Question 1

The demand curve of a perfectly competitive firm is vertical.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following markets most closely resembles the characteristics of a perfectly competitive market?

Accepted Answer

A)  The cable television industry
B)  The fast food restaurant industry
C)  The steel industry
D)  Hot dog vendors on city streets

Question 3

In a long-run equilibrium in a perfectly competitive market, firms are selling at a price equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 4

Figure 10-1
​ 
-A firm earns a profit of exactly zero at its optimal output level only if

Accepted Answer

A)  P = MR.
B)  P = MC.
C)  P = AC.
D)  P = SRAVC.

Question 5

The most efficient market structure in the long run is

Accepted Answer

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

Question 6

Perfectly competitive markets feature relatively high barriers to entry.

Accepted Answer

A) True 
 B)False

Question 7

The short-run supply curve for the perfectly competitive firm is that part of the marginal cost curve that lies above the average fixed cost curve.

Accepted Answer

A) True 
 B)False

Question 8

Table 10-2  ​
-Refer to Table 10-2.Which firm is better off staying in business in the short run?

Accepted Answer

A)  Firm A
B)  Firm B
C)  Firm C
D)  Firm D

Question 9

Perfect competition forms one extreme of the market structure spectrum.

Accepted Answer

A) True 
 B)False

Question 10

Under perfect competition, firms are relatively ignorant of the actions of their competitors.

Accepted Answer

A) True 
 B)False

Question 11

The short-run market demand curve in perfect competition is positively sloped.

Accepted Answer

A) True 
 B)False

Question 12

A firm will not choose to produce if total variable costs exceed total revenue.

Accepted Answer

A) True 
 B)False

Question 13

Helga owns Viking, Inc., started with her $100,000 inheritance.Helga's accountant informs her that her firm earned a profit of $100,000 last year, and that if she chooses to invest the money she can expect a 10 percent return.If Helga did not run Viking, she would not work.What were Helga's economic profits last year?

Accepted Answer

A)  Zero
B)  $100,000
C)  $90,000
D)  $95,000

Question 14

Figure 10-9
​ 1 and demand curve D1.If demand shifts to D2, then in the short run price will A) rise to A. B) rise to some level between A and B. C) remain at B. D) fall to C." class="answers-bank-image d-inline" rel="preload" >
-Figure 10-9 shows supply and demand conditions in a perfectly competitive industry and for a firm in that industry.Assume the industry initially has supply curve S1 and demand curve D1.If demand shifts to D2, then in the short run price will

Accepted Answer

A)  rise to A.
B)  rise to some level between A and B.
C)  remain at B.
D)  fall to C.

Question 15

In the short run, a perfectly competitive firm can make a profit, a loss, or go out of business.

Accepted Answer

A) True 
 B)False

Question 16

A perfectly competitive firm is a price

Accepted Answer

A)  giver.
B)  taker.
C)  maker.
D)  leader.

Question 17

The short-run equilibrium output of a competitive firm is found by equating marginal cost with price.

Accepted Answer

A) True 
 B)False

Question 18

A perfectly competitive firm will always maximize profits by producing where

Accepted Answer

A)  per-unit costs are lowest.
B)  total costs and total revenue are equal.
C)  P = MC.
D)  P = AC.

Question 19

In the short run, if price is below AC, maximizing profits really means minimizing total losses.

Accepted Answer

A) True 
 B)False

Question 20

When a firm leaves a perfectly competitive industry,

Accepted Answer

A)  the individual demand curves facing remaining firms shift toward the point of minimum average cost in the long run.
B)  short-run industry equilibrium is reestablished at a new point along the original short-run industry supply curve.
C)  the short-run industry supply curve shifts to the right.
D)  at the new long-run equilibrium, the remaining firms in the industry will each receive a higher profit.

Exam 10: The Firm and the Industry Under Perfect Competition

In a long-run equilibrium in a perfectly competitive market, firms are selling at a price equal to marginal cost.

Correct Answer
verified

A perfectly competitive firm is a price

Correct Answer
verified

Which of the following markets most closely resembles the characteristics of a perfectly competitive market?

Correct Answer
verified

Figure 10-1 -A firm earns a profit of exactly zero at its optimal output level only if

Correct Answer
verified

In the short run, if price is below AC, maximizing profits really means minimizing total losses.

