Question 1

The total revenue of a purely competitive firm from selling 6 units of output is $48. Based on this information, total revenue for 7 units of output must be

Accepted Answer

A)  $56.
B)  $54.
C)  $55.
D)  $336.E) B) and C)
F) C) and D)

Question 2

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $24, it will produce

Accepted Answer

A)  4 units at a loss of $150.
B)  6 units at a loss of $90.
C)  3 units at an economic profit of zero.
D)  4 units at a loss of $138.E) A) and B)
F) A) and C)

Question 3

As long as its total revenues are greater than its total costs, a firm will earn positive economic profits.

Accepted Answer

A) True 
 B)False

Question 4

The accompanying table shows cost data for a firm that is selling in a purely competitive market. If the product price is $290, the per-unit economic profit at the profit-maximizing output is

Accepted Answer

A)  $0
B)  $76
C)  $119
D)  $152E) A) and B)
F) All of the above

Question 5

The total revenue of a purely competitive firm from selling 50 units of output is $300. Based on this information, total revenue for 60 units of output must be

Accepted Answer

A)  $360.
B)  $306.
C)  $350.
D)  $1,800.E) B) and C)
F) A) and D)

Question 6

Assume the XYZ Corporation is producing 35 units of output. It is selling this output in a purely competitive market at $20 per unit. Its total fixed costs are $150 and its average variable cost is $12 at 35 units of output. This corporation

Accepted Answer

A)  should close down in the short run.
B)  is maximizing its profits.
C)  is realizing an economic profit of $280.
D)  is realizing an economic Profit of $130.E) A) and D)
F) A) and B) D

Question 7

Economists use the term imperfect competition to describe

Accepted Answer

A)  all industries that produce standardized products.
B)  any industry in which there is no nonprice competition.
C)  a pure monopoly only.
D)  those markets that are not purely competitive.E) B) and D)
F) C) and D)

Question 8

According to the accompanying diagram, to maximize profit or minimize losses, this firm will produce

Accepted Answer

A)  K units at price C.
B)  D units at price J.
C)  E units at price A.
D)  E units at price B.E) B) and D)
F) B) and C)

Question 9

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 500 units is $1.50. The average variable cost is $1.00. The market price of the product is $1.25. To maximize profits or minimize losses, the firm should

Accepted Answer

A)  continue producing 500 units.
B)  continue production, but produce less than 500 units.
C)  increase production to more than 500 units.
D)  shut down.E) A) and B)
F) B) and C)

Question 10

Refer to the accompanying graph. The firm will earn maximum total profits if it produces and sells quantity

Accepted Answer

A)  0 A.
B)  0 B.
C)  0 C.
D)  0 K.E) All of the above
F) B) and D)

Question 11

The table gives data for a purely competitive, profit-maximizing firm. Based on this information, in the short run how much is this firm earning in economic profit (or losing, as reflected by negative numbers) ?

Accepted Answer

A)  $10.
B)  $18.
C)  $28.
D)  $40.E) B) and C)
F) A) and B) C

Question 12

Which of the output levels in the accompanying graph is the profit-maximizing output level for this firm?

Accepted Answer

A)  Q₁
B)  Q₂
C)  Q₃
D)  Q₄E) A) and B)
F) A) and C)

Question 13

Given the data in the table, at what quantity would a purely competitive firm cover all of its costs and earn only normal profits?

Accepted Answer

A)  Q = 5
B)  Q = 15
C)  Q = 10
D)  Q = 20E) A) and B)
F) B) and D)

Question 14

The table shows the total costs for a purely competitive firm. If the product sells for $600 a unit, the firm's short run profit-maximizing (or loss-minimizing) output is

Accepted Answer

A)  3.
B)  0.
C)  1.
D)  4.E) All of the above
F) None of the above

Question 15

At P ₂ in the accompanying diagram, this firm will

Accepted Answer

A)  produce 44 units and realize an economic profit.
B)  produce 44 units and earn only a normal profit.
C)  produce 68 units and earn only a normal profit.
D)  shut down in the short run.E) A) and D)
F) A) and C)

Question 16

The accompanying table gives cost data for a firm that is selling in a purely competitive market. Which of the following tables gives the firm's short-run supply schedule?

