Question 1

Graphically, producer surplus is the area:

Accepted Answer

A)  above the equilibrium price and below the demand curve.
B)  below the equilibrium price and below the supply curve.
C)  above the supply curve and below the demand curve.
D)  below the equilibrium price and above the supply curve.
E)  below the equilibrium price and above the demand curve.F) None of the above
G) A) and B)

Question 2

In the short run, the firm's break-even point is:

Accepted Answer

A)  the minimum point of the firm's demand curve.
B)  the minimum point of the firm's average-total-cost curve.
C)  the minimum point of the firm's average-variable-cost curve.
D)  the minimum point of the firm's marginal-cost curve.
E)  the minimum point on the average-fixed-cost curve.F) A) and E)
G) A) and D)

Question 3

At the twenty-fifth anniversary of the Woodstock Festival in 1994, there were many vendors who sold tie-dyed t-shirts.No matter where one went, each vendor was selling these t-shirts for $15 apiece.Which market structure model would best characterize such a situation?

Accepted Answer

A)  Perfect competition
B)  Monopolistic competition
C)  Monopoly
D)  Oligopoly
E)  DuopolyF) C) and D)
G) B) and C)

Question 4

Which of the following is true of the model of perfect competition?

Accepted Answer

A)  There is a high degree of product differentiation.
B)  Consumers do not have adequate information concerning the prices and quality of products in the market.
C)  There are significant barriers to entry and exit.
D)  There are only a few, large firms in the market.
E)  An individual firm cannot affect the market price.F) A) and C)
G) C) and D)

Question 5

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 23.2  MC: Marginal cost curve
MR: Marginal revenue curve
ATC: Average-total-cost curve
AVC: Average-variable-cost curve
Refer to Figure 23.2.What is the profit-maximizing price and output level?

Accepted Answer

A)  $35 and 10 units
B)  $50 and 15 units
C)  $50 and 20 units
D)  $20 and 20 units
E)  $35 and 20 unitsF) B) and E)
G) A) and E)

Question 6

The table given below shows the price of each unit of the product manufactured by a firm and the marginal cost of producing different units of the output. Table: 23.1
 Refer to Table 23.1.If the market price of the good falls to $0.80 per unit, the firm:

Accepted Answer

A)  should decrease its output to seven units.
B)  should decrease its output to seven Units.
C)  should increase its output to ten units.
D)  should produce nine units.
E)  should keep its output level unchanged.F) A) and C)
G) A) and B)

Question 7

Which of the following statements concerning perfect competition is not true?

Accepted Answer

A)  Firms are price takers.
B)  The demand curve facing the individual firm is horizontal.
C)  The firm's demand curve is identical to its marginal revenue curve.
D)  The firms produce differentiated products.
E)  If the firm raises its price, it will lose all of its customers.F) All of the above
G) A) and B)

Question 8

One method that firms in many nations use to exit the market is the use of:

Accepted Answer

A)  antitrust laws.
B)  the uniform commercial code.
C)  bankruptcy laws.
D)  statutes laws.
E)  the federal code.F) B) and D)
G) B) and E)

Question 9

The table given below shows the price of each unit of the product manufactured by a firm and the marginal cost of producing different units of the output. Table: 23.1
 According to the information in Table 23.1, the marginal revenue of the firm:

Accepted Answer

A)  is equal to the marginal cost at each level of output.
B)  is equal to price times output.
C)  is equal to price times marginal cost.
D)  is equal to $1 at all levels of the output.
E)  decreases with an increase in output.F) C) and E)
G) A) and B)

Question 10

Under the long-run equilibrium for perfectly competitive markets without any government intervention:

Accepted Answer

A)  producer surplus is greater than consumer surplus.
B)  consumer surplus is greater than producer surplus.
C)  the sum of consumer and producer surplus is maximized.
D)  consumer surplus is maximized.
E)  producer surplus is maximized.F) B) and C)
G) A) and C)

Question 11

Economic efficiency is achieved when the price of a unit of a commodity is equal to the marginal cost of producing that unit.

