Question 1

A perfectly competitive industry is a

Accepted Answer

A)   realistic extreme.
B)   hypothetical assumption.
C)   hypothetical extreme.
D)   realistic assumption.

Question 2

If a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the _______ and the vertical axis will represent _______.

Accepted Answer

A)   price, measured in dollars; quantity of goods produced
B)   total costs measured in dollars; quantity of goods produced
C)   quantity produced; both total revenue and total costs, measured in dollars.
D)   quantity produced; total revenue and total variable costs, measured in dollars.

Question 3

Given the data provided in the table below, what will the marginal revenue equal for production at quantity Q)  level 4?

Accepted Answer

A)   $20.00
B)   $15.00
C)   $5.00
D)   $1.00

Question 4

When I'MaGoldMiner chooses what quantity of gold each of it/s mines will produce over the next 12 months, this quantity, along with the prices prevailing in the market for output and inputs, will

Accepted Answer

A)   determine the company's annual revenue, variable costs and its profits.
B)   no longer be dictated by the forces of demand and supply.
C)   have no effect on the market forces of demand and supply.
D)   determine the company's total revenue, total costs, and its profits.

Question 5

When a firm makes plans for investments in physical capital, it compares the _______ on these investments with _______.

Accepted Answer

A)   projected rates of return; the cost of financial capital to the firm
B)   present inputs of physical capital; future hurdle rates
C)   present inputs of physical capita; future marginal revenue product
D)   projected rates of return; the competitive pressures for labor

Question 6

Under perfect competition, any profit-maximizing producer faces a market price equal to its

Accepted Answer

A)   average costs
B)   marginal costs
C)   total costs
D)   variable costs

Question 7

If a firm is producing so that the point chosen along the production possibility frontier is socially preferred, then that firm is said to have reached its

Accepted Answer

A)   allocative efficiency
B)   productive efficiency
C)   utility-maximizing efficiency
D)   minimum price efficiency

Question 8

In the _______, the perfectly competitive firm will react to losses by _______.

Accepted Answer

A)   short run; reducing production or shutting down
B)   long run; reducing production or shutting down
C)   short run; increasing physical inputs
D)   long run; increasing capital inputs

Question 9

In economics, labor demand is synonymous with

Accepted Answer

A)   market demand.
B)   average demand.
C)   marginal demand.
D)   derived demand.

Question 10

If a competitive firm experiences a shift in costs of production that decreases marginal costs at all levels of output,

Accepted Answer

A)   expanding output levels at any given price will be profitable.
B)   producing less at any market price will off-set marginal cost .
C)   the firm's marginal cost curve will shift to the left.
D)   the firm's demand curve will also shift to the left.

Question 11

A manufacturer would likely make an _______ in a market following the long-run process of beginning and expanding production in response to .

Accepted Answer

A)   accounting profit; a strategy to grow profits
B)   accounting profit; an incentive for profit
C)   entry; a sustained pattern of profits
D)   entry; an incentive to add to profits

Question 12

In the _______, the perfectly competitive firm will react to profits by _______.

Accepted Answer

A)   short run; increasing quality of products
B)   long run; tailoring their quality controls
C)   short run; reducing its labor inputs
D)   long run; increasing its production

Question 13

In order to produce 100 pairs of oven gloves, Marcia incurs an average total cost of $2.50 per pair. Marcia's marginal cost is constant at $10.00 for every pair of oven gloves produced. The total cost to produce 50 pairs of oven gloves is

Accepted Answer

A)   $250.00
B)   $500.00
C)   $300.00
D)   $200.00

Question 14

In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?

Accepted Answer

A)   what quantity to produce
B)   what price to charge
C)   what quantity of labor is needed
D)   what quality to produce

Question 15

Briefly explain how the zero profit point and the shutdown point for a firm operating in a perfectly competitive market are each determined.

Accepted Answer

The zero profit point for a firm operati...

Question 16

The fact that a consumer is not required to buy the goods that a given firm produces, as well as the fact that the consumer might want the goods a firm produces, but may choose to buy from other firms instead

Accepted Answer

A)   will reduce the revenue a firm receives and it should shut down.
B)   means the firm has reached it shutdown point and should exit.
C)   is part of the process to a sustained pattern of profits.
D)   are two stark realities any business firm must recognize.

