Question 1

Commodities:

Accepted Answer

A)  are a special type of standardized good.
B)  have no product differentiation.
C)  are identical regardless of who produced them.
D)  All of these are correct.E) A) and B)
F) A) and C)

Question 2

Each point of a firm's supply curve represents a price-quantity pair where:

Accepted Answer

A)  marginal cost is equal to marginal revenue.
B)  price is equal to the minimum of average total cost.
C)  price is equal to the minimum of average variable cost.
D)  marginal cost is equal to average total cost.E) B) and C)
F) B) and D)

Question 3

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

Question 4

The graph shown displays the cost curves for one firm in a perfectly competitive market. If the market price is $6, this firm should:

Accepted Answer

A)  shut down in the short run and exit in the long run.
B)  continue producing in both the short run and the long run.
C)  increase the price to $7 in the short run.
D)  continue producing in the short run but exit in the long run.E) C) and D)
F) None of the above

Question 5

The marginal cost of a firm:

Accepted Answer

A)  crosses total cost at its minimum.
B)  crosses average variable cost and average total cost at their respective minima.
C)  crosses marginal revenue at a point above the profit-maximizing level of output.
D)  is a horizontal line, indicating that costs are constant in perfect competition.E) None of the above
F) A) and B)

Question 6

As long as the market price remains above a firm's average total cost, and the firm chooses to produce at the profit-maximizing level of output, the firm will:

Accepted Answer

A)  earn positive profits.
B)  earn zero profits.
C)  incur a loss.
D)  Any of these is possible.E) A) and B)
F) B) and C)

Question 7

A price taker:

Accepted Answer

A)  has market power.
B)  has no control over the market price.
C)  is competitive.
D)  sells at a price determined by government.E) A) and D)
F) B) and C)

Question 8

The graph shown displays the marginal cost and average total cost curves for a perfectly competitive firm. If marginal revenue equals $50, producing 140 units: is not as profitable as producing 120 units.will earn the firm negative profits.will earn more revenue than producing 100 units.

Accepted Answer

A)  I only
B)  II and III only
C)  I and III only
D)  I, II, and IIIE) A) and C)
F) All of the above

Question 9

The graph shown represents the cost and revenue curves of a firm in a perfectly competitive market.  If the firm is producing at Q2, and it is identical to other firms in the market:

Accepted Answer

A)  profits are not being maximized.
B)  firms will enter this market.
C)  economic profits are zero.
D)  firms will exit this market.E) A) and B)
F) B) and C)

Question 10

The graph shown displays the cost curves for a firm in a perfectly competitive market. Assume that all firms in this market have identical cost structures. Which of the following statements is true?  In the long run, the market price will be $80.In the long run, this firm will produce 70 units.This firm should shut down in the short run but produce in the long run.

Accepted Answer

A)  I only
B)  II and III only
C)  I and II only
D)  II onlyE) B) and C)
F) C) and D)

Question 11

Given the exit rule, a firm's long run supply curve is the section of the:

Accepted Answer

A)  average total cost curve to the right of its minimum.
B)  marginal cost curve that lies above the average total cost curve.
C)  marginal cost curve that lies above the average variable cost curve.
D)  average variable cost curve to the right of its minimum.E) B) and C)
F) A) and C)

Question 12

The graph shown represents the cost and revenue curves of a firm in a perfectly competitive market.  If the firm is producing at Q1:

Accepted Answer

A)  profits are being maximized.
B)  average total costs exceed the market price.
C)  it should not increase production because it will earn loss.
D)  marginal revenue is greater than average total cost.E) C) and D)
F) B) and D)

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

Question 14

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

Accepted Answer

A)  the additional revenue gained from selling one more unit.
B)  equal to average revenue.
C)  equal to market price.
D)  All of these are correct.E) All of the above
F) A) and B)

Question 15

In reality, the long run supply curve tends to be:

Accepted Answer

A)  perfectly elastic.
B)  perfectly inelastic.
C)  upward sloping.
D)  downward sloping.E) All of the above
F) A) and D)

Question 16

The graph shown represents the cost and revenue curves of a firm in a perfectly competitive market.  If the 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 correct.E) B) and D)
F) A) and D)

