Question 1

-In the above table, the price of the product is

Accepted Answer

A)   $30.
B)   $147.
C)   $150.
D)   $180.E) A) and B)
F) A) and C)

Question 2

Bob's Lawn Care Services is a perfectly competitive firm that currently mows 22 lawns a week. Bob's marginal cost exceeds the price he charges. Bob can increase his profit if he

Accepted Answer

A)   charges a higher price.
B)   charges a lower price.
C)   mows fewer than 22 lawns a week.
D)   mows more than 22 lawns a week.E) None of the above
F) All of the above

Question 3

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the

Accepted Answer

A)   firm has total revenue of $2,720.
B)   firm's total costs are less than $2,720.
C)   firm is making an economic profit.
D)   All of the above are true.E) B) and D)
F) A) and B)

Question 4

The difference between a perfectly competitive firm's total revenue and its total cost is

Accepted Answer

A)   always positive.
B)   always negative.
C)   always zero.
D)   greatest at the profit-maximizing level of output.E) A) and B)
F) All of the above

Question 5

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Homer's variable cost is equal to

Accepted Answer

A)   0.
B)   $5,000.
C)   $16,000.
D)   $21,000.E) A) and B)
F) A) and C)

Question 6

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his total cost will be

Accepted Answer

A)   $0.
B)   $1,000.
C)   $1,200.
D)   $4,000.E) None of the above
F) A) and C)

Question 7

1, in the long run the market A)  demand will increase. B)  demand will decrease. C)  supply will increase. D)  supply will decrease." class="answers-bank-image d-inline" rel="preload" >
-Suppose the cost curves in the above figure apply to all firms in the market. Then, if the initial price is P1, in the long run the market

Accepted Answer

A)   demand will increase.
B)   demand will decrease.
C)   supply will increase.
D)   supply will decrease.E) None of the above
F) A) and B)

Question 8

-In the above table, if the quantity sold by the firm rises from 5 to 6, its marginal revenue is

Accepted Answer

A)   $15.
B)   $30.
C)   $75.
D)   $90.E) A) and C)
F) None of the above

Question 9

In the long run, a perfectly competitive firm will exit a market when

Accepted Answer

A)   its total revenue is less than its total cost.
B)   its marginal revenue curve is below the minimum of its average total cost curve.
C)   the price is greater than the minimum of its average total cost curve.
D)   Both answers A and B are correct.E) A) and B)
F) A) and D)

Question 10

In a perfectly competitive industry, the demand for a single firm's product is perfectly elastic

Accepted Answer

A)   because this firm's output is a perfect substitute for any other firm's output.
B)   because this firm is a price maker.
C)   only in the long run.
D)   because there are many buyers in this market.E) None of the above
F) A) and B)

Question 11

-The table above shows some of the costs for a perfectly competitive firm. If the price is $160 per unit, how many units of output will the firm produce?

Accepted Answer

A)   8
B)   9
C)   10
D)   more than 10E) C) and D)
F) B) and D)

Question 12

When a firm is considered to be a "price taker" that means that the firm

Accepted Answer

A)   can charge any price that it wants to charge, that is, "take" any price it wants.
B)   pays a fixed price for all of its inputs.
C)   will accept ("take")  the lowest price that its customers offer.
D)   cannot influence the market price of the good that it sells.E) A) and D)
F) A) and C)

Question 13

Which of the following is NOT a defining characteristic of perfectly competitive industries?

Accepted Answer

A)   many buyers and sellers
B)   unrestricted entry and exit
C)   consumer knowledge about prices charged by each firm
D)   higher prices being charged for certain name brandsE) A) and B)
F) None of the above

Question 14

-In the above figure, if the price is $12, a profit-maximizing perfectly competitive firm will have an economic profit

Accepted Answer

A)   of less than $100 but more than $0.
B)   of more than $100.
C)   that is negative, that is, it will have an economic loss.
D)   of zero, that is, it will break even with a normal profit.E) B) and C)
F) A) and D)

Question 15

-In the above figure, the line represented by the "2" is the

Accepted Answer

A)   average fixed cost.
B)   average variable cost.
C)   total cost.
D)   average total cost.E) A) and B)
F) None of the above

Question 16

In perfect competition, the market demand for the good ________ perfectly elastic and the demand for the output of one firm ________ perfectly elastic.

Accepted Answer

A)   is; is
B)   is; is not
C)   is not; is
D)   is not; is notE) None of the above
F) A) and B)

Question 17

In a perfectly competitive market that is in long-run equilibrium, which of the following will NOT occur?

