Question 1

In the short run,in a perfectly competitive market,a firm will shut down if

Accepted Answer

A)  P 
B)  P 
C)  ATC > P > AVC for all levels of output.
D)  P > AFC for all levels of output.

Question 2

In a perfectly competitive market,positive economic profits act to

Accepted Answer

A)  attract new entrants into the industry.
B)  drive potential competitors away from the industry.
C)  prevent reinvestment on the part of firms within the industry.
D)  signal resource owners elsewhere not to invest their capital in this industry.

Question 3

Which of the following statements is correct?

Accepted Answer

A)  The demand curve of the perfectly competitive industry is elastic as are the demand curves facing the individual firms.
B)  The market demand curve of perfect competition is inelastic because the individual consumers are buying a homogeneous product.
C)  The market demand curve of the perfectly competitive industry is downward sloping while the demand curve of an individual firm is horizontal with a height equal to the product price.
D)  The market demand curve of the perfectly competitive industry is downward sloping,so the demand curves of the individual firms are also downward sloping.

Question 4

In a perfectly competitive industry,the industry demand curve

Accepted Answer

A)  must be horizontal.
B)  must be vertical.
C)  is upward sloping.
D)  is downward sloping.

Question 5

-In the above figure,what is the profit-maximizing output and price?

Accepted Answer

A)  8,$7
B)  10,$8
C)  12,$10
D)  10,$10

Question 6

In the short run,a firm should shut down when

Accepted Answer

A)  P 
B)  P > MC.
C)  MR > MC.
D)  MR = ATC.

Question 7

For a firm in a perfectly competitive market,average revenue equals

Accepted Answer

A)  average cost.
B)  the change in total revenue.
C)  the market price.
D)  price divided by quantity.

Question 8

If an industry's long-run per-unit costs are constant as its output increases then

Accepted Answer

A)  the firm's long-run economic profits must be greater than zero.
B)  the firm is most likely a decreasing-cost industry.
C)  the firm is most likely an increasing-cost industry.
D)  the firm is most likely a constant-cost industry.

Question 9

-In the above figure,at the profit-maximizing rate of production for the perfectly competitive firm total revenue is

Accepted Answer

A)  $100.
B)  $70.
C)  $30.
D)  $130.

Question 10

Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $7.00; AVC = $5.00; MC = $6.50; MR = $6.50.The firm should

Accepted Answer

A)  increase output.
B)  decrease output.
C)  continue to produce its current output.
D)  shut down.

Question 11

Marginal revenue equals

Accepted Answer

A)  total revenue divided by output.
B)  price times quantity,divided by average revenue.
C)  total revenue divided by average revenue.
D)  the change in total revenue from selling one more unit.

Question 12

The break-even price for a perfectly competitive firm is the price that is equal to

Accepted Answer

A)  AVC.
B)  ATC.
C)  MC.
D)  MR

Question 13

In a perfectly competitive market,which of the following is the main factor that affects consumers' decisions on which firm to purchase a good from?

Accepted Answer

A)  Quality
B)  Customer service
C)  Reputation
D)  Price

Question 14

The short-run supply curve for a perfectly competitive firm is the portion of its

Accepted Answer

A)  ATC curve above the MC curve.
B)  MC curve above the ATC curve.
C)  ATC curve below the MC curve.
D)  MC curve above its AVC curve.

Question 15

In reference to the long-run firm competitive equilibrium diagram,which of the following statements is INCORRECT?

Accepted Answer

A)  In the long run,the firm has no incentive to alter its scale of operations.
B)  Because profits must be zero in the long run,the firm's short-run average costs (SA
C)  must equal P at  Qe\mathrm { Q } _ { \mathrm { e } }Qe​  ,which occurs at minimum SAC.
C)  In the long run,the firm operates where price,marginal revenue,marginal cost,short-run minimum average cost,and long-run minimum average cost all are equal.
D)  In the long run,this firm must be part of a constant-cost industry,because its marginal revenue curve is perfectly elastic.

Question 16

4,the firm will A) earn positive economic profits. B) incur an economic loss. C) earn zero economic profits. D) shut down." class="answers-bank-image d-inline" rel="preload" >
-In the above figure,if price is equal to P4,the firm will

Accepted Answer

A)  earn positive economic profits.
B)  incur an economic loss.
C)  earn zero economic profits.
D)  shut down.

Question 17

A perfectly competitive industry's short-run supply curve is best described as

Accepted Answer

A)  the upward sloping portion of the industry's marginal cost curve.
B)  horizontal.
C)  perfectly inelastic.
D)  the horizontal summation of the individual firms' supply curves.