Accepted Answer

A) True 
 B)False

Question 12

If the market price of oats is $2.5 per bushel and a farmer decides to sell at $2.8 per bushel, he is likely to sell:

Accepted Answer

A)  more than 5 bushels per day.
B)  more than 10 bushels per day.
C)  less than 5 bushels per day.
D)  10 bushels per day.
E)  nothing.F) C) and D)
G) D) and E)

Question 13

At an output level above the profit-maximizing one for a perfectly competitive firm, a reduction in output will:

Accepted Answer

A)  reduce total revenue more than total cost.
B)  reduce total cost more than total revenue.
C)  increase total revenue more than total cost.
D)  increase total cost more than total revenue.
E)  decrease total revenue and total cost by the same amount.F) A) and E)
G) A) and C)

Question 14

If at the profit maximizing level of output, the AR curve lies below the ATC curve in the short run, the firm is earning positive economic profit.

Accepted Answer

A) True 
 B)False

Question 15

A perfectly competitive firm decides to shut down if:

Accepted Answer

A)  the price falls below the average-total-cost.
B)  average revenue falls below the average-variable-cost.
C)  the price falls below the marginal cost.
D)  the average revenue curve lies below the marginal cost curve.
E)  the total revenue is less than total cost.F) A) and D)
G) A) and C)

Question 16

A perfectly competitive firm incurs loss in the short run if at the profit maximizing level of output:

Accepted Answer

A)  the marginal revenue curve lies below the marginal cost curve.
B)  the marginal revenue curve lies above the average revenue curve.
C)  the average cost curve lies below the average revenue curve.
D)  the average revenue curve lies below the average cost curve.
E)  marginal revenue curve lies above the marginal cost curve.F) B) and E)
G) A) and B)

Question 17

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 23.2  MC: Marginal cost curve
MR: Marginal revenue curve
ATC: Average-total-cost curve
AVC: Average-variable-cost curve
Refer to Figure 23.2.What is the firm's total fixed cost at the profit-maximizing output level?

Accepted Answer

A)  $400
B)  $300
C)  $600
D)  $450
E)  $500F) B) and E)
G) B) and C)

Question 18

The following figure shows equilibrium at the industry and firm level. Figure 23.6 1, S2, S3 are the market supply curves. D1 and D2 are the market demand curves. MC is the marginal cost curve of the firm. MR1 and MR2 are the marginal revenue curves of the firm. ATC is the average-total-cost curve of the firm. According to Figure 23.6, a shift of the S curves in the graph on the left side represents: A) an increased supply because the firm produces more. B) an increased supply because more firms are producing. C) an increased supply resulting from a larger number of customers. D) an increased supply resulting from a lower demand. E) an increased supply resulting from a lower price." class="answers-bank-image d-inline" rel="preload" > In the figure,
S1, S2, S3 are the market supply curves.
D1 and D2 are the market demand curves.
MC is the marginal cost curve of the firm.
MR1 and MR2 are the marginal revenue curves of the firm.
ATC is the average-total-cost curve of the firm.
According to Figure 23.6, a shift of the S curves in the graph on the left side represents:

Accepted Answer

A)  an increased supply because the firm produces more.
B)  an increased supply because more firms are producing.
C)  an increased supply resulting from a larger number of customers.
D)  an increased supply resulting from a lower demand.
E)  an increased supply resulting from a lower price.F) C) and E)
G) B) and C)

Question 19

A firm will shut down permanently if total revenue is not sufficient to pay for total costs in the long run.

Accepted Answer

A) True 
 B)False

Question 20

Under perfect competition, existing firms leave the market in the long run if the price falls below total fixed cost.

Accepted Answer

A) True 
 B)False

Exam 44: Perfect Competition

A firm will shut down permanently if total revenue is not sufficient to pay for total costs in the long run.

Correct Answer
verified

The table given below shows the price of each unit of the product manufactured by a firm and the marginal cost of producing different units of the output. Table: 23.1 According to the information in Table 23.1, the marginal revenue of the firm:

Correct Answer
verified

Which of the following is true of the model of perfect competition?

Correct Answer
verified

A perfectly competitive firm incurs loss in the short run if at the profit maximizing level of output:

Correct Answer
verified

At the twenty-fifth anniversary of the Woodstock Festival in 1994, there were many vendors who sold tie-dyed t-shirts.No matter where one went, each vendor was selling these t-shirts for $15 apiece.Which market structure model would best characterize such a situation?

