Question 1

The demand curve in a purely competitive industry is ______,while the demand curve to a single firm in that industry is ______.

Accepted Answer

A)  perfectly inelastic;perfectly elastic 
B)  downsloping;perfectly elastic 
C)  downsloping;perfectly inelastic 
D)  perfectly elastic;downsloping 
A)  perfectly inelastic;perfectly elastic 
B)  downsloping;perfectly elastic 
C)  downsloping;perfectly inelastic 
D)  perfectly elastic;downsloping

Question 2

If a purely competitive firm is producing at some level less than the profit-maximizing output,then:

Accepted Answer

A)  price is necessarily greater than average total cost. 
B)  fixed costs are large relative to variable costs. 
C)  price exceeds marginal revenue. 
D)  marginal revenue exceeds marginal cost. 
A)  price is necessarily greater than average total cost. 
B)  fixed costs are large relative to variable costs. 
C)  price exceeds marginal revenue. 
D)  marginal revenue exceeds marginal cost.

Question 3

Which of the following is not a basic characteristic of pure competition?

Accepted Answer

A)  Considerable nonprice competition. 
B)  No barriers to the entry or exit of firms. 
C)  A standardized or homogeneous product. 
D)  A large number of buyers and sellers. 
A)  Considerable nonprice competition. 
B)  No barriers to the entry or exit of firms. 
C)  A standardized or homogeneous product. 
D)  A large number of buyers and sellers.

Question 4

Price is constant to the individual firm selling in a purely competitive market because:

Accepted Answer

A)  the firm's demand curve is downsloping. 
B)  of product differentiation reinforced by extensive advertising. 
C)  each seller supplies a negligible fraction of total supply. 
D)  there are no good substitutes for its product. 
A)  the firm's demand curve is downsloping. 
B)  of product differentiation reinforced by extensive advertising. 
C)  each seller supplies a negligible fraction of total supply. 
D)  there are no good substitutes for its product.

Question 5

The following table applies to a purely competitive industry composed of 100 identical firms. $\begin{array}{lcl}
Quantity&&Quantity\
Demanded &Price &Supplied\
\hline
400,000 & \$ 5 & 800,000 \
500,000 & 4 & 700,000 \
600,000 & 3 & 600,000 \
700,000 & 2 & 500,000 \
800,000 & 1 & 400,000
\end{array}$ Refer to the table.If each of the 100 firms in the industry is maximizing its profit,each must have a marginal cost of:

Accepted Answer

A)  $5. 
B)  $4. 
C)  $3. 
D)  $2. 
A)  $5. 
B)  $4. 
C)  $3. 
D)  $2.

Question 6

(Consider This)An unprofitable motel will stay open in the short run if:

Accepted Answer

A)  price (average nightly room rate)exceeds average variable cost. 
B)  marginal revenue exceeds marginal cost. 
C)  price (average nightly room rate)exceeds average fixed cost. 
D)  marginal revenue exceeds price. 
A)  price (average nightly room rate)exceeds average variable cost. 
B)  marginal revenue exceeds marginal cost. 
C)  price (average nightly room rate)exceeds average fixed cost. 
D)  marginal revenue exceeds price.

Question 7

In contrast to American firms,Japanese firms frequently make lifetime employment commitments to their workers and agree not to lay them off when product demand is weak.Other things being equal,we would expect Japanese firms to:

Accepted Answer

A)  face more elastic product demand curves than American firms. 
B)  have relatively greater variable costs than American firms. 
C)  discontinue production at higher product prices than would American firms. 
D)  continue to produce in the short run at lower prices than would American firms. 
A)  face more elastic product demand curves than American firms. 
B)  have relatively greater variable costs than American firms. 
C)  discontinue production at higher product prices than would American firms. 
D)  continue to produce in the short run at lower prices than would American firms.