Question 18

-In the long run,the price for a perfectly competitive firm

Accepted Answer

A)  will be determined by the firm's supply and demand curves.
B)  will allow for positive economic profits.
C)  will equal marginal cost where marginal cost is at a minimum.
D)  will equal the minimum average total cost.

Question 19

The value of total output decreases when labor leaves one industry and goes to another and capital leaves the second industry and goes to the first.This indicates that

Accepted Answer

A)  the first situation was not efficient.
B)  the second situation is efficient.
C)  price is greater than marginal cost.
D)  it would be efficient to return to the first situation.

Question 20

Which of the following is true for the perfectly competitive firm?

Accepted Answer

A)  Price and MR are always equal.
B)  AR is less than price.
C)  AR is more than price.
D)  Price elasticity of demand is equal to 1.

Exam 10: Perfect Competition

-In the above figure,what is the profit-maximizing output and price?

Correct Answer
verified

For a firm in a perfectly competitive market,average revenue equals

Correct Answer
verified

Which of the following is true for the perfectly competitive firm?

Correct Answer
verified

A perfectly competitive industry's short-run supply curve is best described as

Correct Answer
verified

In the short run,in a perfectly competitive market,a firm will shut down if

Correct Answer
verified

The break-even price for a perfectly competitive firm is the price that is equal to

Correct Answer
verified

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

If an industry's long-run per-unit costs are constant as its output increases then

Correct Answer
verified

In a perfectly competitive industry,the industry demand curve

Correct Answer
verified

The short-run supply curve for a perfectly competitive firm is the portion of its

Correct Answer
verified

The value of total output decreases when labor leaves one industry and goes to another and capital leaves the second industry and goes to the first.This indicates that

Correct Answer
verified

Marginal revenue equals

Correct Answer
verified

-In the long run,the price for a perfectly competitive firm

Correct Answer
verified

In a perfectly competitive market,positive economic profits act to

Correct Answer
verified

Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $7.00; AVC = $5.00; MC = $6.50; MR = $6.50.The firm should

Correct Answer
verified

-In the above figure,if price is equal to P₄,the firm will

Correct Answer
verified

In the short run,a firm should shut down when

Correct Answer
verified

In a perfectly competitive market,which of the following is the main factor that affects consumers' decisions on which firm to purchase a good from?

Correct Answer
verified

-In the above figure,at the profit-maximizing rate of production for the perfectly competitive firm total revenue is

Correct Answer
verified

Exam 10: Perfect Competition

-In the above figure,what is the profit-maximizing output and price?

Correct AnswerverifiedShow Answer

For a firm in a perfectly competitive market,average revenue equals

Correct AnswerverifiedShow Answer

Which of the following is true for the perfectly competitive firm?

Correct AnswerverifiedShow Answer

A perfectly competitive industry's short-run supply curve is best described as

Correct AnswerverifiedShow Answer

In the short run,in a perfectly competitive market,a firm will shut down if

Correct AnswerverifiedShow Answer

The break-even price for a perfectly competitive firm is the price that is equal to

Correct AnswerverifiedShow Answer

In reference to the long-run firm competitive equilibrium diagram,which of the following statements is INCORRECT?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

If an industry's long-run per-unit costs are constant as its output increases then

Correct AnswerverifiedShow Answer

In a perfectly competitive industry,the industry demand curve

Correct AnswerverifiedShow Answer

The short-run supply curve for a perfectly competitive firm is the portion of its

Correct AnswerverifiedShow Answer

The value of total output decreases when labor leaves one industry and goes to another and capital leaves the second industry and goes to the first.This indicates that

Correct AnswerverifiedShow Answer

Marginal revenue equals

Correct AnswerverifiedShow Answer

-In the long run,the price for a perfectly competitive firm

Correct AnswerverifiedShow Answer

In a perfectly competitive market,positive economic profits act to

Correct AnswerverifiedShow Answer

Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $7.00; AVC = $5.00; MC = $6.50; MR = $6.50.The firm should

Correct AnswerverifiedShow Answer

-In the above figure,if price is equal to P4,the firm will

Correct AnswerverifiedShow Answer

In the short run,a firm should shut down when

Correct AnswerverifiedShow Answer

In a perfectly competitive market,which of the following is the main factor that affects consumers' decisions on which firm to purchase a good from?

Correct AnswerverifiedShow Answer

-In the above figure,at the profit-maximizing rate of production for the perfectly competitive firm total revenue is

Correct AnswerverifiedShow Answer

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-In the above figure,if price is equal to P₄,the firm will

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