
E) firms exit the market and the economic profit of the surviving firms in the market increases. 
A) the market is in its long-run equilibrium. 
B) new firms enter the market and the equilibrium profit of the firms already in the market decreases. 
C) new firms enter the market and the equilibrium profit of the firms already in the market increases. 
D) firms exit the market and the economic profit of the surviving firms in the market decreases. 
E) firms exit the market and the economic profit of the surviving firms in the market increases.

Question 17

-Jimmy grows corn.His total revenue and total cost are in the above table.What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?

Accepted Answer

Jimmy's profit is greatest if he grows e

Question 18

If a struggling perfectly competitive furniture store in Detroit shuts down, it incurs an economic loss equal to its

Accepted Answer

A) marginal cost. 
B) total fixed cost. 
C) total variable cost. 
D) average variable cost. 
E) average total cost. 
A) marginal cost. 
B) total fixed cost. 
C) total variable cost. 
D) average variable cost. 
E) average total cost.

Question 19

A firm maximizes its profit by producing the amount of output such that

Accepted Answer

A) marginal revenue equals marginal cost. 
B) marginal revenue exceeds marginal cost by some amount. 
C) marginal revenue is maximized. 
D) marginal cost is minimized. 
E) marginal revenue exceeds marginal cost by the maximum amount possible. 
A) marginal revenue equals marginal cost. 
B) marginal revenue exceeds marginal cost by some amount. 
C) marginal revenue is maximized. 
D) marginal cost is minimized. 
E) marginal revenue exceeds marginal cost by the maximum amount possible.

Question 20

-The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas.When Omar maximizes his profit, Omar's profit equals

Accepted Answer

A) $80. 
B) $11. 
C) $30. 
D) $16. 
E) $105. 
A) $80. 
B) $11. 
C) $30. 
D) $16. 
E) $105.

If perfectly competitive firms are making an economic profit, then

-The above figure shows a perfectly competitive firm.If the market price is more than $20 per unit, the firm

A perfectly competitive firm's short-run supply curve is

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

The above figure shows some a firm's cost curves and its marginal revenue curve. -Based on the figure above, if the firm produces 7 cans per day, the firm maximizing its profit and is .

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

Entry by competitive firms decreases the market price, while exit by competitive firms increases the market price.Explain why firms enter or exit an industry and why these price changes occur.

If a perfectly competitive firm's marginal revenue is greater than its marginal cost, as it increases its output, its profit and the price it can charge for its product .

-The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas.Omar's total profit is maximized when he produces ________ bushels of rutabagas.

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 U-pick berry market is perfectly competitive.Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit.What happens as time passes? What is the long-run equilibrium outcome?

The table below shows the total cost schedule for a perfectly competitive firm.The market price is $250 per unit.Complete the table.

Firms exit a competitive market when they incur an economic loss.In the long run, this exit means that the economic losses of the surviving firms

If perfectly firms are making an economic profit, then

-Jimmy grows corn.His total revenue and total cost are in the above table.What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?

If a struggling perfectly competitive furniture store in Detroit shuts down, it incurs an economic loss equal to its

A firm maximizes its profit by producing the amount of output such that

-The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas.When Omar maximizes his profit, Omar's profit equals

Getting Started

The Usand 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

If perfectly competitive firms are making an economic profit, then

-The above figure shows a perfectly competitive firm.If the market price is more than $20 per unit, the firm

A perfectly competitive firm's short-run supply curve is

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

The above figure shows some a firm's cost curves and its marginal revenue curve. -Based on the figure above, if the firm produces 7 cans per day, the firm ________ maximizing its profit and is ________.

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

Entry by competitive firms decreases the market price, while exit by competitive firms increases the market price.Explain why firms enter or exit an industry and why these price changes occur.

If a perfectly competitive firm's marginal revenue is greater than its marginal cost, as it increases its output, its profit ________ and the price it can charge for its product ________.

-The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas.Omar's total profit is maximized when he produces ________ bushels of rutabagas.

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 U-pick berry market is perfectly competitive.Suppose that all U-pick blueberry farms have the same cost curves and all are making an economic profit.What happens as time passes? What is the long-run equilibrium outcome?

The table below shows the total cost schedule for a perfectly competitive firm.The market price is $250 per unit.Complete the table.

Firms exit a competitive market when they incur an economic loss.In the long run, this exit means that the economic losses of the surviving firms

If perfectly firms are making an economic profit, then

-Jimmy grows corn.His total revenue and total cost are in the above table.What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?

If a struggling perfectly competitive furniture store in Detroit shuts down, it incurs an economic loss equal to its

A firm maximizes its profit by producing the amount of output such that

-The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas.When Omar maximizes his profit, Omar's profit equals

Getting Started

The Usand 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 above figure shows some a firm's cost curves and its marginal revenue curve. -Based on the figure above, if the firm produces 7 cans per day, the firm maximizing its profit and is .

If a perfectly competitive firm's marginal revenue is greater than its marginal cost, as it increases its output, its profit and the price it can charge for its product .