Question 8

In the short run,the individual competitive firm's supply curve is that segment of the:

Accepted Answer

A)  average variable cost curve lying below the marginal cost curve. 
B)  marginal cost curve lying above the average variable cost curve. 
C)  marginal revenue curve lying below the demand curve. 
D)  marginal cost curve lying between the average total cost and average variable cost curves. 
A)  average variable cost curve lying below the marginal cost curve. 
B)  marginal cost curve lying above the average variable cost curve. 
C)  marginal revenue curve lying below the demand curve. 
D)  marginal cost curve lying between the average total cost and average variable cost curves.

Question 9

In the short run,a purely competitive seller will shut down if product price:

Accepted Answer

A)  equals average revenue. 
B)  is greater than MC. 
C)  is less than AVC. 
D)  is less than ATC. 
A)  equals average revenue. 
B)  is greater than MC. 
C)  is less than AVC. 
D)  is less than ATC.

Question 10

(Last Word)Fixed costs for a firm are analogous to:

Accepted Answer

A)  the dirt that fills up the financial hole. 
B)  digging a deeper financial hole by producing when prices are too low. 
C)  the cost of the shovel needed to fill the financial hole. 
D)  starting out in a hole that represents economic losses if the firm produces nothing. 
A)  the dirt that fills up the financial hole. 
B)  digging a deeper financial hole by producing when prices are too low. 
C)  the cost of the shovel needed to fill the financial hole. 
D)  starting out in a hole that represents economic losses if the firm produces nothing.

Question 11

The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing it is known as the:

Accepted Answer

A)  output-maximizing rule. 
B)  profit-maximizing rule. 
C)  shut-down rule. 
D)  break-even rule. 
A)  output-maximizing rule. 
B)  profit-maximizing rule. 
C)  shut-down rule. 
D)  break-even rule.

Question 12

An industry comprised of a very large number of sellers producing a standardized product is known as:

Accepted Answer

A)  monopolistic competition. 
B)  oligopoly. 
C)  pure monopoly. 
D)  pure competition. 
A)  monopolistic competition. 
B)  oligopoly. 
C)  pure monopoly. 
D)  pure competition.

Question 13

The demand curve for a purely competitive industry is perfectly elastic,but the demand curves faced by individual firms in such an industry are downsloping.

Accepted Answer

A) True 
 B)False

Question 14

(Last Word)Temporary shutdowns of firms are most widespread when:

Accepted Answer

A)  total fixed costs are rising across the economy. 
B)  the economy experiences recession. 
C)  firms have the ability to set prices for their output. 
D)  wage levels are falling. 
A)  total fixed costs are rising across the economy. 
B)  the economy experiences recession. 
C)  firms have the ability to set prices for their output. 
D)  wage levels are falling.

Question 15

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing)output by equating:

Accepted Answer

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

Question 16

If a purely competitive firm is maximizing economic profit:

Accepted Answer

A)  it is necessarily maximizing per-unit profit. 
B)  it may or may not be maximizing per-unit profit. 
C)  then per-unit profit will be minimized. 
D)  it is necessarily overallocating resources to its product. 
A)  it is necessarily maximizing per-unit profit. 
B)  it may or may not be maximizing per-unit profit. 
C)  then per-unit profit will be minimized. 
D)  it is necessarily overallocating resources to its product.

Question 17

Which of the following is not a characteristic of pure competition?

Accepted Answer

A)  Price strategies by firms. 
B)  A standardized product. 
C)  No barriers to entry. 
D)  A larger number of sellers. 
A)  Price strategies by firms. 
B)  A standardized product. 
C)  No barriers to entry. 
D)  A larger number of sellers.

Question 18

Answer the question on the basis of the following cost data for a purely competitive seller: $\begin{array}{ccc}
\begin{array}{c}
&\text { Total } \
\text { Total }&\text { Fixed } \
\text { Output }&\text { Cost }\
\hline
0&\$50\
1 &   50 \
2 &  50 \
3 &  50 \
4 &  50 \
5 &  50 \
6 &  50
\end{array}
\begin{array}{cc}
\text { Total } &\
\text { Variable }&\text { Total } \
\text { Cost }&\text { Cost }\
\hline
\$ 0 & \$ 50 \
70 & 120 \
120 & 170 \
150 & 200 \
220 & 270 \
300 & 350 \
390 & 440
\end{array}
\end{array}$ Refer to the data.If product price is $75,the firm will produce:

Accepted Answer

A)  3 units of output. 
B)  4 units of output. 
C)  5 units of output. 
D)  6 units of output. 
A)  3 units of output. 
B)  4 units of output. 
C)  5 units of output. 
D)  6 units of output.

Question 19

Which of the following statements applies to a purely competitive producer?

Accepted Answer

A)  It will not advertise its product. 
B)  In long-run equilibrium it will earn an economic profit. 
C)  Its product will have a brand name. 
D)  Its product is slightly different from those of its competitors. 
A)  It will not advertise its product. 
B)  In long-run equilibrium it will earn an economic profit. 
C)  Its product will have a brand name. 
D)  Its product is slightly different from those of its competitors.

Question 20

In which of the following industry structures is the entry of new firms the most difficult?

Accepted Answer

A)  Pure monopoly. 
B)  Oligopoly. 
C)  Monopolistic competition. 
D)  Pure competition. 
A)  Pure monopoly. 
B)  Oligopoly. 
C)  Monopolistic competition. 
D)  Pure competition.

The demand curve in a purely competitive industry is ,while the demand curve to a single firm in that industry is .

If a purely competitive firm is producing at some level less than the profit-maximizing output,then:

Which of the following is not a basic characteristic of pure competition?

Price is constant to the individual firm selling in a purely competitive market because:

(Consider This)An unprofitable motel will stay open in the short run if:

In contrast to American firms,Japanese firms frequently make lifetime employment commitments to their workers and agree not to lay them off when product demand is weak.Other things being equal,we would expect Japanese firms to:

In the short run,the individual competitive firm's supply curve is that segment of the:

In the short run,a purely competitive seller will shut down if product price:

(Last Word)Fixed costs for a firm are analogous to:

The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing it is known as the:

An industry comprised of a very large number of sellers producing a standardized product is known as:

The demand curve for a purely competitive industry is perfectly elastic,but the demand curves faced by individual firms in such an industry are downsloping.

(Last Word)Temporary shutdowns of firms are most widespread when:

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing)output by equating:

If a purely competitive firm is maximizing economic profit:

Which of the following is not a characteristic of pure competition?

Which of the following statements applies to a purely competitive producer?

In which of the following industry structures is the entry of new firms the most difficult?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Cost of Production

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

Technology RD and Efficiency

The Demand for Resources

Wage Determination

Rent Interest and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Filters

Exam 10: Pure Competition in the Short Run

The demand curve in a purely competitive industry is ______,while the demand curve to a single firm in that industry is ______.

If a purely competitive firm is producing at some level less than the profit-maximizing output,then:

Which of the following is not a basic characteristic of pure competition?

Price is constant to the individual firm selling in a purely competitive market because:

(Consider This)An unprofitable motel will stay open in the short run if:

In contrast to American firms,Japanese firms frequently make lifetime employment commitments to their workers and agree not to lay them off when product demand is weak.Other things being equal,we would expect Japanese firms to:

In the short run,the individual competitive firm's supply curve is that segment of the:

In the short run,a purely competitive seller will shut down if product price:

(Last Word)Fixed costs for a firm are analogous to:

The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing it is known as the:

An industry comprised of a very large number of sellers producing a standardized product is known as:

The demand curve for a purely competitive industry is perfectly elastic,but the demand curves faced by individual firms in such an industry are downsloping.

(Last Word)Temporary shutdowns of firms are most widespread when:

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing)output by equating:

If a purely competitive firm is maximizing economic profit:

Which of the following is not a characteristic of pure competition?

Which of the following statements applies to a purely competitive producer?

In which of the following industry structures is the entry of new firms the most difficult?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Cost of Production

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

Technology RD and Efficiency

The Demand for Resources

Wage Determination

Rent Interest and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Filters

The demand curve in a purely competitive industry is ,while the demand curve to a single firm in that industry is .