Question 1

As long as average revenue remains above average total cost:

Accepted Answer

A)   total revenue will be higher than total cost.
B)   the firm will be making profits.
C)   price will be greater than average total cost.
D)   All of these are true.E) None of the above
F) All of the above

Question 2

When some firms leave a perfectly competitive market,the price:

Accepted Answer

A)   falls, and profits of those left rise.
B)   falls, and profits of those left fall.
C)   increases, and profits of those left rise.
D)   increases, and profits of those left fall.E) None of the above
F) C) and D)

Question 3

In the short run,a firm that finds itself earning a loss should compare the market price to which cost in order to determine how to minimize its losses?

Accepted Answer

A)   Average total costs
B)   Average variable costs
C)   Marginal costs
D)   Fixed costsE) C) and D)
F) B) and C)

Question 4

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

Accepted Answer

A)   accounting profits must be positive, but economic profits are zero.
B)   economic profits must be positive.
C)   other firms will exit the market.
D)   firms will exit the market.E) None of the above
F) A) and D)

Question 5

In the short run,we assume that the number of firms in a perfectly competitive market:

Accepted Answer

A)   varies if perfect information is present.
B)   varies more than the long-run equilibrium.
C)   is fixed.
D)   is equal to the number of firms in the long-run.E) C) and D)
F) A) and C)

Question 6

Firms in perfectly competitive markets who wish to maximize profits should produce:

Accepted Answer

A)   more as long as marginal cost is greater than marginal revenue.
B)   less as long as marginal cost is less than marginal revenue.
C)   at the level where marginal cost equals marginal revenue.
D)   All of these are true.E) None of the above
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,when 5 units are produced:

Accepted Answer

A)   profits are maximized.
B)   profits are positive.
C)   the firm is producing less than the profit-maximizing amount.
D)   the firm is producing more than the profit-maximizing amount.E) B) and D)
F) A) and D)

Question 8

This graph represents the cost and revenue curves of a firm in a perfectly competitive market.  According the graph shown,the firm's most efficient scale of operation is to produce quantity:

Accepted Answer

A)   Q1.
B)   Q2.
C)   Q3.
D)   Any quantity as long as P1 is charged.E) All of the above
F) C) and D)

Question 9

Firms in perfectly competitive markets who wish to maximize profits should produce where:

Accepted Answer

A)   marginal revenue and marginal cost are equal.
B)   marginal revenue and market price are equal.
C)   marginal revenue and average revenue are equal.
D)   marginal cost and average cost are equal.E) A) and B)
F) None of the above

Question 10

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

Accepted Answer

A)   constant, regardless of quantity sold.
B)   equal to average revenue for a firm.
C)   equal to marginal revenue for a firm.
D)   All of these are true.E) All of the above
F) A) and B)

Question 11

According to the graph shown,producing 14 units:

Accepted Answer

A)   is not as profitable as producing 11 units.
B)   will earn negative profits.
C)   will earn more profits than producing 9 or 11 units.
D)   will earn zero profit.E) All of the above
F) A) and B)

Question 12

An example of a standardized good is:

Accepted Answer

A)   cereal.
B)   iron.
C)   soda.
D)   pizza.E) None of the above
F) B) and D)

Question 13

The market supply in a perfectly competitive market is:

Accepted Answer

A)   fixed.
B)   the sum of the quantities that each individual producer is willing to supply.
C)   the total quantity of a good that the biggest market shareholder supplies at a given price.
D)   derived from the MC curves from each firm after MC hits ATC.E) A) and B)
F) A) and C)

Question 14

In the long run,firms will enter a perfectly competitive market if the existing firms are making:

Accepted Answer

A)   a profit.
B)   negative profits.
C)   zero profits.
D)   Any of these could be true.E) All of the above
F) C) and D)

Question 15

If the demand increases in a perfectly competitive market,the price will:

Accepted Answer

A)   temporarily increase.
B)   increase permanently.
C)   temporarily decrease.
D)   decrease permanently.E) A) and B)
F) A) and C)

Question 16

In perfectly competitive markets,transactions costs are:

Accepted Answer

A)   generally quite high.
B)   a natural byproduct of making the transaction.
C)   low or nearly zero.
D)   seen as a nuisance and generally ignored when making a transaction.E) None of the above
F) C) and D)

Question 17

If demand in a perfectly competitive market decreases,supply 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 D)
F) B) and C)

Question 18

The long-run exit rule is to exit the industry if:

Accepted Answer

A)   P > AVC.
B)   P 
C)   P > ATC.
D)   P < ATC.E) All of the above
F) A) and B)

Question 19

When firms enter a market,the supply increases and price:

Accepted Answer

A)   increases and profits decrease.
B)   falls and profits increase.
C)   falls and profits decrease.
D)   increases and profits increase.E) B) and C)
F) B) and D)

Question 20

This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. nd unit? A)  $10.00 B)  $7.50 C)  $27.50 D)  $20.00" class="answers-bank-image d-inline" rel="preload" > According to the table shown,what is the firm's marginal cost from producing the 2nd unit?

Accepted Answer

A)   $10.00
B)   $7.50
C)   $27.50
D)   $20.00E) A) and C)
F) B) and C)

Exam 13: Perfect Competition

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

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The long-run exit rule is to exit the industry if:

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When some firms leave a perfectly competitive market,the price:

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Firms in perfectly competitive markets who wish to maximize profits should produce where:

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According to the graph shown,producing 14 units:

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The market supply in a perfectly competitive market is:

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

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If the demand increases in a perfectly competitive market,the price will:

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An example of a standardized good is:

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As long as average revenue remains above average total cost:

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In the short run,a firm that finds itself earning a loss should compare the market price to which cost in order to determine how to minimize its losses?

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In perfectly competitive markets,transactions costs are:

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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 cost from producing the 2nd unit?

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In the short run,we assume that the number of firms in a perfectly competitive market:

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When firms enter a market,the supply increases and price:

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This graph represents the cost and revenue curves of a firm in a perfectly competitive market. According the graph shown,the firm's most efficient scale of operation is to produce quantity:

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In the long run,firms will enter a perfectly competitive market if the existing firms are making:

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Firms in perfectly competitive markets who wish to maximize profits should produce:

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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,when 5 units are produced:

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For firms that sell one product in a perfectly competitive market,the market price 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,what is the firm's marginal cost from producing the 2^nd unit?

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