Question 1

Table 13-6
The following table presents cost and revenue information for a firm operating in a competitive industry.
 
-Refer to Table 13-6.What is the average revenue when 4 units are sold?

Accepted Answer

A)   $60
B)   $120
C)   $125
D)   $197E) C) and D)
F) B) and C)

Question 2

Scenario 13-3
Suppose a certain competitive firm is producing Q=500 units of output.The marginal cost of the 500th unit is $17,and the average total cost of producing 500 units is $12.The firm sells its output for $20.
-Refer to Scenario 13-3.At Q=499,the firm's profits equal

Accepted Answer

A)   $3,980.
B)   $3,992.
C)   $3,997.
D)   $4,017.E) A) and B)
F) All of the above

Question 3

When a perfectly competitive firm decides to shut down,it is most likely that

Accepted Answer

A)   marginal cost is above average variable cost.
B)   marginal cost is above average total cost.
C)   price is below the firm's average variable cost.
D)   fixed costs exceed variable costs.E) B) and D)
F) B) and C)

Question 4

Firms operating in perfectly competitive markets try to maximize profits.

Accepted Answer

A) True 
 B)False

Question 5

A miniature golf course is a good example of where fixed costs become relevant to the decision of when to open and when to close for the season.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following characteristics of competitive markets is necessary for firms to be price takers? (i) There are many sellers.
(ii) Firms can freely enter or exit the market.
(iii) Goods offered for sale are largely the same.

Accepted Answer

A)   (i) and (ii) only
B)   (i) and (iii) only
C)   (ii) only
D)   (i) ,(ii) ,and (iii) E) B) and D)
F) All of the above

Question 7

Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each.Which of the following statements is correct? (i) Marginal revenue equals $4.
(ii) Average revenue equals $100.
(iii) Total revenue equals $1,600.

Accepted Answer

A)   (i) only
B)   (iii) only
C)   (i) and (iii) only
D)   (i) ,(ii) ,and (iii) E) A) and B)
F) A) and C)

Question 8

Table 13-9
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 13-9.In order to maximize profit,the firm will produce a level of output where marginal cost is equal to

Accepted Answer

A)   $5.
B)   $7.
C)   $9.
D)   $10.E) B) and C)
F) None of the above

Question 9

In the long run,a competitive market with 1,000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

Accepted Answer

A) True 
 B)False

Question 10

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue,then

Accepted Answer

A)   a one-unit increase in output will increase the firm's profit.
B)   a one-unit decrease in output will increase the firm's profit.
C)   total revenue exceeds total cost.
D)   total cost exceeds total revenue.E) B) and C)
F) A) and D)

Question 11

Table 13-9
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 13-9.The maximum profit available to the firm is

Accepted Answer

A)   $2.
B)   $3.
C)   $4.
D)   $5.E) A) and B)
F) None of the above

Question 12

Table 13-14
The following table presents cost and revenue information for Bob's bakery production and sales.
 
-Refer to Table 13-14.Suppose that due to a decrease in the market demand for bread the market price of bread drops to $2.75 per loaf.At this new price,what is Bob's profit-maximizing quantity?

Accepted Answer

A)   5 units
B)   6 units
C)   7 units
D)   8 unitsE) B) and C)
F) A) and D)

Question 13

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $600.In order to maximize profits,Marcia should

Accepted Answer

A)   make more than 10 dresses per month.
B)   make fewer than 10 dresses per month.
C)   continue to make 10 dresses per month.
D)   We do not have enough information with which to answer the question.E) All of the above
F) A) and B)

Question 14

Table 13-6
The following table presents cost and revenue information for a firm operating in a competitive industry.
 
-Refer to Table 13-6.What is the total revenue from selling 4 units?

Accepted Answer

A)   $120
B)   $257
C)   $317
D)   $480E) B) and D)
F) B) and C)

Question 15

Figure 13-2
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 13-2.Which of the four prices corresponds to a firm earning positive economic profits in the short run?

Accepted Answer

A)   P1
B)   P2
C)   P3
D)   P4E) All of the above
F) A) and B)

Question 16

Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In this market,an increase in demand will

Accepted Answer

A)   increase price in the short run but not in the long run.
B)   increase price in the long run but not in the short run.
C)   increase price both in the short and the long run.
D)   not affect price in either the short or the long run.E) A) and B)
F) A) and C)

Question 17

When total revenue is less than variable costs,a firm in a competitive market will

Accepted Answer

A)   continue to operate as long as average revenue exceeds marginal cost.
B)   continue to operate as long as average revenue exceeds average fixed cost.
C)   shut down.
D)   raise its price.E) A) and D)
F) B) and D)

Question 18

Figure 13-1
Suppose that a firm in a competitive market has the following cost curves: 
-Refer to Figure 13-1.If the market price is $6.30,the firm will earn

Accepted Answer

A)   positive economic profits in the short run.
B)   negative economic profits in the short run but remain in business.
C)   negative economic profits and shut down.
D)   zero economic profits in the short run.E) A) and B)
F) A) and C)

Question 19

Suppose that in a competitive market the equilibrium price is $2.50.What is marginal revenue for the last unit sold by the typical firm in this market?