Correct Answer
verified

In the short run, the firm's break-even point is:

Correct Answer
verified

Under perfect competition, existing firms leave the market in the long run if the price falls below total fixed cost.

Correct Answer
verified

A perfectly competitive firm decides to shut down if:

Correct Answer
verified

Correct Answer
verified

At an output level above the profit-maximizing one for a perfectly competitive firm, a reduction in output will:

Correct Answer
verified

Graphically, producer surplus is the area:

Correct Answer
verified

If at the profit maximizing level of output, the AR curve lies below the ATC curve in the short run, the firm is earning positive economic profit.

Correct Answer
verified

One method that firms in many nations use to exit the market is the use of:

Correct Answer
verified

If the market price of oats is $2.5 per bushel and a farmer decides to sell at $2.8 per bushel, he is likely to sell:

Correct Answer
verified

The table given below shows the price of each unit of the product manufactured by a firm and the marginal cost of producing different units of the output. Table: 23.1 Refer to Table 23.1.If the market price of the good falls to $0.80 per unit, the firm:

Correct Answer
verified

Which of the following statements concerning perfect competition is not true?

Correct Answer
verified

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 23.2 MC: Marginal cost curve MR: Marginal revenue curve ATC: Average-total-cost curve AVC: Average-variable-cost curve Refer to Figure 23.2.What is the profit-maximizing price and output level?

Correct Answer
verified

Correct Answer
verified

Under the long-run equilibrium for perfectly competitive markets without any government intervention:

Correct Answer
verified

Economic efficiency is achieved when the price of a unit of a commodity is equal to the marginal cost of producing that unit.

Correct Answer
verified

Exam 44: Perfect Competition

A firm will shut down permanently if total revenue is not sufficient to pay for total costs in the long run.

Correct AnswerverifiedShow Answer

The table given below shows the price of each unit of the product manufactured by a firm and the marginal cost of producing different units of the output. Table: 23.1 According to the information in Table 23.1, the marginal revenue of the firm:

Correct AnswerverifiedShow Answer

Which of the following is true of the model of perfect competition?

Correct AnswerverifiedShow Answer

A perfectly competitive firm incurs loss in the short run if at the profit maximizing level of output:

Correct AnswerverifiedShow Answer

At the twenty-fifth anniversary of the Woodstock Festival in 1994, there were many vendors who sold tie-dyed t-shirts.No matter where one went, each vendor was selling these t-shirts for $15 apiece.Which market structure model would best characterize such a situation?

Correct AnswerverifiedShow Answer

In the short run, the firm's break-even point is:

Correct AnswerverifiedShow Answer

Under perfect competition, existing firms leave the market in the long run if the price falls below total fixed cost.

Correct AnswerverifiedShow Answer

A perfectly competitive firm decides to shut down if:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

At an output level above the profit-maximizing one for a perfectly competitive firm, a reduction in output will:

Correct AnswerverifiedShow Answer

Graphically, producer surplus is the area:

Correct AnswerverifiedShow Answer

If at the profit maximizing level of output, the AR curve lies below the ATC curve in the short run, the firm is earning positive economic profit.

Correct AnswerverifiedShow Answer

One method that firms in many nations use to exit the market is the use of:

Correct AnswerverifiedShow Answer

If the market price of oats is $2.5 per bushel and a farmer decides to sell at $2.8 per bushel, he is likely to sell:

Correct AnswerverifiedShow Answer

The table given below shows the price of each unit of the product manufactured by a firm and the marginal cost of producing different units of the output. Table: 23.1 Refer to Table 23.1.If the market price of the good falls to $0.80 per unit, the firm:

Correct AnswerverifiedShow Answer

Which of the following statements concerning perfect competition is not true?

Correct AnswerverifiedShow Answer

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 23.2 MC: Marginal cost curve MR: Marginal revenue curve ATC: Average-total-cost curve AVC: Average-variable-cost curve Refer to Figure 23.2.What is the profit-maximizing price and output level?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under the long-run equilibrium for perfectly competitive markets without any government intervention:

Correct AnswerverifiedShow Answer

Economic efficiency is achieved when the price of a unit of a commodity is equal to the marginal cost of producing that unit.

Correct AnswerverifiedShow Answer

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