Question 1

If the demand increases in a perfectly competitive market,the price will:

Accepted Answer

A)  temporarily increase.
B)  increase permanently.
C)  temporarily decrease.
D)  decrease permanently.E) B) and C)
F) A) and B)

Question 2

As long as market price remains above the average total cost,and the firm chooses the profit-maximizing level of output,it will:

Accepted Answer

A)  make profits.
B)  Any of these is possible.
C)  earn a loss.
D)  earn zero profits.E) A) and D)
F) None of the above

Question 3

The MC of a firm:

Accepted Answer

A)  crosses ATC at its minimum.
B)  crosses AVC at its minimum.
C)  crosses MR at the profit-maximizing level of output.
D)  All of these are true.E) A) and D)
F) A) and B)

Question 4

In reality,the long-run supply curve tends to be:

Accepted Answer

A)  perfectly elastic.
B)  perfectly inelastic.
C)  upward sloping.
D)  downward sloping.E) All of the above
F) C) and D)

Question 5

If a firm in a perfectly competitive market faces a market price of $7,and it decides to increase its production from 4,000 to 12,000 units,the firm's marginal revenue:

Accepted Answer

A)  will diminish once diminishing marginal product sets in.
B)  will rise once diminishing marginal product sets in.
C)  will stay the same.
D)  will increase from $28,000 to $84,000.E) All of the above
F) A) and B)

Question 6

For firms that sell one product in a perfectly competitive market,the market price:

Accepted Answer

A)  is constant,regardless of quantity sold.
B)  is equal to average revenue for a firm.
C)  is equal to marginal revenue for a firm.
D)  All of these are true.E) A) and B)
F) A) and C)

Question 7

When someone has market power,it means they:

Accepted Answer

A)  can noticeably affect the market price.
B)  have no control over the market price.
C)  can noticeably affect the market quantity available for sale.
D)  do not noticeably affect the market quantity offered for sale.E) B) and D)
F) B) and C)

Question 8

If the demand increases in a perfectly competitive market,in the short run the supply curve will:

Accepted Answer

A)  increase.
B)  decrease.
C)  not change.
D)  either increase or decrease.E) All of the above
F) A) and B)

Question 9

This graph represents the cost and revenue curves of a firm in a perfectly competitive market. 
According to the graph shown,if a firm is producing at Q2:

Accepted Answer

A)  profits are being maximized.
B)  average total costs are minimized.
C)  it is producing at an efficient scale.
D)  All of these are true.E) A) and D)
F) C) and D)

Question 10

For firms that sell one product in a perfectly competitive market,average revenue:

Accepted Answer

A)  is always greater than market price.
B)  is always less than market price.
C)  is always the same as market price.
D)  None of these is true.E) A) and D)
F) B) and C)

Question 11

If the market price ever drops below a firm's average variable costs at its profit-maximizing level of output:

Accepted Answer

A)  the firm should shut down immediately.
B)  the loss-minimizing quantity of output is zero.
C)  the firm is not earning enough revenue to cover the variable costs of production.
D)  All of these are true.E) None of the above
F) A) and B)

Question 12

This table shows price and quantity produced for a single firm in a perfectly competitive market. 
Given the information in the table shown,what is the average revenue when 24 units are produced?

Accepted Answer

A)  $240
B)  $10
C)  $24
D)  $2.40E) B) and D)
F) A) and B)

Question 13

In theory,the long-run supply curve for perfectly competitive market firms who are identical is:

Accepted Answer

A)  perfectly elastic.
B)  perfectly inelastic.
C)  upward sloping.
D)  downward sloping.E) A) and C)
F) B) and C)

Question 14

In the short run,the relevant costs for a firm to consider whether to shut down production are:

Accepted Answer

A)  average total costs.
B)  average variable costs.
C)  average fixed costs.
D)  fixed costs.E) A) and C)
F) B) and C)

Question 15

For firms that sell one product in a perfectly competitive market,marginal revenue:

Accepted Answer

A)  is the additional revenue gained from selling one more unit.
B)  is equal to average revenue.
C)  is equal to market price.
D)  All of these are true.E) A) and D)
F) B) and D)

Question 16

For a firm in a perfectly competitive market,if it produces where marginal cost exceeds marginal revenue:

Accepted Answer

A)  it should cut back production to increase profits.
B)  it should increase production to increase profits.
C)  it is producing a profit-maximizing quantity.
D)  The firm is not maximizing profits,but it is impossible to tell how quantity should be changed without more information.E) None of the above
F) A) and B)

Question 17

This graph represents the cost and revenue curves of a firm in a perfectly competitive market. 
According to the graph shown,what is the market price?

Accepted Answer

A)  P1
B)  P2
C)  P3
D)  Cannot tell from the graph.E) C) and D)
F) None of the above

Question 18

If firms are producing at a profit-maximizing level of output where the price is less than the average total cost:

Accepted Answer

A)  economic profits may be positive.
B)  accounting profits may be positive.
C)  All of these are true.
D)  accounting profits must be positive.E) B) and C)
F) A) and B)

Question 19

A competitive market is one in which:

Accepted Answer

A)  fully informed price-taking buyers and sellers easily trade a standardized good.
B)  few large sellers compete for a majority of the market share.
C)  government oversees its operation.
D)  None of these describe a competitive market.E) None of the above
F) B) and D)

Question 20

Standardized goods are:

Accepted Answer

A)  goods which are regulated by government quality standards.
B)  goods which are easily substitutable and not distinguishable.
C)  the most common type of good produced.
D)  those sold in markets with regulated price systems.E) All of the above
F) C) and D)

Exam 13: Perfect Competition

This table shows price and quantity produced for a single firm in a perfectly competitive market. Given the information in the table shown,what is the average revenue when 24 units are produced?

Correct AnswerverifiedShow Answer

The MC of a firm:

Correct AnswerverifiedShow Answer

If firms are producing at a profit-maximizing level of output where the price is less than the average total cost:

Correct AnswerverifiedShow Answer

Standardized goods are:

Correct AnswerverifiedShow Answer

In the short run,the relevant costs for a firm to consider whether to shut down production are:

Correct AnswerverifiedShow Answer

If a firm in a perfectly competitive market faces a market price of $7,and it decides to increase its production from 4,000 to 12,000 units,the firm's marginal revenue:

Correct AnswerverifiedShow Answer

A competitive market is one in which:

Correct AnswerverifiedShow Answer

For a firm in a perfectly competitive market,if it produces where marginal cost exceeds marginal revenue:

Correct AnswerverifiedShow Answer

For firms that sell one product in a perfectly competitive market,average revenue:

Correct AnswerverifiedShow Answer

For firms that sell one product in a perfectly competitive market,the market price:

Correct AnswerverifiedShow Answer

This graph represents the cost and revenue curves of a firm in a perfectly competitive market. According to the graph shown,what is the market price?

Correct AnswerverifiedShow Answer

If the market price ever drops below a firm's average variable costs at its profit-maximizing level of output:

Correct AnswerverifiedShow Answer

As long as market price remains above the average total cost,and the firm chooses the profit-maximizing level of output,it will:

Correct AnswerverifiedShow Answer

When someone has market power,it means they:

Correct AnswerverifiedShow Answer

For firms that sell one product in a perfectly competitive market,marginal revenue:

Correct AnswerverifiedShow Answer

In theory,the long-run supply curve for perfectly competitive market firms who are identical is:

Correct AnswerverifiedShow Answer

In reality,the long-run supply curve tends to be:

Correct AnswerverifiedShow Answer

This graph represents the cost and revenue curves of a firm in a perfectly competitive market. According to the graph shown,if a firm is producing at Q2:

Correct AnswerverifiedShow Answer

If the demand increases in a perfectly competitive market,in the short run the supply curve will:

Correct AnswerverifiedShow Answer

If the demand increases in a perfectly competitive market,the price will:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified