Question 1

Which of the following is true?

Accepted Answer

A)  Profit per unit is price minus AVC.
B)  Total economic profit is per unit profit times quantity.
C)  If price is less than ATC, the firm will shut down in the short run.
D)  If price is less than marginal cost, the perfectly competitive firm should raise the price and increase output.E) B) and C)
F) C) and D)

Question 2

A decrease in production costs for firms in a perfectly competitive market will cause a(n) :

Accepted Answer

A)  permanent increase in price.
B)  economic loss for firms.
C)  decrease in demand.
D)  rightward shift in the market supply curve in the long run.E) All of the above
F) None of the above

Question 3

Suppose that automobile buyers in the southern part of a town have no idea what prices are being paid in the northern part of town.This situation violates the perfect competition assumption of:

Accepted Answer

A)  many buyers and sellers.
B)  identical goods.
C)  complete information.
D)  no discrimination.E) C) and D)
F) None of the above

Question 4

Use the following to answer questions 
-(Exhibit: Total Revenue, Total Costs, and Economic Profit) Which of the following is (are) true?

Accepted Answer

A)  Total revenue and total cost are equal at approximately 8,300 pounds of output.
B)  Marginal cost and marginal revenue are equal at approximately 8,300 pounds of output.
C)  At approximately 4,500 pounds of output, marginal cost is zero and increasing returns sets in.
D)  All of the above are true.E) All of the above
F) B) and C)

Question 5

A perfectly competitive firm is a:

Accepted Answer

A)  price taker.
B)  price searcher.
C)  cost maximizer.
D)  quantity taker.E) B) and D)
F) All of the above

Question 6

In perfect competition, P = MR = MC because that is where firms maximize profits.

Accepted Answer

A) True 
 B)False

Question 7

In the short run, if AVC < P < ATC, a perfectly competitive firm:

Accepted Answer

A)  produces output and earns an economic profit.
B)  produces output and incurs an economic loss.
C)  does not produce output and earns an economic profit.
D)  does not produce output and earns zero economic profit.E) All of the above
F) C) and D)

Question 8

Use the following to answer questions 4, the firm will produce _______ in the short run. A) q2 and break even B) q2 and make an economic profit C) q3 and make an economic profit per unit equal to the vertical distance between P4 and Curve N at that quantity D) q2 and make an economic profit per unit equal to the vertical distance between P4 and Curve O at that quantity" class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market.If the market price is P4, the firm will produce _______ in the short run.

Accepted Answer

A)  q2 and break even
B)  q2 and make an economic profit
C)  q3 and make an economic profit per unit equal to the vertical distance between P4 and Curve N at that quantity
D)  q2 and make an economic profit per unit equal to the vertical distance between P4 and Curve O at that quantityE) B) and C)
F) A) and D)

Question 9

Accountants use only _______ costs in their computations of short-run total cost.

Accepted Answer

A)  opportunity
B)  implicit
C)  explicit costs
D)  variableE) A) and B)
F) B) and C)

Question 10

A firm's total revenue curve in perfect competition is an upward-sloping straight line.

Accepted Answer

A) True 
 B)False

Question 11

The shutdown point is:

Accepted Answer

A)  the point at which economic profit is zero.
B)  the minimum level of AVC.
C)  the intersection of the MC and ATC curves.
D)  the minimum level of AFC.E) B) and D)
F) B) and C)

Question 12

Which of the following is true in a perfectly competitive market?

Accepted Answer

A)  One unit of a good or service cannot be differentiated from any other on any basis.
B)  Brand preferences exist but are very slight.
C)  Barriers to entry are relatively strong.
D)  Information is costly.E) A) and B)
F) B) and C)

Question 13

Which of the following is false?

Accepted Answer

A)  Economists believe that they can understand most markets by applying the model of demand and supply.
B)  When economists apply the model of demand and supply, they are using the model of perfect competition.
C)  Many changes in the past 20 years have made markets more competitive by increasing ease of entry.
D)  Price-taking firms produce differentiated goods.E) A) and D)
F) C) and D)

Question 14

Use the following to answer questions   Total Cost for a Perfectly Competitive Firm  Quantity  per  Total  period  Cost 0$101$162$203$224$245$256$277$308$349$3910$45\begin{array}{l}	ext { Total Cost for a Perfectly Competitive Firm }\\\begin{array} { c c } \begin{array} { cc } 	ext { Quantity } \	ext { per } &\end{array} & 	ext { Total }    \	ext { period }&	ext { Cost } \0 & \$ 10 \1 & \$ 16 \2 & \$ 20 \3 & \$ 22 \4 & \$ 24 \5 & \$ 25 \6 & \$ 27 \7 & \$ 30 \8 & \$ 34 \9 & \$ 39 \10 & \$ 45\end{array}\end{array} Total Cost for a Perfectly Competitive Firm  Quantity  per ​​ period 012345678910​ Total  Cost $10$16$20$22$24$25$27$30$34$39$45​​ 
-(Exhibit: Total Cost for a Perfectly Competitive Firm) If the market price is $4.50, profit at the profit-maximizing quantity of output is:

Accepted Answer

A)  $2.00.
B)  $4.50.
C)  $5.00.
D)  $34.00. E) B) and C)
F) C) and D)

Question 15

The slope of the total revenue curve is:

Accepted Answer

A)  net revenue.
B)  marginal profit.
C)  net profit.
D)  marginal revenue.E) A) and C)
F) All of the above

Question 16

Economic profit cannot exist under perfect competition.

