Question 1

Suppose you bought a ticket to a football game for $30 and that you place a $35 value on seeing the game.If you lose the ticket,then what is the maximum price you should pay for another ticket? Assume that losing the ticket does not alter how you value it.

Accepted Answer

A)   $5
B)   $30
C)   $35
D)   $65E) A) and B)
F) A) and C)

Question 2

By comparing the marginal revenue and marginal cost from each unit produced,a firm in a competitive market can determine the profit-maximizing level of production.

Accepted Answer

A) True 
 B)False

Question 3

The accountants hired by the Brookside Racquet Club have determined total fixed cost to be $75,000,total variable cost to be $130,000,and total revenue to be $125,000.Because of this information,in the short run,the Brookside Racquet Club should

Accepted Answer

A)   shut down because staying open would be more expensive.
B)   lower their prices to increase their profits.
C)   stay open because shutting down would be more expensive.
D)   stay open because the firm is making an economic profit.E) None of the above
F) A) and C)

Question 4

Figure 14-10
In the figure below,panel (a) depicts the linear marginal cost of a firm in a competitive market,and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms.  
-Refer to Figure 14-10.If there are 700 identical firms in this market,what is the value of Q1?

Accepted Answer

A)   140,000
B)   210,000
C)   280,000
D)   420,000E) All of the above
F) A) and B)

Question 5

Table 14-14
The following table presents cost and revenue information for Bob's bakery production and sales.
 
-Refer to Table 14-14.When Bob produces and sells the profit-maximizing quantity,how much profit does he earn?

Accepted Answer

A)   $0.25
B)   $2.75
C)   $4.00
D)   $5.25E) All of the above
F) B) and D)

Question 6

When economic profits are zero in equilibrium,the firm's revenue must be sufficient to cover all opportunity costs.

Accepted Answer

A) True 
 B)False

Question 7

Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 14-9.At which quantity of output is marginal revenue equal to marginal cost?

Accepted Answer

A)   3 units
B)   6 units
C)   8 units
D)   9 unitsE) A) and B)
F) B) and D)

Question 8

Figure 14-1 
-Refer to Figure 14-1.In the short run,the firm's maximum profit (or minimum loss) is the same at which of the following pairs of prices?

Accepted Answer

A)   $65 and $75
B)   $75 and $85
C)   $80 and $100
D)   $125 and $175E) None of the above
F) A) and C)

Question 9

If a competitive firm is operating at its efficient scale,then is the firm's profit positive,zero,or negative?

Accepted Answer

Profit is zero for a...

Question 10

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $600.In order to maximize profits,Marcia should

Accepted Answer

A)   make more than 10 dresses per month.
B)   make fewer than 10 dresses per month.
C)   continue to make 10 dresses per month.
D)   We do not have enough information with which to answer the question.E) A) and C)
F) All of the above

Question 11

Table 14-12
Bill's Birdhouses
 
-Refer to Table 14-12.What is the marginal revenue from selling the 1st unit?

Accepted Answer

A)   $30
B)   $50
C)   $80
D)   $160E) A) and D)
F) A) and C)

Question 12

The short-run supply curve in a competitive market must be more elastic than the long-run supply curve.

Accepted Answer

A) True 
 B)False

Question 13

Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 14-9.If the firm's marginal cost is $11,it should

Accepted Answer

A)   increase production to maximize profit.
B)   increase the price of the product to maximize profit.
C)   advertise to attract additional buyers to maximize profit.
D)   reduce production to increase profit.E) B) and C)
F) B) and D)

Question 14

When firms in a competitive market have different costs,it is likely that

Accepted Answer

A)   free entry and exit in the market will be violated.
B)   the market will no longer be considered competitive.
C)   long-run market supply will be downward sloping.
D)   some firms will earn positive economic profits in the long run.E) A) and B)
F) B) and C)

Question 15

For a firm in a competitive market,an increase in the quantity produced by the firm will result in

Accepted Answer

A)   a decrease in the product's market price.
B)   an increase in the product's market price.
C)   no change in the product's market price.
D)   either an increase or no change in the product's market price depending on the number of firms in the market.E) B) and D)
F) A) and B)

Question 16

If some resources used in the production of a good are only available in limited quantities,then the long run market supply curve will be perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 17

In order to maximize profits in the short run,a firm should produce where

Accepted Answer

A)   marginal revenue exceeds marginal cost by the greatest amount.
B)   marginal cost is minimized.
C)   average total cost is minimized.
D)   marginal cost equals marginal revenue.E) None of the above
F) All of the above

Question 18

Figure 14-4
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-4.When price rises from P2 to P3,the firm finds that

Accepted Answer

A)   marginal cost exceeds marginal revenue at a production level of Q2.
B)   if it produces at output level Q3 it will earn a positive profit.
C)   expanding output to Q4 would leave the firm with losses.
D)   it could increase profits by lowering output from Q3 to Q2.E) None of the above
F) A) and C)

Question 19

In the long run,all of a firm's costs are variable.In this case the exit criterion for a profit-maximizing firm is to shut down if

Accepted Answer

A)   price is less than average total cost.
B)   price is greater than average total cost.
C)   average revenue is greater than average fixed cost.
D)   average revenue is greater than marginal cost.E) A) and C)
F) B) and D)

Question 20

Table 14-1
 
-Refer to Table 14-1.Over what range of output is marginal revenue declining?

