Question 1

A competitive market is one in which:

Accepted Answer

A)   fully informed price-taking buyers and sellers easily trade a standardized good.
B)   few large sellers compete for a majority of the market share.
C)   government oversees its operation.
D)   individual sellers and buyers have a lot of influence over market price.E) All of the above
F) A) and B)

Question 2

For firms that sell one product in a perfectly competitive market,the market price:

Accepted Answer

A)   will remain constant regardless of an individual firm's output decision.
B)   is equal to the average total cost of a firm.
C)   is equal to the marginal cost of a firm.
D)   All of these are true.E) C) and D)
F) B) and C)

Question 3

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 Q2:

Accepted Answer

A)   profits are being maximized.
B)   average total costs are minimized.
C)   it is producing at an efficient scale.
D)   All of these are true.E) A) and C)
F) C) and D)

Question 4

If the market price ever drops below a firm's average variable costs at its profit-maximizing level of output the:

Accepted Answer

A)   firm should shut down immediately.
B)   loss-minimizing quantity of output is zero.
C)   firm is not earning enough revenue to cover the variable costs of production.
D)   All of these are true.E) None of the above
F) A) and B)

Question 5

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 market price?

Accepted Answer

A)   $20
B)   $10
C)   $2
D)   $260E) A) and B)
F) A) and C)

Question 6

This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. rd unit produced? A)  $50 B)  $90 C)  $150 D)  $60" class="answers-bank-image d-inline" rel="preload" > According to the table shown,what is the firm's marginal revenue from the 3rd unit produced?

Accepted Answer

A)   $50
B)   $90
C)   $150
D)   $60E) A) and D)
F) B) and C)

Question 7

According to the graph shown,the market price is:

Accepted Answer

A)   $15
B)   $9
C)   $11
D)   $20E) C) and D)
F) B) and C)

Question 8

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 total revenue when 23 units are produced?

Accepted Answer

A)   $230
B)   $10
C)   $23
D)   $2.30E) B) and C)
F) A) and D)

Question 9

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

Accepted Answer

A)   average total cost must be minimized.
B)   economic profits must be zero.
C)   accounting profits must be positive.
D)   All of these are true.E) A) and C)
F) A) and B)

Question 10

The short-run supply curve is _______________ and the long-run supply curve is _______________ in a perfectly competitive market in which all firms have identical cost structures.

Accepted Answer

A)   upward sloping; upward sloping
B)   upward sloping; perfectly elastic
C)   perfectly elastic; upward sloping
D)   downward sloping; upward slopingE) A) and D)
F) B) and D)

Question 11

In the short run,the fixed costs of a firm:

Accepted Answer

A)   can sometimes be avoided in the short run.
B)   are irrelevant in deciding whether to shut down production.
C)   are equal to zero when quantity produced is zero.
D)   are all the costs it incurs when it produces some positive quantity.E) All of the above
F) C) and D)

Question 12

This graph represents the cost and revenue curves of a firm in a perfectly competitive market.  According to the graph shown,what is the market price?

Accepted Answer

A)   P1
B)   P2
C)   P3
D)   Cannot tell from the graph.E) A) and B)
F) All of the above

Question 13

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) All of the above
F) C) and D)

Question 14

If a firm in a perfectly competitive market faces the cost curves in the graph shown and produces at the profit-maximizing level of output,which of the following is true? A firm will:

Accepted Answer

A)   plan to exit the industry in the long run if price falls below $15.
B)   continue to operate in the short run if price is below $11.
C)   make positive profits any time the price is greater than $11.
D)   will earn maximum profits at a quantity of 35.E) A) and B)
F) A) and C)

Question 15

If a firm in a perfectly competitive market faces the cost curves in the graph shown and produces at the profit-maximizing level of output,which of the following is true? A firm will:

Accepted Answer

A)   lose money and shut down in the short run if price falls below $15.
B)   lose money, but continue to operate in the short run if price is at least $15.
C)   make positive profits any time the price is greater than $15.
D)   All of these are true.E) None of the above
F) A) and B)

Question 16

If the demand increases in a perfectly competitive market,what will likely occur?

Accepted Answer

A)   Firms will temporarily make a profit due to a higher price.
B)   Firms will enter the market in hopes of capturing some profits.
C)   The short-run supply curve will shift to the right, causing price to eventually fall.
D)   All of these are true.E) A) and B)
F) None of the above

Question 17

Given the exit rule,where does a firm's long-run supply curve derive from? It is the section of the:

Accepted Answer

A)   ATC curve to the right of its minimum.
B)   MC curve that lies above the ATC curve.
C)   MC curve that lies above the AVC curve.
D)   AVC curve to the right of its minimum.E) A) and B)
F) All of the above

Question 18

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) A) and D)
F) A) and B)

Question 19

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) C) and D)
F) A) and C)

Question 20

When firms have market power,it means that they:

Accepted Answer

A)   can noticeably affect the market price.
B)   have no control over the market price.
C)   can noticeably affect the market quantity available for sale.
D)   do not noticeably affect the market quantity offered for sale.E) B) and D)
F) B) and C)

Exam 13: Perfect Competition

Given the exit rule,where does a firm's long-run supply curve derive from? It is the section of the:

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If the market price ever drops below a firm's average variable costs at its profit-maximizing level of output the:

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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 total revenue when 23 units are produced?

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The short-run supply curve is _______________ and the long-run supply curve is _______________ in a perfectly competitive market in which all firms have identical cost structures.

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In the short run,the fixed costs of a firm:

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If a firm in a perfectly competitive market faces the cost curves in the graph shown and produces at the profit-maximizing level of output,which of the following is true? A firm will:

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According to the graph shown,the market price is:

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In the long run in a perfectly competitive market:

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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,what is the market price?

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For firms that sell one product in a perfectly competitive market,the market price:

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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 a firm in a perfectly competitive market faces the cost curves in the graph shown and produces at the profit-maximizing level of output,which of the following is true? A firm will:

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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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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 Q2:

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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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If the demand increases in a perfectly competitive market,what will likely occur?

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A competitive market is one in which:

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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 marginal revenue from the 3rd unit produced?

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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 market price?

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When firms have market power,it means that they:

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The short-run supply curve is _ and the long-run supply curve is _ in a perfectly competitive market in which all firms have identical cost structures.

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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 marginal revenue from the 3^rd unit produced?

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