Question 1

-In the above figure,if the market price is $8,the firm

Accepted Answer

A) continues to produce but at an economic loss. 
B) continues to produce but at an economic profit. 
C) shuts down operations. 
D) produces 10 units. 
A) continues to produce but at an economic loss. 
B) continues to produce but at an economic profit. 
C) shuts down operations. 
D) produces 10 units. A

Question 2

In a perfectly competitive market,if P > ATC in the short run,there is apt to be

Accepted Answer

A) entry of new firms into the market. 
B) an accounting loss for existing firms. 
C) an inward shift in the industry supply curve. 
D) an upward pressure on price. 
A) entry of new firms into the market. 
B) an accounting loss for existing firms. 
C) an inward shift in the industry supply curve. 
D) an upward pressure on price. A

Question 3

The profit-maximizing output for the perfectly competitive firm occurs at the point at which

Accepted Answer

A) TR - MR is at a maximum. 
B) TR - TC is at a minimum. 
C) MR = MC. 
D) TR - ATC is at a maximum. 
A) TR - MR is at a maximum. 
B) TR - TC is at a minimum. 
C) MR = MC. 
D) TR - ATC is at a maximum. C

Question 4

$$\begin{array} { c c c r } 
\begin{array} { c } 
\text { Total } \
\text { Output }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Output }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Costs }
\end{array} \
\hline 100 & \$ 500 & 106 & \$ 528 \
101 & 501 & 107 & 540 \
102 & 503 & 108 & 555 \
103 & 506 & 109 & 580 \
104 & 510 & 110 & 615 \
105 & 518 & 111 & 660\\hline
\end{array}$$
-Refer to the above table.This firm operates in a perfectly competitive market in which the market price is $10/unit.What is true when the firm produces 103 units?

Accepted Answer

A) Total revenue equals $5,060. 
B) Total costs exceed total revenue by $403. 
C) Marginal revenue is less than marginal cost. 
D) Its total profit is $524. 
A) Total revenue equals $5,060. 
B) Total costs exceed total revenue by $403. 
C) Marginal revenue is less than marginal cost. 
D) Its total profit is $524.

Question 5

When demand is perfectly elastic,marginal revenue is

Accepted Answer

A) zero. 
B) equal to price. 
C) declining. 
D) increasing. 
A) zero. 
B) equal to price. 
C) declining. 
D) increasing.

Question 6

For a perfectly competitive firm,which of the following is NOT true?

Accepted Answer

A) The average revenue curve,the demand and the marginal revenue curves are identical. 
B) The total revenue curve begins at the origin and slopes upward as output increases. 
C) The slope of the total revenue curve is equal to the product price. 
D) The total revenue curve is horizontal. 
A) The average revenue curve,the demand and the marginal revenue curves are identical. 
B) The total revenue curve begins at the origin and slopes upward as output increases. 
C) The slope of the total revenue curve is equal to the product price. 
D) The total revenue curve is horizontal.

Question 7

What is the short-run break-even price? What are economic profits at this price? Why would a firm be willing to operate permanently at this price?

Accepted Answer

The short-run break-even price is the pr

Question 8

A firm is currently producing at the rate of output at which total revenues just cover its total variable costs.If demand falls,the firm should

Accepted Answer

A) lower both price and its rate of output. 
B) shut down. 
C) increase its rate of output to make up for the lower price. 
D) not change its rate of output because it is still covering its variable costs. 
A) lower both price and its rate of output. 
B) shut down. 
C) increase its rate of output to make up for the lower price. 
D) not change its rate of output because it is still covering its variable costs.

Question 9

-Refer to the above figure.The market supply and demand curves in a perfectly competitive market intersect at $4.Which of the graphs represent the situation for an individual firm?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D

Question 10

For a firm in a perfectly competitive industry,which of the following is TRUE?

Accepted Answer

A) MR = P 
B) MR  P 
A) MR = P 
B) MR  P

Question 11

Suppose that at the current level of output,price = $10,MC = $4,AVC = $7,and ATC = $11.Which of the following is true?

Accepted Answer

A) The firm should decrease output. 
B) The firm should shut down. 
C) The firm should increase output. 
D) The firm should maintain the current level of output. 
A) The firm should decrease output. 
B) The firm should shut down. 
C) The firm should increase output. 
D) The firm should maintain the current level of output.

Question 12

The short-run supply curve for the perfectly competitive firm is the portion of its

Accepted Answer

A) MC curve above the AVC curve. 
B) MC curve above the AFC curve. 
C) MC curve above the ATC curve. 
D) MC curve above the MR curve. 
A) MC curve above the AVC curve. 
B) MC curve above the AFC curve. 
C) MC curve above the ATC curve. 
D) MC curve above the MR curve.

Question 13

In a decreasing-cost industry,an increase in output will lead to

Accepted Answer

A) an upward shift in the ATC curve. 
B) an upward shift in the MC curve. 
C) a reduction in long-run per-unit costs. 
D) an increase in long-run per-unit costs. 
A) an upward shift in the ATC curve. 
B) an upward shift in the MC curve. 
C) a reduction in long-run per-unit costs. 
D) an increase in long-run per-unit costs.

Question 14

A perfectly competitive firm faces a horizontal demand curve because it is

Accepted Answer

A) a price taker. 
B) a price maker. 
C) a large firm in a small industry. 
D) one of few firms in the market. 
A) a price taker. 
B) a price maker. 
C) a large firm in a small industry. 
D) one of few firms in the market.

