Question 1

-Refer to Figure 9.3.This farmer's profit-maximizing level of output is ________ units of output.

Accepted Answer

A)  200 
B)  700 
C)  1,000 
D)  1,400 
A)  200 
B)  700 
C)  1,000 
D)  1,400 C

Question 2

Recall the Application about the price and supply of blueberries to answer the following question(s).
-Recall the Application.If the quantity of blueberries demanded decreases,prices ________ in the short run and ________ as supply drops to meet demand.

Accepted Answer

A)  rise; stabilize 
B)  fall; stabilize 
C)  rise; fall 
D)  fall; rise 
A)  rise; stabilize 
B)  fall; stabilize 
C)  rise; fall 
D)  fall; rise B

Question 3

Perfectly competitive industries are characterized by a homogeneous product.

Accepted Answer

A) True 
 B)False  True

Question 4

-Refer to Figure 9.4.At the market price of $18 per bushel,if this farmer produces at the profit-maximizing level of output,her total revenue would be

Accepted Answer

A)  $1,200. 
B)  $2,800. 
C)  $5,600. 
D)  $6,300. 
A)  $1,200. 
B)  $2,800. 
C)  $5,600. 
D)  $6,300.

Question 5

At all prices below the shut-down point,optimal short-run output is zero.

Accepted Answer

A) True 
 B)False

Question 6

-Refer to Figure 9.1.A farmer produces 100 bushels of corn and sells each bushel at $5.The cost of producing each unit bushel is $2.This farmer's total revenue is

Accepted Answer

A)  $20. 
B)  $200. 
C)  $300. 
D)  $500. 
A)  $20. 
B)  $200. 
C)  $300. 
D)  $500.

Question 7

Assume that Bright Lights,Inc.is part of a perfectly competitive market.If Bright Lights,Inc.decides to raise their prices for vanity light fixtures by 20%,which of the following is most likely to result?

Accepted Answer

A)  Bright Lights, Inc.'s supply curve will shift to the left and they will produce less output. 
B)  Bright Lights, Inc. will increase the price of their output to compensate for the rise in their rent. 
C)  Bright Lights, Inc. will earn less profit but will produce the same amount of output. 
D)  Bright Lights, Inc. will shut down immediately. 
A)  Bright Lights, Inc.'s supply curve will shift to the left and they will produce less output. 
B)  Bright Lights, Inc. will increase the price of their output to compensate for the rise in their rent. 
C)  Bright Lights, Inc. will earn less profit but will produce the same amount of output. 
D)  Bright Lights, Inc. will shut down immediately.

Question 8

Of the following,the best example of a perfectly competitive industry is

Accepted Answer

A)  music stores. 
B)  beer. 
C)  cigarettes. 
D)  corn. 
A)  music stores. 
B)  beer. 
C)  cigarettes. 
D)  corn.

Question 9

If a firm is producing where marginal revenue is greater than marginal cost,

Accepted Answer

A)  the revenue gained by producing one more unit of output exceeds the additional cost incurred by doing so. 
B)  the revenue gained by producing one more unit of output equals the additional cost incurred by doing so. 
C)  the revenue gained by producing one more unit of output is less than the additional cost incurred by doing so. 
D)  the firm is already maximizing profits because revenue is being increased by more than costs. 
A)  the revenue gained by producing one more unit of output exceeds the additional cost incurred by doing so. 
B)  the revenue gained by producing one more unit of output equals the additional cost incurred by doing so. 
C)  the revenue gained by producing one more unit of output is less than the additional cost incurred by doing so. 
D)  the firm is already maximizing profits because revenue is being increased by more than costs.

Question 10

In 1992,Hurricane Andrew caused the price of ice in Florida to increase in the long run.

Accepted Answer

A) True 
 B)False

Question 11

Recall the Application about the production of coffee in China to answer the following question(s).
-Recall the Application.Chinese farmers switched from growing tea to growing coffee,indicating what about the coffee market?

Accepted Answer

A)  an increase in price increased the quantity supplied 
B)  a decrease in demand 
C)  a decrease in price decreased the quantity supplied 
D)  an increase in demand 
A)  an increase in price increased the quantity supplied 
B)  a decrease in demand 
C)  a decrease in price decreased the quantity supplied 
D)  an increase in demand

Question 12

If a firm shuts down in the short run,will the firm have zero costs? Why or why not?

Accepted Answer

No,the fir

Question 13

Recall the Application about the shut-down price for zinc to answer the following question(s).
-Recall the Application.If the selling price of zinc falls below the shut-down price for one-quarter of the world's zinc mines,the output produced from these mines will

Accepted Answer

A)  decrease by 25 percent. 
B)  still remain constant. 
C)  increase by 25 percent. 
D)  fall to zero. 
A)  decrease by 25 percent. 
B)  still remain constant. 
C)  increase by 25 percent. 
D)  fall to zero.

Question 14

-Refer to Figure 9.7.This firm will choose to continue operating but incur an economic loss if the price is

Accepted Answer

A)  between $0 and $4. 
B)  between $4 and $7. 
C)  between $7 and $13. 
D)  above $13. 
A)  between $0 and $4. 
B)  between $4 and $7. 
C)  between $7 and $13. 
D)  above $13.

Question 15

If each firm in a perfectly competitive industry is in market equilibrium,the market price is equal to the break-even price.

Accepted Answer

A) True 
 B)False

Question 16

Economic profit is equal to

Accepted Answer

A)  the amount received from the sale of the product. 
B)  total revenue divided by average costs. 
C)  the opportunity cost of each factor of production. 
D)  total revenue minus total economic cost. 
A)  the amount received from the sale of the product. 
B)  total revenue divided by average costs. 
C)  the opportunity cost of each factor of production. 
D)  total revenue minus total economic cost.