Accepted Answer

A)   Firms make only zero economic profit.
B)   Firms' owners earn a normal profit.
C)   The price equals the minimum average total cost.
D)   Entrepreneurs want to enter this industry.E) All of the above
F) C) and D)

Question 18

A perfectly competitive firm will operate and incur an economic loss in the short run if

Accepted Answer

A)   the loss is smaller than its total fixed costs.
B)   it knows it can recoup the loss in the long run.
C)   shareholders do not know about the loss.
D)   the loss can offset future profits.E) None of the above
F) B) and C)

Question 19

In the long run, for a perfectly competitive market, if economic profit is

Accepted Answer

A)   less than zero, then some firms will exit the market and the market supply curve will shift leftward.
B)   greater than zero, then some firms will enter the market and the market supply curve will shift rightward.
C)   equal to zero, then there is no entry or exit of firms into or out of the market.
D)   All of the above answers are correct.E) None of the above
F) C) and D)

Question 20

ATC." class="answers-bank-image d-inline" rel="preload" >
-For a perfectly competitive firm, in the long-run equilibrium

Accepted Answer

A)   P = MC = ATC = MR.
B)   MR = MC = AFC.
C)   MR = P = ATC = AFC.
D)   P = MC > ATC.E) A) and B)
F) A) and D)

Exam 12: Perfect Competition

-In the above table, the price of the product is

Correct Answer
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In a perfectly competitive market that is in long-run equilibrium, which of the following will NOT occur?

Correct Answer
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-The table above shows some of the costs for a perfectly competitive firm. If the price is $160 per unit, how many units of output will the firm produce?

Correct Answer
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-In the above figure, if the price is $12, a profit-maximizing perfectly competitive firm will have an economic profit

Correct Answer
verified

In the long run, a perfectly competitive firm will exit a market when

Correct Answer
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-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his total cost will be

Correct Answer
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-Suppose the cost curves in the above figure apply to all firms in the market. Then, if the initial price is P₁, in the long run the market

Correct Answer
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In perfect competition, the market demand for the good perfectly elastic and the demand for the output of one firm perfectly elastic.

Correct Answer
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Which of the following is NOT a defining characteristic of perfectly competitive industries?

Correct Answer
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Bob's Lawn Care Services is a perfectly competitive firm that currently mows 22 lawns a week. Bob's marginal cost exceeds the price he charges. Bob can increase his profit if he

Correct Answer
verified

-In the above figure, the line represented by the "2" is the

Correct Answer
verified

-For a perfectly competitive firm, in the long-run equilibrium

Correct Answer
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In a perfectly competitive industry, the demand for a single firm's product is perfectly elastic

Correct Answer
verified

The difference between a perfectly competitive firm's total revenue and its total cost is

Correct Answer
verified

-In the above table, if the quantity sold by the firm rises from 5 to 6, its marginal revenue is

Correct Answer
verified

A perfectly competitive firm will operate and incur an economic loss in the short run if

Correct Answer
verified

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the

Correct Answer
verified

In the long run, for a perfectly competitive market, if economic profit is

Correct Answer
verified

When a firm is considered to be a "price taker" that means that the firm

Correct Answer
verified

Exam 12: Perfect Competition

-In the above table, the price of the product is

Correct AnswerverifiedShow Answer

In a perfectly competitive market that is in long-run equilibrium, which of the following will NOT occur?

Correct AnswerverifiedShow Answer

-The table above shows some of the costs for a perfectly competitive firm. If the price is $160 per unit, how many units of output will the firm produce?

Correct AnswerverifiedShow Answer

-In the above figure, if the price is $12, a profit-maximizing perfectly competitive firm will have an economic profit

Correct AnswerverifiedShow Answer

In the long run, a perfectly competitive firm will exit a market when

Correct AnswerverifiedShow Answer

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his total cost will be

Correct AnswerverifiedShow Answer

-Suppose the cost curves in the above figure apply to all firms in the market. Then, if the initial price is P1, in the long run the market

Correct AnswerverifiedShow Answer

In perfect competition, the market demand for the good ________ perfectly elastic and the demand for the output of one firm ________ perfectly elastic.

Correct AnswerverifiedShow Answer

Which of the following is NOT a defining characteristic of perfectly competitive industries?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Bob's Lawn Care Services is a perfectly competitive firm that currently mows 22 lawns a week. Bob's marginal cost exceeds the price he charges. Bob can increase his profit if he

Correct AnswerverifiedShow Answer

-In the above figure, the line represented by the "2" is the

Correct AnswerverifiedShow Answer

-For a perfectly competitive firm, in the long-run equilibrium

Correct AnswerverifiedShow Answer

In a perfectly competitive industry, the demand for a single firm's product is perfectly elastic

Correct AnswerverifiedShow Answer

The difference between a perfectly competitive firm's total revenue and its total cost is

Correct AnswerverifiedShow Answer

-In the above table, if the quantity sold by the firm rises from 5 to 6, its marginal revenue is

Correct AnswerverifiedShow Answer

A perfectly competitive firm will operate and incur an economic loss in the short run if

Correct AnswerverifiedShow Answer

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the

Correct AnswerverifiedShow Answer

In the long run, for a perfectly competitive market, if economic profit is

Correct AnswerverifiedShow Answer

When a firm is considered to be a "price taker" that means that the firm

Correct AnswerverifiedShow Answer

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-Suppose the cost curves in the above figure apply to all firms in the market. Then, if the initial price is P₁, in the long run the market

Correct Answer
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In perfect competition, the market demand for the good perfectly elastic and the demand for the output of one firm perfectly elastic.

Correct Answer
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