Question 1

This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. 
According to the table shown,what is the firm's total revenue when 4 units are produced?

Accepted Answer

A)  $160
B)  $50
C)  $200
D)  $40E) A) and D)
F) A) and C)

Question 2

In a perfectly competitive market in the long run:

Accepted Answer

A)  price is the same at any quantity.
B)  firms produce at an efficient scale.
C)  profits are maximized.
D)  All of these are true.E) None of the above
F) B) and D)

Question 3

An essential characteristic of a perfectly competitive market is:

Accepted Answer

A)  buyers and sellers share market power.
B)  sellers are price makers.
C)  goods are standardized.
D)  goods are unique.E) A) and B)
F) A) and C)

Question 4

This table shows price and quantity produced for a single firm in a perfectly competitive market. 
Given the information in the table shown,what is the marginal revenue when 25 units are produced?

Accepted Answer

A)  $250
B)  $25
C)  $10
D)  $20E) A) and C)
F) A) and D)

Question 5

We assume that in the short run in a perfectly competitive market the:

Accepted Answer

A)  number of firms is fixed.
B)  total quantity supplied is fixed.
C)  price is fixed.
D)  All of these are true of the short run.E) A) and C)
F) All of the above

Question 6

This graph represents the cost and revenue curves of a firm in a perfectly competitive market. 
According to the graph shown,if a firm is producing at Q1:

Accepted Answer

A)  profits are not being maximized.
B)  average total costs exceed the market price.
C)  the firm should increase production.
D)  All of these are true.E) A) and D)
F) C) and D)

Question 7

This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. 
According to the table shown,fixed costs must be:

Accepted Answer

A)  $10.
B)  $200.
C)  $60.
D)  Fixed costs cannot be determined by the information in the table.E) None of the above
F) B) and D)

Question 8

The short-run shutdown rule is to shut down if:

Accepted Answer

A)  P > AVC.
B)  P 
C)  P > ATC.
D)  P < ATC.E) C) and D)
F) A) and B)

Question 9

If a firm in a perfectly competitive market faces a market price of $4,and it decides to produce 700 units,the firm's average revenue will be:

Accepted Answer

A)  $4.
B)  $2,800.
C)  $175.
D)  $700.E) All of the above
F) B) and D)

Question 10

If a perfectly competitive firm faces a market price of $3 per unit,and it decides to produce 30,000 units,the market price will likely:

Accepted Answer

A)  increase.
B)  decrease.
C)  stay the same.
D)  Cannot answer without more information.E) A) and B)
F) None of the above

Question 11

The market supply in a perfectly competitive market:

Accepted Answer

A)  is fixed.
B)  is the sum of the quantities that each individual producer is willing to supply.
C)  is the total quantity of a good that the biggest market shareholder supplies at a given price.
D)  All of these are true.E) A) and B)
F) None of the above

Question 12

If a firm is earning a profit,then:

Accepted Answer

A)  total revenue must be higher than total cost.
B)  the ATC must be higher than the market price.
C)  the ATC must be higher than AR.
D)  All of these are true.E) B) and C)
F) A) and B)

Question 13

If firms are producing at a profit-maximizing level of output where the price is equal to the average total cost:

Accepted Answer

A)  accounting profits may be negative.
B)  accounting profits must be zero.
C)  economic profits may be positive.
D)  economic profits must be zero.E) None of the above
F) A) and D)

Question 14

In the long run in a perfectly competitive market:

Accepted Answer

A)  firms earn positive economic profits.
B)  firms operate at an efficient scale.
C)  supply is perfectly inelastic when all firms have the same cost structure.
D)  All of these are true.E) B) and C)
F) A) and D)

Question 15

When demand increases in a perfectly competitive market,the market price:

Accepted Answer

A)  increases in the short run and falls in the long run.
B)  decreases in the short run and increases in the long run.
C)  increases in the short run and stays permanently higher in the long run.
D)  decreases in the short run and stays permanently lower in the long run.E) A) and B)
F) C) and D)

Question 16

If the demand in a perfectly competitive market decreases,the supply curve will:

Accepted Answer

A)  not change in the short run.
B)  increase in the long run.
C)  increase in the short run.
D)  decrease in the short run.E) B) and C)
F) A) and D)

Question 17

If a firm in a perfectly competitive market faces a market price of $2,and it decides to increase its production from 2,000 units to 4,000 units,the firm's marginal revenue:

Accepted Answer

A)  will increase from $4,000 to $8,000.
B)  will decrease from $8,000 to $4,000.
C)  will stay the same.
D)  None of these is true.E) A) and C)
F) All of the above

Question 18

For firms that sell one product in a perfectly competitive market,average revenue:

Accepted Answer

A)  will increase if marginal revenue is greater than it.
B)  will decrease if marginal revenue is greater than it.
C)  will always be the same as marginal revenue.
D)  None of these is true.E) B) and C)
F) All of the above

Question 19

For a firm in a perfectly competitive market,if it is producing at a level of output where marginal costs are less than marginal revenue:

Accepted Answer

A)  it should cut back production to increase profits.
B)  it should increase production to increase profits.
C)  it is producing a profit-maximizing quantity.
D)  The firm is not maximizing profits,but it is impossible to tell how quantity should be changed without more information.E) A) and C)
F) B) and D)

Question 20

One implication of goods being standardized in a market is:

Accepted Answer

A)  there are no information asymmetries.
B)  the government regulations must promote competition and lower prices to be efficient.
C)  the similarity in products may be real or perceived.
D)  None of these is an implication of standardization.E) A) and B)
F) A) and C)

Exam 13: Perfect Competition

This table shows price and quantity produced for a single firm in a perfectly competitive market. Given the information in the table shown,what is the marginal revenue when 25 units are produced?

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If a firm in a perfectly competitive market faces a market price of $2,and it decides to increase its production from 2,000 units to 4,000 units,the firm's marginal revenue:

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If the demand in a perfectly competitive market decreases,the supply curve will:

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This graph represents the cost and revenue curves of a firm in a perfectly competitive market. According to the graph shown,if a firm is producing at Q1:

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In the long run in a perfectly competitive market:

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For firms that sell one product in a perfectly competitive market,average revenue:

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We assume that in the short run in a perfectly competitive market the:

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The market supply in a perfectly competitive market:

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If a firm is earning a profit,then:

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If firms are producing at a profit-maximizing level of output where the price is equal to the average total cost:

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When demand increases in a perfectly competitive market,the market price:

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This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. According to the table shown,what is the firm's total revenue when 4 units are produced?

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For a firm in a perfectly competitive market,if it is producing at a level of output where marginal costs are less than marginal revenue:

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If a perfectly competitive firm faces a market price of $3 per unit,and it decides to produce 30,000 units,the market price will likely:

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One implication of goods being standardized in a market is:

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This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. According to the table shown,fixed costs must be:

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In a perfectly competitive market in the long run:

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An essential characteristic of a perfectly competitive market is:

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The short-run shutdown rule is to shut down if:

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If a firm in a perfectly competitive market faces a market price of $4,and it decides to produce 700 units,the firm's average revenue will be:

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