Accepted Answer

A)   1 to 6 units
B)   3 to 7 units
C)   7 to 9 units
D)   Marginal revenue is constant over the entire range of output.E) All of the above
F) A) and D)

Exam 14: Firms in Competitive Markets

Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9.If the firm's marginal cost is $11,it should

Correct Answer
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Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14.When Bob produces and sells the profit-maximizing quantity,how much profit does he earn?

Correct Answer
verified

When firms in a competitive market have different costs,it is likely that

Correct Answer
verified

Figure 14-1 -Refer to Figure 14-1.In the short run,the firm's maximum profit (or minimum loss) is the same at which of the following pairs of prices?

Correct Answer
verified

In order to maximize profits in the short run,a firm should produce where

Correct Answer
verified

Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9.At which quantity of output is marginal revenue equal to marginal cost?

Correct Answer
verified

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $600.In order to maximize profits,Marcia should

Correct Answer
verified

Correct Answer
verified

In the long run,all of a firm's costs are variable.In this case the exit criterion for a profit-maximizing firm is to shut down if

Correct Answer
verified

For a firm in a competitive market,an increase in the quantity produced by the firm will result in

Correct Answer
verified

Suppose you bought a ticket to a football game for $30 and that you place a $35 value on seeing the game.If you lose the ticket,then what is the maximum price you should pay for another ticket? Assume that losing the ticket does not alter how you value it.

Correct Answer
verified

When economic profits are zero in equilibrium,the firm's revenue must be sufficient to cover all opportunity costs.

Correct Answer
verified

The short-run supply curve in a competitive market must be more elastic than the long-run supply curve.

Correct Answer
verified

Figure 14-4 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-4.When price rises from P2 to P3,the firm finds that

Correct Answer
verified

Table 14-12 Bill's Birdhouses -Refer to Table 14-12.What is the marginal revenue from selling the 1st unit?

Correct Answer
verified

Table 14-1 -Refer to Table 14-1.Over what range of output is marginal revenue declining?

Correct Answer
verified

By comparing the marginal revenue and marginal cost from each unit produced,a firm in a competitive market can determine the profit-maximizing level of production.

Correct Answer
verified

If some resources used in the production of a good are only available in limited quantities,then the long run market supply curve will be perfectly elastic.

Correct Answer
verified

The accountants hired by the Brookside Racquet Club have determined total fixed cost to be $75,000,total variable cost to be $130,000,and total revenue to be $125,000.Because of this information,in the short run,the Brookside Racquet Club should

Correct Answer
verified

If a competitive firm is operating at its efficient scale,then is the firm's profit positive,zero,or negative?

Correct Answer
verified
Profit is zero for a...
View Answer

Exam 14: Firms in Competitive Markets

Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9.If the firm's marginal cost is $11,it should

Correct AnswerverifiedShow Answer

Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14.When Bob produces and sells the profit-maximizing quantity,how much profit does he earn?

Correct AnswerverifiedShow Answer

When firms in a competitive market have different costs,it is likely that

Correct AnswerverifiedShow Answer

Figure 14-1 -Refer to Figure 14-1.In the short run,the firm's maximum profit (or minimum loss) is the same at which of the following pairs of prices?

Correct AnswerverifiedShow Answer

In order to maximize profits in the short run,a firm should produce where

Correct AnswerverifiedShow Answer

Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9.At which quantity of output is marginal revenue equal to marginal cost?

Correct AnswerverifiedShow Answer

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $600.In order to maximize profits,Marcia should

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the long run,all of a firm's costs are variable.In this case the exit criterion for a profit-maximizing firm is to shut down if

Correct AnswerverifiedShow Answer

For a firm in a competitive market,an increase in the quantity produced by the firm will result in

Correct AnswerverifiedShow Answer

Suppose you bought a ticket to a football game for $30 and that you place a $35 value on seeing the game.If you lose the ticket,then what is the maximum price you should pay for another ticket? Assume that losing the ticket does not alter how you value it.

Correct AnswerverifiedShow Answer

When economic profits are zero in equilibrium,the firm's revenue must be sufficient to cover all opportunity costs.

Correct AnswerverifiedShow Answer

The short-run supply curve in a competitive market must be more elastic than the long-run supply curve.

Correct AnswerverifiedShow Answer

Figure 14-4 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-4.When price rises from P2 to P3,the firm finds that

Correct AnswerverifiedShow Answer

Table 14-12 Bill's Birdhouses -Refer to Table 14-12.What is the marginal revenue from selling the 1st unit?

Correct AnswerverifiedShow Answer

Table 14-1 -Refer to Table 14-1.Over what range of output is marginal revenue declining?

Correct AnswerverifiedShow Answer

By comparing the marginal revenue and marginal cost from each unit produced,a firm in a competitive market can determine the profit-maximizing level of production.

Correct AnswerverifiedShow Answer

If some resources used in the production of a good are only available in limited quantities,then the long run market supply curve will be perfectly elastic.

Correct AnswerverifiedShow Answer

The accountants hired by the Brookside Racquet Club have determined total fixed cost to be $75,000,total variable cost to be $130,000,and total revenue to be $125,000.Because of this information,in the short run,the Brookside Racquet Club should

Correct AnswerverifiedShow Answer

If a competitive firm is operating at its efficient scale,then is the firm's profit positive,zero,or negative?

Correct AnswerverifiedProfit is zero for a...View AnswerShow Answer

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Profit is zero for a...
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