Accepted Answer

A)   
B)   
C)   
D)   E) C) and D)
F) B) and D) C

Question 17

Assume a purely competitive firm is selling 200 units of output at $3 each. At this output, its total fixed cost is $100 and its total variable cost is $350. This firm

Accepted Answer

A)  is maximizing its profit.
B)  is making a profit, but not necessarily the maximum profit.
C)  is incurring losses.
D)  should shut down in the short run.E) None of the above
F) A) and C)

Question 18

An industry comprising 40 firms, each with about 2-3 percent of the total market for a differentiated product, is an example of

Accepted Answer

A)  monopolistic competition.
B)  oligopoly.
C)  pure monopoly.
D)  pure competition.E) B) and D)
F) A) and B)

Question 19

Refer to the short-run data in the accompanying graph. The profit-maximizing output for this firm is

Accepted Answer

A)  above 440 units.
B)  440 units.
C)  320 units.
D)  100 units.E) B) and C)
F) A) and B)

Question 20

The market for agricultural products such as wheat or corn would best be described by which market model?

Accepted Answer

A)  monopolistic competition
B)  pure competition
C)  pure monopoly
D)  oligopolyE) B) and D)
F) B) and C)

Exam 10: Pure Competition in the Short Run

The total revenue of a purely competitive firm from selling 6 units of output is $48. Based on this information, total revenue for 7 units of output must be

Correct AnswerverifiedShow Answer

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $24, it will produce

Correct AnswerverifiedShow Answer

As long as its total revenues are greater than its total costs, a firm will earn positive economic profits.

Correct AnswerverifiedShow Answer

The accompanying table shows cost data for a firm that is selling in a purely competitive market. If the product price is $290, the per-unit economic profit at the profit-maximizing output is

Correct AnswerverifiedShow Answer

The total revenue of a purely competitive firm from selling 50 units of output is $300. Based on this information, total revenue for 60 units of output must be

Correct AnswerverifiedShow Answer

Assume the XYZ Corporation is producing 35 units of output. It is selling this output in a purely competitive market at $20 per unit. Its total fixed costs are $150 and its average variable cost is $12 at 35 units of output. This corporation

Correct AnswerverifiedD

Economists use the term imperfect competition to describe

Correct AnswerverifiedShow Answer

According to the accompanying diagram, to maximize profit or minimize losses, this firm will produce

Correct AnswerverifiedShow Answer

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 500 units is $1.50. The average variable cost is $1.00. The market price of the product is $1.25. To maximize profits or minimize losses, the firm should

Correct AnswerverifiedShow Answer

Refer to the accompanying graph. The firm will earn maximum total profits if it produces and sells quantity

Correct AnswerverifiedShow Answer

The table gives data for a purely competitive, profit-maximizing firm. Based on this information, in the short run how much is this firm earning in economic profit (or losing, as reflected by negative numbers) ?

Correct AnswerverifiedC

Which of the output levels in the accompanying graph is the profit-maximizing output level for this firm?

Correct AnswerverifiedShow Answer

Given the data in the table, at what quantity would a purely competitive firm cover all of its costs and earn only normal profits?

Correct AnswerverifiedShow Answer

The table shows the total costs for a purely competitive firm. If the product sells for $600 a unit, the firm's short run profit-maximizing (or loss-minimizing) output is

Correct AnswerverifiedShow Answer

At P ₂ in the accompanying diagram, this firm will

Correct AnswerverifiedShow Answer

The accompanying table gives cost data for a firm that is selling in a purely competitive market. Which of the following tables gives the firm's short-run supply schedule?

Correct AnswerverifiedC

Assume a purely competitive firm is selling 200 units of output at $3 each. At this output, its total fixed cost is $100 and its total variable cost is $350. This firm

Correct AnswerverifiedShow Answer

An industry comprising 40 firms, each with about 2-3 percent of the total market for a differentiated product, is an example of

Correct AnswerverifiedShow Answer

Refer to the short-run data in the accompanying graph. The profit-maximizing output for this firm is

Correct AnswerverifiedShow Answer

The market for agricultural products such as wheat or corn would best be described by which market model?

Correct AnswerverifiedShow Answer

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D

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C

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C

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