Question 1

If the price is less than the average variable cost at the quantity of output where MR = MC,in the short run a perfectly competitive firm will:

Accepted Answer

A)  produce at a loss.
B)  produce at a profit.
C)  shut down production.
D)  produce more than the profit-maximizing quantity.

Question 2

A perfectly competitive industry is in a state of long-run equilibrium.Which expression must be TRUE?

Accepted Answer

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

Question 3

In the long run,all of the firms in a perfectly competitive industry will:

Accepted Answer

A)  produce at an output level at which average total cost equals marginal cost.
B)  earn an economic profit greater than zero.
C)  exit the industry if price is greater than average total cost.
D)  produce an output level at which price is greater than average total cost.

Question 4

In the long run,each firm in a perfectly competitive industry will:

Accepted Answer

A)  earn only enough to cover the opportunity costs of all resources used in production.
B)  produce where MR is greater than MC.
C)  differentiate its goods.
D)  increase its price.

Question 5

When a perfectly competitive industry is in long-run equilibrium,its firms:

Accepted Answer

A)  earn more than zero economic profits.
B)  combine their variable and fixed resources inefficiently.
C)  are not in short-run equilibrium.
D)  allocate all of their resources efficiently.

Question 6

In the short run,a firm will produce as long as the price is GREATER than its:

Accepted Answer

A)  ATC.
B)  MC.
C)  MR.
D)  AVC.

Question 7

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium.Subsequently,an increase in population increases the demand for haircuts.In the short run,the typical firm is likely to:

Accepted Answer

A)  earn an economic profit.
B)  incur an economic loss.
C)  have no change in its economic profit.
D)  have neither an economic profit nor an economic loss.

Question 8

The marginal revenue received by a firm in a perfectly competitive market:

Accepted Answer

A)  is unrelated to the market price.
B)  is less than the market price.
C)  is greater than the market price.
D)  is the change in total revenue divided by the change in output.

Question 9

Use the following to answer question: 
-(Figure: Revenues,Costs,and Profits for Tomato Producers III) Use Figure: Revenues,Costs,and Profits for Tomato Producers III.The market for tomatoes is perfectly competitive.If the market price of a bushel of tomatoes is $12,in the short run this farm will:

Accepted Answer

A)  minimize its losses by shutting down.
B)  minimize its losses by continuing to produce.
C)  break even.
D)  earn an economic profit.

Question 10

Use the following to answer question: 
-(Table: Total Cost and Output) Use Table: Total Cost and Output,which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm.What is the minimum price that Sergei needs to receive for a tub of ice cream to stay in business in the long run?

Accepted Answer

A)  $10.00
B)  $20.00
C)  $33.33
D)  $36.67

Question 11

Use the following to answer question: 
-(Table: Soybean Cost) Use Table: Soybean Cost.What is the break-even price for this farmer?

Accepted Answer

A)  $13.00
B)  $13.50
C)  $14.00
D)  $14.50

Question 12

The short-run industry supply curve is the sum of the individual supply curves of all of the firms in the industry,given a fixed number of firms.

Accepted Answer

A) True 
 B)False

Question 13

The equilibrium price of a guidebook is $35 in the perfectly competitive guidebook industry.Our firm produces 10,000 guidebooks for an average total cost of $38,marginal cost of $30,and average variable cost of $30.Our firm,in the short run,should:

Accepted Answer

A)  raise the price of guidebooks because the firm is losing money.
B)  keep output the same because the firm is producing at minimum average variable cost.
C)  produce more guidebooks because the next guidebook produced will increase profit by $5.
D)  shut down because the firm is losing money.

Question 14

A perfectly competitive firm will produce:

Accepted Answer

A)  whenever it can.
B)  mostly in the long run and only if price is greater than AFC.
C)  with a loss in the short run if its price is greater than AVC but less than ATC.
D)  only when it earns profits in the short run.

Question 15

The addition to the total revenue from selling one more unit of the good is:

Accepted Answer

A)  less than the market price.
B)  average profit.
C)  marginal cost.
D)  marginal revenue.

Question 16

Microsoft's Windows operating system is a standardized product,since everyone who buys a particular version of the product gets exactly the same thing.This means that Microsoft is a perfectly competitive firm.

Accepted Answer

A) True 
 B)False

Question 17

Individuals in a market who must take the market price as given are:

Accepted Answer

A)  quantity minimizers.
B)  quantity takers.
C)  price takers.
D)  price searchers.

Question 18

If firms are taking economic losses in the short run,then in the long run,firms will leave the industry,industry output will _____,and economic losses will _____.

Accepted Answer

A)  fall;decrease
B)  rise;decrease
C)  rise;increase
D)  fall;increase

Question 19

In perfect competition,a change in fixed cost will:

Accepted Answer

A)  cause a change in the price in the short run.
B)  cause a change in output in the short run.
C)  encourage entry or exit in the long run such that price will change enough to leave firms earning zero profits.
D)  cause a change in variable cost.

Question 20

Use the following to answer question: 2,then this firm's optimal output is _____ units of output and its economic profit will be _____. A) Q1;positive B) Q2;negative C) Q3;positive D) Q4;negative" class="answers-bank-image d-inline" rel="preload" >
-(Figure: The Perfectly Competitive Firm II) Use Figure: The Perfectly Competitive Firm II.If this firm's MR curve is MR2,then this firm's optimal output is _____ units of output and its economic profit will be _____.