Correct Answer
verified

Perfectly competitive markets feature relatively high barriers to entry.

Correct Answer
verified

Correct Answer
verified

The short-run market demand curve in perfect competition is positively sloped.

Correct Answer
verified

Figure 10-9 -Figure 10-9 shows supply and demand conditions in a perfectly competitive industry and for a firm in that industry.Assume the industry initially has supply curve S₁ and demand curve D₁.If demand shifts to D₂, then in the short run price will

Correct Answer
verified

The demand curve of a perfectly competitive firm is vertical.

Correct Answer
verified

In the short run, a perfectly competitive firm can make a profit, a loss, or go out of business.

Correct Answer
verified

The most efficient market structure in the long run is

Correct Answer
verified

Under perfect competition, firms are relatively ignorant of the actions of their competitors.

Correct Answer
verified

A firm will not choose to produce if total variable costs exceed total revenue.

Correct Answer
verified

A perfectly competitive firm will always maximize profits by producing where

Correct Answer
verified

When a firm leaves a perfectly competitive industry,

Correct Answer
verified

Perfect competition forms one extreme of the market structure spectrum.

Correct Answer
verified

The short-run equilibrium output of a competitive firm is found by equating marginal cost with price.

Correct Answer
verified

Table 10-2 -Refer to Table 10-2.Which firm is better off staying in business in the short run?

Correct Answer
verified

The short-run supply curve for the perfectly competitive firm is that part of the marginal cost curve that lies above the average fixed cost curve.

Correct Answer
verified

Exam 10: The Firm and the Industry Under Perfect Competition

In a long-run equilibrium in a perfectly competitive market, firms are selling at a price equal to marginal cost.

Correct AnswerverifiedShow Answer

A perfectly competitive firm is a price

Correct AnswerverifiedShow Answer

Which of the following markets most closely resembles the characteristics of a perfectly competitive market?

Correct AnswerverifiedShow Answer

Figure 10-1 ​ -A firm earns a profit of exactly zero at its optimal output level only if

Correct AnswerverifiedShow Answer

In the short run, if price is below AC, maximizing profits really means minimizing total losses.

Correct AnswerverifiedShow Answer

Perfectly competitive markets feature relatively high barriers to entry.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The short-run market demand curve in perfect competition is positively sloped.

Correct AnswerverifiedShow Answer

Figure 10-9 ​ -Figure 10-9 shows supply and demand conditions in a perfectly competitive industry and for a firm in that industry.Assume the industry initially has supply curve S1 and demand curve D1.If demand shifts to D2, then in the short run price will

Correct AnswerverifiedShow Answer

The demand curve of a perfectly competitive firm is vertical.

Correct AnswerverifiedShow Answer

In the short run, a perfectly competitive firm can make a profit, a loss, or go out of business.

Correct AnswerverifiedShow Answer

The most efficient market structure in the long run is

Correct AnswerverifiedShow Answer

Under perfect competition, firms are relatively ignorant of the actions of their competitors.

Correct AnswerverifiedShow Answer

A firm will not choose to produce if total variable costs exceed total revenue.

Correct AnswerverifiedShow Answer

A perfectly competitive firm will always maximize profits by producing where

Correct AnswerverifiedShow Answer

When a firm leaves a perfectly competitive industry,

Correct AnswerverifiedShow Answer

Perfect competition forms one extreme of the market structure spectrum.

Correct AnswerverifiedShow Answer

The short-run equilibrium output of a competitive firm is found by equating marginal cost with price.

Correct AnswerverifiedShow Answer

Table 10-2 ​ -Refer to Table 10-2.Which firm is better off staying in business in the short run?

Correct AnswerverifiedShow Answer

The short-run supply curve for the perfectly competitive firm is that part of the marginal cost curve that lies above the average fixed cost curve.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Figure 10-1 -A firm earns a profit of exactly zero at its optimal output level only if

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Figure 10-9 -Figure 10-9 shows supply and demand conditions in a perfectly competitive industry and for a firm in that industry.Assume the industry initially has supply curve S₁ and demand curve D₁.If demand shifts to D₂, then in the short run price will

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Table 10-2 -Refer to Table 10-2.Which firm is better off staying in business in the short run?

Correct Answer
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Correct Answer
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