Accepted Answer

A) True 
 B)False

Question 17

At any level of output less than the most profitable one, an increase in output adds more to a firm's total cost than to its total revenue.

Accepted Answer

A) True 
 B)False

Question 18

Use the following to answer questions 
 3 would be the _______-run supply curve if _______. A) long; expanded production leaves production costs unchanged B) short; expanded production changes production costs C) long; there is no entry into or exit from the industry D) medium; costs are changed if there is easy entry" class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Supply: Short and Long Run) S3 would be the _______-run supply curve if _______.

Accepted Answer

A)  long; expanded production leaves production costs unchanged
B)  short; expanded production changes production costs
C)  long; there is no entry into or exit from the industry
D)  medium; costs are changed if there is easy entryE) C) and D)
F) A) and D)

Question 19

Use the following to answer questions 2 is to the left of the shutdown point." class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market.Which of the following statements is true?

Accepted Answer

A)  AFC is represented in this exhibit by the vertical distance between Curve M and Curve N at any level of output.
B)  AFC is represented in this exhibit by the vertical distance between Curve N and Curve O at any level of output.
C)  This exhibit illustrates the long run because all costs are variable.
D)  Quantity q2 is to the left of the shutdown point.E) All of the above
F) B) and C)

Question 20

In a perfectly competitive industry, a change in fixed cost will have no effect on price in the long run.

Accepted Answer

A) True 
 B)False

Exam 9: The Nature and Creation of Money

Which of the following is false?

Correct Answer
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Economic profit cannot exist under perfect competition.

Correct Answer
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The slope of the total revenue curve is:

Correct Answer
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A decrease in production costs for firms in a perfectly competitive market will cause a(n) :

Correct Answer
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Use the following to answer questions -(Exhibit: Total Revenue, Total Costs, and Economic Profit) Which of the following is (are) true?

Correct Answer
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A perfectly competitive firm is a:

Correct Answer
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In the short run, if AVC < P < ATC, a perfectly competitive firm:

Correct Answer
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Correct Answer
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At any level of output less than the most profitable one, an increase in output adds more to a firm's total cost than to its total revenue.

Correct Answer
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Use the following to answer questions -(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market.Which of the following statements is true?

Correct Answer
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The shutdown point is:

Correct Answer
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In perfect competition, P = MR = MC because that is where firms maximize profits.

Correct Answer
verified

Accountants use only _______ costs in their computations of short-run total cost.

Correct Answer
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A firm's total revenue curve in perfect competition is an upward-sloping straight line.

Correct Answer
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Suppose that automobile buyers in the southern part of a town have no idea what prices are being paid in the northern part of town.This situation violates the perfect competition assumption of:

Correct Answer
verified

Use the following to answer questions -(Exhibit: Supply: Short and Long Run) S₃ would be the _-run supply curve if _.

Correct Answer
verified

In a perfectly competitive industry, a change in fixed cost will have no effect on price in the long run.

Correct Answer
verified

Use the following to answer questions -(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market.If the market price is P₄, the firm will produce _______ in the short run.

Correct Answer
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Which of the following is true?

Correct Answer
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Which of the following is true in a perfectly competitive market?

Correct Answer
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Exam 9: The Nature and Creation of Money

Which of the following is false?

Correct AnswerverifiedShow Answer

Economic profit cannot exist under perfect competition.

Correct AnswerverifiedShow Answer

The slope of the total revenue curve is:

Correct AnswerverifiedShow Answer

A decrease in production costs for firms in a perfectly competitive market will cause a(n) :

Correct AnswerverifiedShow Answer

Use the following to answer questions -(Exhibit: Total Revenue, Total Costs, and Economic Profit) Which of the following is (are) true?

Correct AnswerverifiedShow Answer

A perfectly competitive firm is a:

Correct AnswerverifiedShow Answer

In the short run, if AVC < P < ATC, a perfectly competitive firm:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

At any level of output less than the most profitable one, an increase in output adds more to a firm's total cost than to its total revenue.

Correct AnswerverifiedShow Answer

Use the following to answer questions -(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market.Which of the following statements is true?

Correct AnswerverifiedShow Answer

The shutdown point is:

Correct AnswerverifiedShow Answer

In perfect competition, P = MR = MC because that is where firms maximize profits.

Correct AnswerverifiedShow Answer

Accountants use only _______ costs in their computations of short-run total cost.

Correct AnswerverifiedShow Answer

A firm's total revenue curve in perfect competition is an upward-sloping straight line.

Correct AnswerverifiedShow Answer

Suppose that automobile buyers in the southern part of a town have no idea what prices are being paid in the northern part of town.This situation violates the perfect competition assumption of:

Correct AnswerverifiedShow Answer

Use the following to answer questions -(Exhibit: Supply: Short and Long Run) S3 would be the _______-run supply curve if _______.

Correct AnswerverifiedShow Answer

In a perfectly competitive industry, a change in fixed cost will have no effect on price in the long run.

Correct AnswerverifiedShow Answer

Use the following to answer questions -(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market.If the market price is P4, the firm will produce _______ in the short run.

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

Which of the following is true in a perfectly competitive market?

Correct AnswerverifiedShow Answer

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Use the following to answer questions -(Exhibit: Supply: Short and Long Run) S₃ would be the _-run supply curve if _.

Correct Answer
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Correct Answer
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Use the following to answer questions -(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market.If the market price is P₄, the firm will produce _______ in the short run.

Correct Answer
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Correct Answer
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Correct Answer
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