Question 1

Which of the following decisions cannot be taken by a firm in a perfectly competitive market?

Accepted Answer

A) Market exit decision 
B) Market price of the product 
C) Quantity of output it can produce 
D) Entering a market 
A) Market exit decision 
B) Market price of the product 
C) Quantity of output it can produce 
D) Entering a market B

Question 2

The opportunity cost of a given investment is the potential earnings forfeited by tying up money in the investment.

Accepted Answer

A) True 
 B)False  True

Question 3

Perfectly competitive markets feature relatively high barriers to entry.

Accepted Answer

A) True 
 B)False  False

Question 4

Firms entering a perfectly competitive industry will cause the price of the product to

Accepted Answer

A) fall. 
B) rise. 
C) remain constant. 
D) become more responsive to consumer demand. 
A) fall. 
B) rise. 
C) remain constant. 
D) become more responsive to consumer demand.

Question 5

In a perfectly competitive industry,influence over price is exerted by

Accepted Answer

A) individual sellers. 
B) individual buyers. 
C) the largest firms. 
D) the forces of supply and demand. 
A) individual sellers. 
B) individual buyers. 
C) the largest firms. 
D) the forces of supply and demand.

Question 6

In the long run,any firm may enter or leave a perfectly competitive market.

Accepted Answer

A) True 
 B)False

Question 7

The short-run supply curve of the perfectly competitive industry is found by summing the

Accepted Answer

A) AC curves of the individual firms in the industry. 
B) AVC curves of the individual firms in the industry. 
C) MC curves above AVC of the individual firms in the industry. 
D) There is no short-run supply curve in a competitive industry. 
A) AC curves of the individual firms in the industry. 
B) AVC curves of the individual firms in the industry. 
C) MC curves above AVC of the individual firms in the industry. 
D) There is no short-run supply curve in a competitive industry.

Question 8

The short-run supply curve for the perfectly competitive firm is that part of the marginal cost curve that lies above the average fixed cost curve.

Accepted Answer

A) True 
 B)False

Question 9

A market

Accepted Answer

A) may be an organized exchange. 
B) refers to a set of sellers and buyers whose actions affect a commodity's price. 
C) is that area in which buyers and sellers compete to affect a product price. 
D) All of the above are correct. 
A) may be an organized exchange. 
B) refers to a set of sellers and buyers whose actions affect a commodity's price. 
C) is that area in which buyers and sellers compete to affect a product price. 
D) All of the above are correct.

Question 10

Figure 10-3
  
-In Figure 10-3,the perfectly competitive firm is realizing a

Accepted Answer

A) loss equal to ABCE. 
B) profit equal to ABCE. 
C) profit equal to ABDF. 
D) loss equal to ABDF. 
A) loss equal to ABCE. 
B) profit equal to ABCE. 
C) profit equal to ABDF. 
D) loss equal to ABDF.

Question 11

How does a firm that is losing money in the short run decide whether to shut down or continue to produce to minimize its losses?

Accepted Answer

The firm should continue to pr

Question 12

What is the difference between the accountant's concept of profit and the economist's view of profit?

Accepted Answer

Accountants tend to include in TC contra

Question 13

Perfectly competitive markets have absolutely no drawbacks.

Accepted Answer

A) True 
 B)False

Question 14

The demand curve of a perfectly competitive firm is vertical.

Accepted Answer

A) True 
 B)False

Question 15

For a perfectly competitive firm,marginal revenue equals average revenue because the

Accepted Answer

A) firm's supply curve is horizontal. 
B) industry's demand curve is horizontal. 
C) firm's demand curve is horizontal. 
D) industry's supply curve is horizontal. 
A) firm's supply curve is horizontal. 
B) industry's demand curve is horizontal. 
C) firm's demand curve is horizontal. 
D) industry's supply curve is horizontal.

Question 16

Which of the following is a characteristic of perfect competition?

Accepted Answer

A) large barriers to entry 
B) a small number of firms 
C) firms selling unique goods 
D) None of the above is correct. 
A) large barriers to entry 
B) a small number of firms 
C) firms selling unique goods 
D) None of the above is correct.

Question 17

A firm can stay in business while taking a loss in the short run as long as it covers its

Accepted Answer

A) fixed costs. 
B) variable costs. 
C) fixed and variable costs. 
D) A firm can never stay in business when it experiences losses. 
A) fixed costs. 
B) variable costs. 
C) fixed and variable costs. 
D) A firm can never stay in business when it experiences losses.

Question 18

A firm operating at MC = MR must be making a profit.

Accepted Answer

A) True 
 B)False

Question 19

In the short run,perfectly competitive firms can

Accepted Answer

A) make an economic profit. 
B) take a loss. 
C) break even. 
D) All of the above are correct. 
A) make an economic profit. 
B) take a loss. 
C) break even. 
D) All of the above are correct.

Question 20

The short run for the industry is defined as a period

Accepted Answer

A) too brief for new firms to enter the industry. 
B) too brief for old firms to leave the industry. 
C) in which the number of firms in the industry is fixed. 
D) All of the above are correct. 
A) too brief for new firms to enter the industry. 
B) too brief for old firms to leave the industry. 
C) in which the number of firms in the industry is fixed. 
D) All of the above are correct.

Exam 10: The Firm and the Industry Under Perfect Competition

Which of the following decisions cannot be taken by a firm in a perfectly competitive market?

The opportunity cost of a given investment is the potential earnings forfeited by tying up money in the investment.

Perfectly competitive markets feature relatively high barriers to entry.

Firms entering a perfectly competitive industry will cause the price of the product to

In a perfectly competitive industry,influence over price is exerted by

In the long run,any firm may enter or leave a perfectly competitive market.

The short-run supply curve of the perfectly competitive industry is found by summing the

The short-run supply curve for the perfectly competitive firm is that part of the marginal cost curve that lies above the average fixed cost curve.

A market

Figure 10-3 -In Figure 10-3,the perfectly competitive firm is realizing a

How does a firm that is losing money in the short run decide whether to shut down or continue to produce to minimize its losses?

What is the difference between the accountant's concept of profit and the economist's view of profit?

Perfectly competitive markets have absolutely no drawbacks.

The demand curve of a perfectly competitive firm is vertical.

For a perfectly competitive firm,marginal revenue equals average revenue because the

Which of the following is a characteristic of perfect competition?

A firm can stay in business while taking a loss in the short run as long as it covers its

A firm operating at MC = MR must be making a profit.

In the short run,perfectly competitive firms can

The short run for the industry is defined as a period

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production,Inputs,and Cost: Building Blocks for Supply Analysis

Output,Price,and Profit: The Importance of Marginal Analysis

Securities: Business Finance,and the Economy: The Tail That Wags the Dog

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: the Price System

The Shortcomings of Free Markets

The Markets Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

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