Question 17

Briefly contrast how firms in a perfectly competitive market will respond to long-run profits and losses. Include an explanation of each response affects the price level.

Accepted Answer

In a perfectly competitive market, firms...

Question 18

In the _______, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where _______.

Accepted Answer

A)   long run; increasing production
B)   short run; fixed costs can be reduced
C)   short run; losses are smallest
D)   long run; fixed costs can be eliminated

Question 19

If accounting profits for a firm are 20% of output, and the opportunity cost of financial capital is 8% of output, then what do the firm's economic profits equal?

Accepted Answer

A)   6% of output
B)   10% of output
C)   12% of output
D)   8% of output

Question 20

If the price that a firm charges is lower than its _______ of production, the firm will suffer losses.

Accepted Answer

A)   average cost
B)   marginal cost
C)   fixed cost
D)   variable cost

Exam 8: Perfect Competition

In economics, labor demand is synonymous with

Correct AnswerverifiedShow Answer

In order to produce 100 pairs of oven gloves, Marcia incurs an average total cost of $2.50 per pair. Marcia's marginal cost is constant at $10.00 for every pair of oven gloves produced. The total cost to produce 50 pairs of oven gloves is

Correct AnswerverifiedShow Answer

Briefly explain how the zero profit point and the shutdown point for a firm operating in a perfectly competitive market are each determined.

Correct AnswerAnswered by ExamLex AIThe zero profit point for a firm operati...View AnswerShow Answer

In the _______, the perfectly competitive firm will react to profits by _______.

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Given the data provided in the table below, what will the marginal revenue equal for production at quantity Q) level 4?

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If a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the _______ and the vertical axis will represent _______.

Correct AnswerverifiedShow Answer

When a firm makes plans for investments in physical capital, it compares the _______ on these investments with _______.

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The fact that a consumer is not required to buy the goods that a given firm produces, as well as the fact that the consumer might want the goods a firm produces, but may choose to buy from other firms instead

Correct AnswerverifiedShow Answer

If the price that a firm charges is lower than its _______ of production, the firm will suffer losses.

Correct AnswerverifiedShow Answer

Under perfect competition, any profit-maximizing producer faces a market price equal to its

Correct AnswerverifiedShow Answer

If a firm is producing so that the point chosen along the production possibility frontier is socially preferred, then that firm is said to have reached its

Correct AnswerverifiedShow Answer

In the _______, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where _______.

Correct AnswerverifiedShow Answer

When I'MaGoldMiner chooses what quantity of gold each of it/s mines will produce over the next 12 months, this quantity, along with the prices prevailing in the market for output and inputs, will

Correct AnswerverifiedShow Answer

A manufacturer would likely make an _______ in a market following the long-run process of beginning and expanding production in response to .

Correct AnswerverifiedShow Answer

Briefly contrast how firms in a perfectly competitive market will respond to long-run profits and losses. Include an explanation of each response affects the price level.

Correct AnswerAnswered by ExamLex AIIn a perfectly competitive market, firms...View AnswerShow Answer

If a competitive firm experiences a shift in costs of production that decreases marginal costs at all levels of output,

Correct AnswerverifiedShow Answer

In the _______, the perfectly competitive firm will react to losses by _______.

Correct AnswerverifiedShow Answer

If accounting profits for a firm are 20% of output, and the opportunity cost of financial capital is 8% of output, then what do the firm's economic profits equal?

Correct AnswerverifiedShow Answer

A perfectly competitive industry is a

Correct AnswerverifiedShow Answer

In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?

Correct AnswerverifiedShow Answer

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Answered by ExamLex AI
The zero profit point for a firm operati...
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In the _, the perfectly competitive firm will react to profits by _.

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If a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the _ and the vertical axis will represent _.

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When a firm makes plans for investments in physical capital, it compares the _ on these investments with _.

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In the _, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where _.

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Correct Answer
Answered by ExamLex AI
In a perfectly competitive market, firms...
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In the _, the perfectly competitive firm will react to losses by _.

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