Question 15

Marginal revenue

Accepted Answer

A) cannot be used to determine the profit-maximizing rate of production. 
B) is the change in total revenues resulting from a change in output. 
C) is a change in revenue that is immeasurable and non-quantifiable. 
D) cannot be effectively utilized when analyzing the perfect competitor. 
A) cannot be used to determine the profit-maximizing rate of production. 
B) is the change in total revenues resulting from a change in output. 
C) is a change in revenue that is immeasurable and non-quantifiable. 
D) cannot be effectively utilized when analyzing the perfect competitor.

Question 16

In a long-run perfectly competitive equilibrium,

Accepted Answer

A) P = MR = MC > ATC. 
B) P = MR > MC = ATC. 
C) P = MR = MC = ATC. 
D) P > MR > MC = ATC. 
A) P = MR = MC > ATC. 
B) P = MR > MC = ATC. 
C) P = MR = MC = ATC. 
D) P > MR > MC = ATC.

Question 17

Clothing retailers have faced greater competition in recent years as more firms have entered the clothing market.Some of the competition has come from foreign competitors,but much of it is domestic competition.As a result there is much competition in markets for many types of clothing and

Accepted Answer

A) individual buyers and sellers cannot affect the market price because it is determined by the market forces of demand and supply. 
B) there are no other implications. 
C) firms have a great degree of flexibility in pricing their products because these products can be sold at a high profit level. 
D) there are relatively few buyers and sellers in the market,and one individual firm can determine the market price. 
A) individual buyers and sellers cannot affect the market price because it is determined by the market forces of demand and supply. 
B) there are no other implications. 
C) firms have a great degree of flexibility in pricing their products because these products can be sold at a high profit level. 
D) there are relatively few buyers and sellers in the market,and one individual firm can determine the market price.

Question 18

For a perfect competitor,the marginal revenue curve will be

Accepted Answer

A) horizontal. 
B) vertical. 
C) positively sloped. 
D) negatively sloped. 
A) horizontal. 
B) vertical. 
C) positively sloped. 
D) negatively sloped.

Question 19

The total revenue of a perfectly competitive firm is calculated by

Accepted Answer

A) multiplying average revenue by price. 
B) dividing price by quantity. 
C) multiplying price by quantity. 
D) multiplying quantity by average total cost. 
A) multiplying average revenue by price. 
B) dividing price by quantity. 
C) multiplying price by quantity. 
D) multiplying quantity by average total cost.

Question 20

A constant-cost industry

Accepted Answer

A) is one in which an increase in demand is matched by a proportional increases in long-run supply. 
B) generates increasing profits whenever demand increases because the new long-run equilibrium price is above the old price even though average costs have not changed. 
C) has a horizontal long-run supply curve. 
D) has a downward sloping long-run supply curve. 
A) is one in which an increase in demand is matched by a proportional increases in long-run supply. 
B) generates increasing profits whenever demand increases because the new long-run equilibrium price is above the old price even though average costs have not changed. 
C) has a horizontal long-run supply curve. 
D) has a downward sloping long-run supply curve.

-In the above figure,if the market price is $8,the firm

In a perfectly competitive market,if P > ATC in the short run,there is apt to be

The profit-maximizing output for the perfectly competitive firm occurs at the point at which

When demand is perfectly elastic,marginal revenue is

For a perfectly competitive firm,which of the following is NOT true?

What is the short-run break-even price? What are economic profits at this price? Why would a firm be willing to operate permanently at this price?

A firm is currently producing at the rate of output at which total revenues just cover its total variable costs.If demand falls,the firm should

-Refer to the above figure.The market supply and demand curves in a perfectly competitive market intersect at $4.Which of the graphs represent the situation for an individual firm?

For a firm in a perfectly competitive industry,which of the following is TRUE?

Suppose that at the current level of output,price = $10,MC = $4,AVC = $7,and ATC = $11.Which of the following is true?

The short-run supply curve for the perfectly competitive firm is the portion of its

In a decreasing-cost industry,an increase in output will lead to

A perfectly competitive firm faces a horizontal demand curve because it is

Marginal revenue

In a long-run perfectly competitive equilibrium,

Clothing retailers have faced greater competition in recent years as more firms have entered the clothing market.Some of the competition has come from foreign competitors,but much of it is domestic competition.As a result there is much competition in markets for many types of clothing and

For a perfect competitor,the marginal revenue curve will be

The total revenue of a perfectly competitive firm is calculated by

A constant-cost industry

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 10: Perfect Competition

-In the above figure,if the market price is $8,the firm

In a perfectly competitive market,if P > ATC in the short run,there is apt to be

The profit-maximizing output for the perfectly competitive firm occurs at the point at which

When demand is perfectly elastic,marginal revenue is

For a perfectly competitive firm,which of the following is NOT true?

What is the short-run break-even price? What are economic profits at this price? Why would a firm be willing to operate permanently at this price?

A firm is currently producing at the rate of output at which total revenues just cover its total variable costs.If demand falls,the firm should

-Refer to the above figure.The market supply and demand curves in a perfectly competitive market intersect at $4.Which of the graphs represent the situation for an individual firm?

For a firm in a perfectly competitive industry,which of the following is TRUE?

Suppose that at the current level of output,price = $10,MC = $4,AVC = $7,and ATC = $11.Which of the following is true?

The short-run supply curve for the perfectly competitive firm is the portion of its

In a decreasing-cost industry,an increase in output will lead to

A perfectly competitive firm faces a horizontal demand curve because it is

Marginal revenue

In a long-run perfectly competitive equilibrium,

Clothing retailers have faced greater competition in recent years as more firms have entered the clothing market.Some of the competition has come from foreign competitors,but much of it is domestic competition.As a result there is much competition in markets for many types of clothing and

For a perfect competitor,the marginal revenue curve will be

The total revenue of a perfectly competitive firm is calculated by

A constant-cost industry

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters