Question 1

Kate's 24-Hour Breakfast Diner menu offers one item, a $5.00 breakfast special. Kate's costs for servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies and business license average out to $1.25 per meal. Since the market is highly competitive, Kate should

Accepted Answer

A)   raise her prices above the perfectly competitive level set by the market.
B)   keep the business open in the short-run, but plan to go out of business in the long-run.
C)   keep the business open in the short-run, and plan to expand the business in the long-run.
D)   lay-off her staff, break her lease, and close the business down immediately.

Question 2

If the price that a firm charges is higher than its _______ cost of production for that quantity produced, then the firm will earn profits.

Accepted Answer

A)   marginal
B)   variable
C)   average
D)   fixed

Question 3

Given the data provided in the table below, what will the marginal cost equal for production at quantity Q)  level 4?

Accepted Answer

A)   $5.00
B)   $4.00
C)   $1.00
D)   $3.00

Question 4

If the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers?

Accepted Answer

A)   price of competing products
B)   size of competing products
C)   purchaser's opportunity cost
D)   geographic origin of products

Question 5

Why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases?

Accepted Answer

A)   to produce the highest profitable quantity of output at the lowest possible marginal cost
B)   deciding what quantity to produce is one of the major choices a profit-seeking firm makes
C)   the quantity of labor is the only variable cost choice a profit-seeking firm can make
D)   to produce the profit-maximizing quantity of output at the lowest possible average cost

Question 6

In economics, the term "shutdown point" refers to the point where the

Accepted Answer

A)   marginal cost curve crosses the total revenue curve.
B)   average variable cost curve crosses the total revenue curve.
C)   average variable cost curve crosses the marginal cost curve.
D)   marginal cost curve crosses the average variable cost curve.

Question 7

Briefly contrast when losses will be the smallest for a perfectly competitive firm based on total revenues with when losses for such a firm will be smallest based on marginal revenue.

Accepted Answer

In a perfectly competitive market, a fir...

Question 8

Neil's Bakery is famous for its giant cinnamon buns. The bakery has fixed costs of $100. Neil must pay each worker a wage of $10.00 per hour and each works an 8 hour shift. He earns $2 for each cinnamon bun that is sold. The following table shows how many cinnamon buns he can sell, depending on the number of workers he hires. Refer to the table below. To maximize his profits in this competitive market, how many workers should he hire?

Accepted Answer

A)   2 workers
B)   3 workers
C)   4 workers
D)   5 workers

Question 9

An _______ is calculated by subtracting the firm's costs from its total revenues, _______.

Accepted Answer

A)   accounting profit; excluding opportunity cost
B)   accounting profit; including opportunity cost
C)   economic profit; excluding opportunity cost
D)   opportunity cost; including economic profit

Question 10

If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased, then

Accepted Answer

A)   marginal cost is above average variable cost.
B)   marginal cost is below average fixed cost.
C)   marginal cost is below average variable cost.
D)   average fixed cost is constant.

Question 11

Why are some producers forced to sell their products at the prevailing market price?

Accepted Answer

A)   price takers find market analysis is too costly
B)   they are very small players in the overall market
C)   high degree of similarity to competitor's products
D)   they can increase output without affecting quality

Question 12

Economic profit can be derived from calculating total revenues minus all of the firm's costs,

Accepted Answer

A)   excluding its opportunity costs.
B)   including its opportunity costs.
C)   including its marginal revenue.
D)   excluding its marginal revenue.

Question 13

If a perfectly competitive firm is a price taker, then

Accepted Answer

A)   pressure from competing firms will force acceptance of the prevailing market price.
B)   it must be a relatively small player compared to its competitors in the overall market.
C)   it can increase or decrease its output without affecting overall quantity supplied in the market.
D)   quality differences will be very perceptible and will play a major role in purchasers' decisions.

Question 14

I'maSolarPanelCo. manufactures and distributes solar panels in the US market. Two years ago, it had 5 US competitors, but government stimulus in the industry has encouraged 7 new US competitors to enter the market. In these circumstances, I'maSolarPanelCo.'s price for its output

Accepted Answer

A)   can be tailored to exceed the price of its inputs.
B)   is dictated by the forces of demand and supply.
C)   can be tailored to meet the price of its inputs.
D)   can be set by management to maximize profits.

Question 15

In the _______, the perfectly competitive firm will seek out _______.

Accepted Answer

A)   long run; the quantity of output where profits are highest
B)   short run; profits by ignoring the concept of total cost analysis
C)   short run; the quantity of output where profits are highest
D)   long run; methods to reduce production and shut down

Question 16

Briefly explain the relationship between market price and a firm's profitability in perfectly competitive market.

Accepted Answer

In a perfectly competitive market, the r...

Question 17

Temperatures have persisted below freezing levels in Florida throughout the months of December and January. As a result, demand for electricity sharply increased and the price of electricity rose sharply. The price of coal also rose. In these circumstances, any resulting shifts in the supply curves for coal miners and electricity producers

Accepted Answer

A)   will determine what price to produce at given the market demand.
B)   at all levels of output shifts marginal costs to the right.
C)   can also be interpreted as shifts of their respective marginal cost curves.
D)   shifts marginal costs to the right enabling both to produce more at any given market price.

Question 18

If the average product for six workers is fifteen and the marginal product of the seventh worker is eighteen, then

Accepted Answer

A)   marginal product is rising.
B)   marginal product is falling.
C)   average product is rising.
D)   average product is falling.

Question 19

In order to produce 100 oatmeal cookies, GoodieCookieCo incurs an average total cost of $0.25 per cookie. The company's marginal cost is constant at $0.10 for all oatmeal cookies produced. The total cost to produce 50 oatmeal cookies is

Accepted Answer

A)   $25
B)   $20
C)   $50
D)   $60

Question 20

Briefly describe what the effect of producing a greater quantity of products will be in relation to a perfectly competitive firm.

Accepted Answer

In a perfectly competitive market, firms...

Exam 8: Perfect Competition

Why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases?

Correct Answer
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If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased, then

Correct Answer
verified

If a perfectly competitive firm is a price taker, then

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

I'maSolarPanelCo. manufactures and distributes solar panels in the US market. Two years ago, it had 5 US competitors, but government stimulus in the industry has encouraged 7 new US competitors to enter the market. In these circumstances, I'maSolarPanelCo.'s price for its output

Correct Answer
verified

Briefly explain the relationship between market price and a firm's profitability in perfectly competitive market.

Correct Answer
Answered by ExamLex AI
In a perfectly competitive market, the r...
View Answer

Briefly describe what the effect of producing a greater quantity of products will be in relation to a perfectly competitive firm.

Correct Answer
Answered by ExamLex AI
In a perfectly competitive market, firms...
View Answer

If the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers?

Correct Answer
verified

Economic profit can be derived from calculating total revenues minus all of the firm's costs,

Correct Answer
verified

In the _, the perfectly competitive firm will seek out _.

Correct Answer
verified

Correct Answer
verified

In economics, the term "shutdown point" refers to the point where the

Correct Answer
verified

If the price that a firm charges is higher than its _______ cost of production for that quantity produced, then the firm will earn profits.

Correct Answer
verified

If the average product for six workers is fifteen and the marginal product of the seventh worker is eighteen, then

Correct Answer
verified

Why are some producers forced to sell their products at the prevailing market price?

Correct Answer
verified

Briefly contrast when losses will be the smallest for a perfectly competitive firm based on total revenues with when losses for such a firm will be smallest based on marginal revenue.

Correct Answer
Answered by ExamLex AI
In a perfectly competitive market, a fir...
View Answer

In order to produce 100 oatmeal cookies, GoodieCookieCo incurs an average total cost of $0.25 per cookie. The company's marginal cost is constant at $0.10 for all oatmeal cookies produced. The total cost to produce 50 oatmeal cookies is

Correct Answer
verified

An _ is calculated by subtracting the firm's costs from its total revenues, _.

Correct Answer
verified

Given the data provided in the table below, what will the marginal cost equal for production at quantity Q) level 4?

Correct Answer
verified

Exam 8: Perfect Competition

Why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases?

Correct AnswerverifiedShow Answer

If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased, then

Correct AnswerverifiedShow Answer

If a perfectly competitive firm is a price taker, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

I'maSolarPanelCo. manufactures and distributes solar panels in the US market. Two years ago, it had 5 US competitors, but government stimulus in the industry has encouraged 7 new US competitors to enter the market. In these circumstances, I'maSolarPanelCo.'s price for its output

Correct AnswerverifiedShow Answer

Briefly explain the relationship between market price and a firm's profitability in perfectly competitive market.

Correct AnswerAnswered by ExamLex AIIn a perfectly competitive market, the r...View AnswerShow Answer

Briefly describe what the effect of producing a greater quantity of products will be in relation to a perfectly competitive firm.

Correct AnswerAnswered by ExamLex AIIn a perfectly competitive market, firms...View AnswerShow Answer

If the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers?

Correct AnswerverifiedShow Answer

Economic profit can be derived from calculating total revenues minus all of the firm's costs,

Correct AnswerverifiedShow Answer

In the _______, the perfectly competitive firm will seek out _______.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In economics, the term "shutdown point" refers to the point where the

Correct AnswerverifiedShow Answer

If the price that a firm charges is higher than its _______ cost of production for that quantity produced, then the firm will earn profits.

Correct AnswerverifiedShow Answer

If the average product for six workers is fifteen and the marginal product of the seventh worker is eighteen, then

Correct AnswerverifiedShow Answer

Why are some producers forced to sell their products at the prevailing market price?

Correct AnswerverifiedShow Answer

Briefly contrast when losses will be the smallest for a perfectly competitive firm based on total revenues with when losses for such a firm will be smallest based on marginal revenue.

Correct AnswerAnswered by ExamLex AIIn a perfectly competitive market, a fir...View AnswerShow Answer

In order to produce 100 oatmeal cookies, GoodieCookieCo incurs an average total cost of $0.25 per cookie. The company's marginal cost is constant at $0.10 for all oatmeal cookies produced. The total cost to produce 50 oatmeal cookies is

Correct AnswerverifiedShow Answer

An _______ is calculated by subtracting the firm's costs from its total revenues, _______.

Correct AnswerverifiedShow Answer

Given the data provided in the table below, what will the marginal cost equal for production at quantity Q) level 4?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
Answered by ExamLex AI
In a perfectly competitive market, the r...
View Answer

Correct Answer
Answered by ExamLex AI
In a perfectly competitive market, firms...
View Answer

Correct Answer
verified

Correct Answer
verified

In the _, the perfectly competitive firm will seek out _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
Answered by ExamLex AI
In a perfectly competitive market, a fir...
View Answer

Correct Answer
verified

An _ is calculated by subtracting the firm's costs from its total revenues, _.

Correct Answer
verified

Correct Answer
verified