Accepted Answer

A)  Q1;positive
B)  Q2;negative
C)  Q3;positive
D)  Q4;negative

Exam 12: Perfect Competition and the Supply Curve

In the short run,a firm will produce as long as the price is GREATER than its:

Correct Answer
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Individuals in a market who must take the market price as given are:

Correct Answer
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Correct Answer
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When a perfectly competitive industry is in long-run equilibrium,its firms:

Correct Answer
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In perfect competition,a change in fixed cost will:

Correct Answer
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The addition to the total revenue from selling one more unit of the good is:

Correct Answer
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If the price is less than the average variable cost at the quantity of output where MR = MC,in the short run a perfectly competitive firm will:

Correct Answer
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A perfectly competitive firm will produce:

Correct Answer
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If firms are taking economic losses in the short run,then in the long run,firms will leave the industry,industry output will _,and economic losses will _.

Correct Answer
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In the long run,all of the firms in a perfectly competitive industry will:

Correct Answer
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Use the following to answer question: -(Figure: Revenues,Costs,and Profits for Tomato Producers III) Use Figure: Revenues,Costs,and Profits for Tomato Producers III.The market for tomatoes is perfectly competitive.If the market price of a bushel of tomatoes is $12,in the short run this farm will:

Correct Answer
verified

The marginal revenue received by a firm in a perfectly competitive market:

Correct Answer
verified

Microsoft's Windows operating system is a standardized product,since everyone who buys a particular version of the product gets exactly the same thing.This means that Microsoft is a perfectly competitive firm.

Correct Answer
verified

The equilibrium price of a guidebook is $35 in the perfectly competitive guidebook industry.Our firm produces 10,000 guidebooks for an average total cost of $38,marginal cost of $30,and average variable cost of $30.Our firm,in the short run,should:

Correct Answer
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Use the following to answer question: -(Table: Soybean Cost) Use Table: Soybean Cost.What is the break-even price for this farmer?

Correct Answer
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Use the following to answer question: -(Figure: The Perfectly Competitive Firm II) Use Figure: The Perfectly Competitive Firm II.If this firm's MR curve is MR₂,then this firm's optimal output is _ units of output and its economic profit will be _.

Correct Answer
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In the long run,each firm in a perfectly competitive industry will:

Correct Answer
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Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium.Subsequently,an increase in population increases the demand for haircuts.In the short run,the typical firm is likely to:

Correct Answer
verified

A perfectly competitive industry is in a state of long-run equilibrium.Which expression must be TRUE?

Correct Answer
verified

The short-run industry supply curve is the sum of the individual supply curves of all of the firms in the industry,given a fixed number of firms.

Correct Answer
verified

Exam 12: Perfect Competition and the Supply Curve

In the short run,a firm will produce as long as the price is GREATER than its:

Correct AnswerverifiedShow Answer

Individuals in a market who must take the market price as given are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a perfectly competitive industry is in long-run equilibrium,its firms:

Correct AnswerverifiedShow Answer

In perfect competition,a change in fixed cost will:

Correct AnswerverifiedShow Answer

The addition to the total revenue from selling one more unit of the good is:

Correct AnswerverifiedShow Answer

If the price is less than the average variable cost at the quantity of output where MR = MC,in the short run a perfectly competitive firm will:

Correct AnswerverifiedShow Answer

A perfectly competitive firm will produce:

Correct AnswerverifiedShow Answer

If firms are taking economic losses in the short run,then in the long run,firms will leave the industry,industry output will _____,and economic losses will _____.

Correct AnswerverifiedShow Answer

In the long run,all of the firms in a perfectly competitive industry will:

Correct AnswerverifiedShow Answer

Use the following to answer question: -(Figure: Revenues,Costs,and Profits for Tomato Producers III) Use Figure: Revenues,Costs,and Profits for Tomato Producers III.The market for tomatoes is perfectly competitive.If the market price of a bushel of tomatoes is $12,in the short run this farm will:

Correct AnswerverifiedShow Answer

The marginal revenue received by a firm in a perfectly competitive market:

Correct AnswerverifiedShow Answer

Microsoft's Windows operating system is a standardized product,since everyone who buys a particular version of the product gets exactly the same thing.This means that Microsoft is a perfectly competitive firm.

Correct AnswerverifiedShow Answer

The equilibrium price of a guidebook is $35 in the perfectly competitive guidebook industry.Our firm produces 10,000 guidebooks for an average total cost of $38,marginal cost of $30,and average variable cost of $30.Our firm,in the short run,should:

Correct AnswerverifiedShow Answer

Use the following to answer question: -(Table: Soybean Cost) Use Table: Soybean Cost.What is the break-even price for this farmer?

Correct AnswerverifiedShow Answer

Use the following to answer question: -(Figure: The Perfectly Competitive Firm II) Use Figure: The Perfectly Competitive Firm II.If this firm's MR curve is MR2,then this firm's optimal output is _____ units of output and its economic profit will be _____.

Correct AnswerverifiedShow Answer

In the long run,each firm in a perfectly competitive industry will:

Correct AnswerverifiedShow Answer

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium.Subsequently,an increase in population increases the demand for haircuts.In the short run,the typical firm is likely to:

Correct AnswerverifiedShow Answer

A perfectly competitive industry is in a state of long-run equilibrium.Which expression must be TRUE?

Correct AnswerverifiedShow Answer

The short-run industry supply curve is the sum of the individual supply curves of all of the firms in the industry,given a fixed number of firms.

Correct AnswerverifiedShow Answer

Correct Answer
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If firms are taking economic losses in the short run,then in the long run,firms will leave the industry,industry output will _,and economic losses will _.

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Use the following to answer question: -(Figure: The Perfectly Competitive Firm II) Use Figure: The Perfectly Competitive Firm II.If this firm's MR curve is MR₂,then this firm's optimal output is _ units of output and its economic profit will be _.

Correct Answer
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Correct Answer
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