Question 17

Profit-maximizing firms want to maximize the difference between

Accepted Answer

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

Question 18

Scenario 9.1: 21st Century Pen, Inc. produces 2,000 pens per day, and hires 20 workers at a cost of $200 per day per worker. The price of each pen is $5 each. 21st Century Pen, Inc. pays a daily rental rate of $60 on its factory and a daily insurance rate of $20. 21st Century Pen, Inc. has a ten year lease on the factory, an insurance contract for a year, and the company has no other expenses.
-Refer to Scenario 9.1.Suppose that 21st Century Pen,Inc.continues to produce the same level of output and hires the same number of workers.21st Century Pen,Inc.will shut down in the short run if the price falls below

Accepted Answer

A)  $1. 
B)  $2. 
C)  $3. 
D)  $4. 
A)  $1. 
B)  $2. 
C)  $3. 
D)  $4.

Question 19

In an increasing-cost industry,the average cost of production increases as the total output increases due to

Accepted Answer

A)  increasing input prices. 
B)  price equals marginal cost. 
C)  increasing in demand for outputs. 
D)  all of the above 
A)  increasing input prices. 
B)  price equals marginal cost. 
C)  increasing in demand for outputs. 
D)  all of the above

Question 20

A perfectly competitive firm is producing 75 units of output.The market price is $7 and the firm's marginal cost is $8.The firm should

Accepted Answer

A)  lower its price. 
B)  raise its price. 
C)  increase production. 
D)  decrease production. 
A)  lower its price. 
B)  raise its price. 
C)  increase production. 
D)  decrease production.

-Refer to Figure 9.3.This farmer's profit-maximizing level of output is ________ units of output.

Recall the Application about the price and supply of blueberries to answer the following question(s). -Recall the Application.If the quantity of blueberries demanded decreases,prices in the short run and as supply drops to meet demand.

Perfectly competitive industries are characterized by a homogeneous product.

-Refer to Figure 9.4.At the market price of $18 per bushel,if this farmer produces at the profit-maximizing level of output,her total revenue would be

At all prices below the shut-down point,optimal short-run output is zero.

-Refer to Figure 9.1.A farmer produces 100 bushels of corn and sells each bushel at $5.The cost of producing each unit bushel is $2.This farmer's total revenue is

Assume that Bright Lights,Inc.is part of a perfectly competitive market.If Bright Lights,Inc.decides to raise their prices for vanity light fixtures by 20%,which of the following is most likely to result?

Of the following,the best example of a perfectly competitive industry is

If a firm is producing where marginal revenue is greater than marginal cost,

In 1992,Hurricane Andrew caused the price of ice in Florida to increase in the long run.

Recall the Application about the production of coffee in China to answer the following question(s). -Recall the Application.Chinese farmers switched from growing tea to growing coffee,indicating what about the coffee market?

If a firm shuts down in the short run,will the firm have zero costs? Why or why not?

Recall the Application about the shut-down price for zinc to answer the following question(s). -Recall the Application.If the selling price of zinc falls below the shut-down price for one-quarter of the world's zinc mines,the output produced from these mines will

-Refer to Figure 9.7.This firm will choose to continue operating but incur an economic loss if the price is

If each firm in a perfectly competitive industry is in market equilibrium,the market price is equal to the break-even price.

Economic profit is equal to

Profit-maximizing firms want to maximize the difference between

In an increasing-cost industry,the average cost of production increases as the total output increases due to

A perfectly competitive firm is producing 75 units of output.The market price is $7 and the firm's marginal cost is $8.The firm should

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 9: Perfect Competition

-Refer to Figure 9.3.This farmer's profit-maximizing level of output is ________ units of output.

Recall the Application about the price and supply of blueberries to answer the following question(s). -Recall the Application.If the quantity of blueberries demanded decreases,prices ________ in the short run and ________ as supply drops to meet demand.

Perfectly competitive industries are characterized by a homogeneous product.

-Refer to Figure 9.4.At the market price of $18 per bushel,if this farmer produces at the profit-maximizing level of output,her total revenue would be

At all prices below the shut-down point,optimal short-run output is zero.

-Refer to Figure 9.1.A farmer produces 100 bushels of corn and sells each bushel at $5.The cost of producing each unit bushel is $2.This farmer's total revenue is

Assume that Bright Lights,Inc.is part of a perfectly competitive market.If Bright Lights,Inc.decides to raise their prices for vanity light fixtures by 20%,which of the following is most likely to result?

Of the following,the best example of a perfectly competitive industry is

If a firm is producing where marginal revenue is greater than marginal cost,

In 1992,Hurricane Andrew caused the price of ice in Florida to increase in the long run.

Recall the Application about the production of coffee in China to answer the following question(s). -Recall the Application.Chinese farmers switched from growing tea to growing coffee,indicating what about the coffee market?

If a firm shuts down in the short run,will the firm have zero costs? Why or why not?

Recall the Application about the shut-down price for zinc to answer the following question(s). -Recall the Application.If the selling price of zinc falls below the shut-down price for one-quarter of the world's zinc mines,the output produced from these mines will

-Refer to Figure 9.7.This firm will choose to continue operating but incur an economic loss if the price is

If each firm in a perfectly competitive industry is in market equilibrium,the market price is equal to the break-even price.

Economic profit is equal to

Profit-maximizing firms want to maximize the difference between

In an increasing-cost industry,the average cost of production increases as the total output increases due to

A perfectly competitive firm is producing 75 units of output.The market price is $7 and the firm's marginal cost is $8.The firm should

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Recall the Application about the price and supply of blueberries to answer the following question(s). -Recall the Application.If the quantity of blueberries demanded decreases,prices in the short run and as supply drops to meet demand.