Question 1

The competitive firm's short-run supply curve is that portion of the

Accepted Answer

A)   average variable cost curve that lies above marginal cost.
B)   average total cost curve that lies above marginal cost.
C)   marginal cost curve that lies above average variable cost.
D)   marginal cost curve that lies above average total cost.E) A) and B)
F) A) and C)

Question 2

Table 14-12

-Refer to Table 14-12. What is the marginal cost of the 5th unit?

Accepted Answer

A)   $55
B)   $60
C)   $68
D)   $80E) A) and D)
F) B) and D)

Question 3

Scenario 14-4
Victor is the recipient of $1 million from a lawsuit. Victor decides to use the money to purchase a small business in Florida. His business operates in a perfectly competitive industry. If Victor would have invested the $1 million in a risk-free bond fund, he could have earned $100,000 each year. After he bought the small business, Victor quit his job as a market analyst with Research, Inc., where he used to earn $75,000 per year.
-Refer to Scenario 14-4. What is Victor's opportunity costs of operating his new business?

Accepted Answer

A)   $25,000
B)   $75,000
C)   $100,000
D)   $175,000E) None of the above
F) B) and D)

Question 4

Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by

Accepted Answer

A)   increases in production costs resulting from more firms coming into the market.
B)   a breakdown of the "free entry and exit" feature of competition.
C)   a breakdown of the "price taking" feature of competition.
D)   a stable demand curve for the good, that is, a demand curve that never shifts.E) None of the above
F) A) and B)

Question 5

One of the defining characteristics of a perfectly competitive market is

Accepted Answer

A)   a small number of sellers.
B)   a large number of buyers and a small number of sellers.
C)   a similar product.
D)   significant advertising by firms to promote their products.E) A) and D)
F) A) and C)

Question 6

For an individual firm operating in a competitive market, marginal revenue equals

Accepted Answer

A)   average revenue and the price for all levels of output.
B)   average revenue, which is greater than the price for all levels of output.
C)   average revenue, the price, and marginal cost for all levels of output.
D)   marginal cost, which is greater than average revenue for all levels of output.E) B) and C)
F) A) and D)

Question 7

Figure 14-4
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-4. The firm will earn positive economic profits if the price is i)  P4.
Ii)  P3.
Iii)  P2.
Iv)  P1.

Accepted Answer

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

Question 8

Which of the following expressions is correct for a competitive firm?

Accepted Answer

A)   profit = quantity of output)  x price - average total cost) 
B)   marginal revenue = change in total revenue) /quantity of output) 
C)   average total cost = total variable cost/quantity of output
D)   average revenue = marginal revenue)  x quantity of output) E) B) and C)
F) A) and C)

Question 9

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 10

In the long run the market supply

Accepted Answer

A)   must always be horizontal.
B)   could be upward sloping if the cost of production falls as new firms enter the market.
C)   could be upward sloping if the cost of production rises as new firms enter the market.
D)   could be upward sloping if technological improvements lower the cost of producing in the market.E) A) and B)
F) A) and C)

Question 11

A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Accepted Answer

A)   opportunity costs.
B)   fixed costs.
C)   variable costs.
D)   total costs.E) None of the above
F) A) and D)

Question 12

In a competitive market the current price is $5. The typical firm in the market has ATC = $5.00 and AVC = $4.50.

Accepted Answer

A)   In the short run firms will shut down, and in the long run firms will leave the market.
B)   In the short run firms will continue to operate, but in the long run firms will leave the market.
C)   New firms will likely enter this market to capture any remaining economic profits.
D)   The firm will earn zero profits in both the short run and long run.E) A) and D)
F) A) and C)

Question 13

Suppose that some firms in a competitive industry are earning zero economic profits, while others are experiencing losses. All else equal, in the long run, we would expect the number of firms in the industry to

Accepted Answer

A)   increase.
B)   decrease.
C)   remain the same.
D)   We do not have enough information with which to answer this question.E) None of the above
F) A) and B)

Question 14

When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is

Accepted Answer

A)   downward sloping.
B)   upward sloping.
C)   horizontal.
D)   vertical.E) A) and D)
F) None of the above

Question 15

Table 14-2
The table represents a demand curve faced by a firm in a competitive market.
 
-Refer to Table 14-2. For this firm, the marginal revenue from selling the 3rd unit is

Accepted Answer

A)   $12.
B)   $4.
C)   $3.
D)   $1.E) A) and B)
F) None of the above

Question 16

A firm operating in a perfectly competitive industry will shut down in the short run if its economic profits fall to zero because it is likely to be earning negative accounting profits.