Question 17

Firms that have market power:

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

Question 18

When a firm faces a perfectly competitive market and buys its inputs from perfectly competitive markets, the only choice the firm has to affect its profits is to:

Accepted Answer

A)  increase its selling price.
B)  change the quantity it produces.
C)  decrease the selling price.
D)  decrease its cost of production lower than other firms.E) A) and B)
F) A) and D)

Question 19

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

Accepted Answer

A)  Q1.
B)  Q2.
C)  Q3.
D)  Any quantity can be produced, as long as price P1 is charged.E) A) and B)
F) C) and D)

Question 20

Which of the following holds true at the chosen level of output in the long run for firms in a perfectly competitive market?

Accepted Answer

A)  Price is equal to marginal cost.
B)  Price is equal to the minimum of average variable cost.
C)  Marginal revenue is equal to average variable cost.
D)  Marginal revenue is greater than average total cost.E) B) and D)
F) C) and D)

Exam 13: Perfect Competition

The marginal cost of a firm:

Correct Answer
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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:

Correct Answer
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<p><b><b><span style="font-size:20pt;"><span style="color:#FF0000;"> </span></span> </b> The graph shown displays the cost curves for one firm in a perfectly competitive market. If the market price is $6, this firm should:

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

Correct Answer
verified

Correct Answer
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Correct Answer
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The graph shown represents the cost and revenue curves of a firm in a perfectly competitive market. If the firm is producing at Q2:

Correct Answer
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Each point of a firm's supply curve represents a price-quantity pair where:

Correct Answer
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As long as the market price remains above a firm's average total cost, and the firm chooses to produce at the profit-maximizing level of output, the firm will:

Correct Answer
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Commodities:

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

Correct Answer
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Which of the following holds true at the chosen level of output in the long run for firms in a perfectly competitive market?

Correct Answer
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Firms that have market power:

Correct Answer
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For firms that sell one product in a perfectly competitive market, marginal revenue is:

Correct Answer
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In reality, the long run supply curve tends to be:

Correct Answer
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The graph shown represents the cost and revenue curves of a firm in a perfectly competitive market. If the firm is producing at Q2, and it is identical to other firms in the market:

Correct Answer
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A price taker:

Correct Answer
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When a firm faces a perfectly competitive market and buys its inputs from perfectly competitive markets, the only choice the firm has to affect its profits is to:

Correct Answer
verified

The graph shown represents the cost and revenue curves of a firm in a perfectly competitive market. If the firm is producing at Q1:

Correct Answer
verified

Given the exit rule, a firm's long run supply curve is the section of the:

Correct Answer
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Exam 13: Perfect Competition

The marginal cost of a firm:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

<p><b><b><span style="font-size:20pt;"><span style="color:#FF0000;"> </span></span> </b> The graph shown displays the cost curves for one firm in a perfectly competitive market. If the market price is $6, this firm should:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The graph shown represents the cost and revenue curves of a firm in a perfectly competitive market. If the firm is producing at Q2:

Correct AnswerverifiedShow Answer

Each point of a firm's supply curve represents a price-quantity pair where:

Correct AnswerverifiedShow Answer

As long as the market price remains above a firm's average total cost, and the firm chooses to produce at the profit-maximizing level of output, the firm will:

Correct AnswerverifiedShow Answer

Commodities:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following holds true at the chosen level of output in the long run for firms in a perfectly competitive market?

Correct AnswerverifiedShow Answer

Firms that have market power:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In reality, the long run supply curve tends to be:

Correct AnswerverifiedShow Answer

The graph shown represents the cost and revenue curves of a firm in a perfectly competitive market. If the firm is producing at Q2, and it is identical to other firms in the market:

Correct AnswerverifiedShow Answer

A price taker:

Correct AnswerverifiedShow Answer

When a firm faces a perfectly competitive market and buys its inputs from perfectly competitive markets, the only choice the firm has to affect its profits is to:

Correct AnswerverifiedShow Answer

The graph shown represents the cost and revenue curves of a firm in a perfectly competitive market. If the firm is producing at Q1:

Correct AnswerverifiedShow Answer

Given the exit rule, a firm's long run supply curve is the section of the:

Correct AnswerverifiedShow Answer

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