Accepted Answer

A)   less than $2.50
B)   more than $2.50
C)   exactly $2.50
D)   The marginal revenue cannot be determined without knowing the actual quantity sold by the typical firm.E) All of the above
F) A) and C)

Question 20

Laura is a gourmet chef who runs a small catering business in a competitive industry.Laura specializes in making wedding cakes.Laura sells 20 wedding cakes per month.Her monthly total revenue is $5,000.The marginal cost of making a wedding cake is $300.In order to maximize profits,Laura should

Accepted Answer

A)   make more than 20 wedding cakes per month.
B)   make fewer than 20 wedding cakes per month.
C)   continue to make 20 wedding cakes per month.
D)   We do not have enough information with which to answer the question.E) A) and B)
F) All of the above

Exam 13: Firms in Competitive Markets

Scenario 13-3 Suppose a certain competitive firm is producing Q=500 units of output.The marginal cost of the 500th unit is $17,and the average total cost of producing 500 units is $12.The firm sells its output for $20. -Refer to Scenario 13-3.At Q=499,the firm's profits equal

Correct Answer
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Table 13-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-9.The maximum profit available to the firm is

Correct Answer
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When total revenue is less than variable costs,a firm in a competitive market will

Correct Answer
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Figure 13-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 13-1.If the market price is $6.30,the firm will earn

Correct Answer
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Which of the following characteristics of competitive markets is necessary for firms to be price takers? (i) There are many sellers. (ii) Firms can freely enter or exit the market. (iii) Goods offered for sale are largely the same.

Correct Answer
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Table 13-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 13-6.What is the total revenue from selling 4 units?

Correct Answer
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Firms operating in perfectly competitive markets try to maximize profits.

Correct Answer
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If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue,then

Correct Answer
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When a perfectly competitive firm decides to shut down,it is most likely that

Correct Answer
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In the long run,a competitive market with 1,000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

Correct Answer
verified

A miniature golf course is a good example of where fixed costs become relevant to the decision of when to open and when to close for the season.

Correct Answer
verified

Suppose that in a competitive market the equilibrium price is $2.50.What is marginal revenue for the last unit sold by the typical firm in this market?

Correct Answer
verified

Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In this market,an increase in demand will

Correct Answer
verified

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $600.In order to maximize profits,Marcia should

Correct Answer
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Table 13-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 13-6.What is the average revenue when 4 units are sold?

Correct Answer
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Laura is a gourmet chef who runs a small catering business in a competitive industry.Laura specializes in making wedding cakes.Laura sells 20 wedding cakes per month.Her monthly total revenue is $5,000.The marginal cost of making a wedding cake is $300.In order to maximize profits,Laura should

Correct Answer
verified

Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each.Which of the following statements is correct? (i) Marginal revenue equals $4. (ii) Average revenue equals $100. (iii) Total revenue equals $1,600.

Correct Answer
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Figure 13-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-2.Which of the four prices corresponds to a firm earning positive economic profits in the short run?

Correct Answer
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Table 13-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-9.In order to maximize profit,the firm will produce a level of output where marginal cost is equal to

Correct Answer
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Exam 13: Firms in Competitive Markets

Scenario 13-3 Suppose a certain competitive firm is producing Q=500 units of output.The marginal cost of the 500th unit is $17,and the average total cost of producing 500 units is $12.The firm sells its output for $20. -Refer to Scenario 13-3.At Q=499,the firm's profits equal

Correct AnswerverifiedShow Answer

Table 13-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-9.The maximum profit available to the firm is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When total revenue is less than variable costs,a firm in a competitive market will

Correct AnswerverifiedShow Answer

Figure 13-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 13-1.If the market price is $6.30,the firm will earn

Correct AnswerverifiedShow Answer

Which of the following characteristics of competitive markets is necessary for firms to be price takers? (i) There are many sellers. (ii) Firms can freely enter or exit the market. (iii) Goods offered for sale are largely the same.

Correct AnswerverifiedShow Answer

Table 13-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 13-6.What is the total revenue from selling 4 units?

Correct AnswerverifiedShow Answer

Firms operating in perfectly competitive markets try to maximize profits.

Correct AnswerverifiedShow Answer

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue,then

Correct AnswerverifiedShow Answer

When a perfectly competitive firm decides to shut down,it is most likely that

Correct AnswerverifiedShow Answer

In the long run,a competitive market with 1,000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

Correct AnswerverifiedShow Answer

A miniature golf course is a good example of where fixed costs become relevant to the decision of when to open and when to close for the season.

Correct AnswerverifiedShow Answer

Suppose that in a competitive market the equilibrium price is $2.50.What is marginal revenue for the last unit sold by the typical firm in this market?

Correct AnswerverifiedShow Answer

Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In this market,an increase in demand will

Correct AnswerverifiedShow Answer

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $600.In order to maximize profits,Marcia should

Correct AnswerverifiedShow Answer

Table 13-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 13-6.What is the average revenue when 4 units are sold?

Correct AnswerverifiedShow Answer

Laura is a gourmet chef who runs a small catering business in a competitive industry.Laura specializes in making wedding cakes.Laura sells 20 wedding cakes per month.Her monthly total revenue is $5,000.The marginal cost of making a wedding cake is $300.In order to maximize profits,Laura should

Correct AnswerverifiedShow Answer

Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each.Which of the following statements is correct? (i) Marginal revenue equals $4. (ii) Average revenue equals $100. (iii) Total revenue equals $1,600.

Correct AnswerverifiedShow Answer

Figure 13-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-2.Which of the four prices corresponds to a firm earning positive economic profits in the short run?

Correct AnswerverifiedShow Answer

Table 13-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-9.In order to maximize profit,the firm will produce a level of output where marginal cost is equal to

Correct AnswerverifiedShow Answer

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