Accepted Answer

A) True 
 B)False

Question 17

Table 14-10
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 14-10. This firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to

Accepted Answer

A)   $3.
B)   $5.
C)   $7.
D)   $9.E) None of the above
F) B) and C)

Question 18

Table 14-15-a
 
-Refer to Table 14-15-a. What is the lowest price at which this firm would operate in the short run?

Accepted Answer

A)   $5.
B)   $6.
C)   $7.
D)   $8.E) A) and D)
F) None of the above

Question 19

Table 14-10
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 14-10. The marginal cost of producing the 4th unit is

Accepted Answer

A)   $7.
B)   $8.
C)   $10.
D)   $23.E) A) and C)
F) B) and C)

Question 20

Because there are many buyers and sellers in a perfectly competitive market, no one seller can influence the market price.

Accepted Answer

A) True 
 B)False

Exam 13: Firms in Competitive Markets

For an individual firm operating in a competitive market, marginal revenue equals

Correct Answer
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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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Suppose that some firms in a competitive industry are earning zero economic profits, while others are experiencing losses. All else equal, in the long run, we would expect the number of firms in the industry to

Correct Answer
verified

In a competitive market the current price is $5. The typical firm in the market has ATC = $5.00 and AVC = $4.50.

Correct Answer
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Table 14-12 -Refer to Table 14-12. What is the marginal cost of the 5th unit?

Correct Answer
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A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Correct Answer
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Which of the following expressions is correct for a competitive firm?

Correct Answer
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Table 14-2 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-2. For this firm, the marginal revenue from selling the 3rd unit is

Correct Answer
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The competitive firm's short-run supply curve is that portion of the

Correct Answer
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Figure 14-4 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-4. The firm will earn positive economic profits if the price is i) P4. Ii) P3. Iii) P2. Iv) P1.

Correct Answer
verified

A firm operating in a perfectly competitive industry will shut down in the short run if its economic profits fall to zero because it is likely to be earning negative accounting profits.

Correct Answer
verified

When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is

Correct Answer
verified

Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by

Correct Answer
verified

Table 14-10 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-10. This firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to

Correct Answer
verified

Because there are many buyers and sellers in a perfectly competitive market, no one seller can influence the market price.

Correct Answer
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Table 14-10 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-10. The marginal cost of producing the 4th unit is

Correct Answer
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In the long run the market supply

Correct Answer
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One of the defining characteristics of a perfectly competitive market is

Correct Answer
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Table 14-15-a -Refer to Table 14-15-a. What is the lowest price at which this firm would operate in the short run?

Correct Answer
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Exam 13: Firms in Competitive Markets

For an individual firm operating in a competitive market, marginal revenue equals

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

Suppose that some firms in a competitive industry are earning zero economic profits, while others are experiencing losses. All else equal, in the long run, we would expect the number of firms in the industry to

Correct AnswerverifiedShow Answer

In a competitive market the current price is $5. The typical firm in the market has ATC = $5.00 and AVC = $4.50.

Correct AnswerverifiedShow Answer

Table 14-12 -Refer to Table 14-12. What is the marginal cost of the 5th unit?

Correct AnswerverifiedShow Answer

A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Correct AnswerverifiedShow Answer

Which of the following expressions is correct for a competitive firm?

Correct AnswerverifiedShow Answer

Table 14-2 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-2. For this firm, the marginal revenue from selling the 3rd unit is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The competitive firm's short-run supply curve is that portion of the

Correct AnswerverifiedShow Answer

Figure 14-4 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-4. The firm will earn positive economic profits if the price is i) P4. Ii) P3. Iii) P2. Iv) P1.

Correct AnswerverifiedShow Answer

A firm operating in a perfectly competitive industry will shut down in the short run if its economic profits fall to zero because it is likely to be earning negative accounting profits.

Correct AnswerverifiedShow Answer

When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is

Correct AnswerverifiedShow Answer

Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by

Correct AnswerverifiedShow Answer

Table 14-10 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-10. This firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to

Correct AnswerverifiedShow Answer

Because there are many buyers and sellers in a perfectly competitive market, no one seller can influence the market price.

Correct AnswerverifiedShow Answer

Table 14-10 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-10. The marginal cost of producing the 4th unit is

Correct AnswerverifiedShow Answer

In the long run the market supply

Correct AnswerverifiedShow Answer

One of the defining characteristics of a perfectly competitive market is

Correct AnswerverifiedShow Answer

Table 14-15-a -Refer to Table 14-15-a. What is the lowest price at which this firm would operate in the short run?

Correct AnswerverifiedShow Answer

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