Question 1

Sam sells soybeans to a broker in Chicago,Illinois.Because the market for soybeans is generally considered to be competitive,Sam maximizes his profit by choosing

Accepted Answer

A)   to produce the quantity at which average variable cost is minimized.
B)   to produce the quantity at which average fixed cost is minimized.
C)   to sell at a price where marginal cost is equal to average total cost.
D)   the quantity at which market price is equal to Sam's marginal cost of production.E) A) and D)
F) B) and C)

Question 2

Table 13-14
The following table presents cost and revenue information for Bob's bakery production and sales.
 
-Refer to Table 13-14.Suppose that due to a decrease in the market demand for bread the market price of bread drops to $2.75.At this new price,if Bob produces and sells the profit-maximizing quantity,how much profit will he earn?

Accepted Answer

A)   $0.25
B)   $1.25
C)   $2.25
D)   The firm will lose $6.25.E) A) and B)
F) A) and C)

Question 3

Table 13-7
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 13-7.If the firm is currently producing 14 units,what would you advise the owners?

Accepted Answer

A)   decrease quantity to 13 units
B)   increase quantity to 17 units
C)   continue to operate at 14 units
D)   increase quantity to 16 unitsE) A) and C)
F) None of the above

Question 4

A profit-maximizing firm in a competitive market is able to sell its product for $7.At its current level of output,the firm's average total cost is $10.The firm's marginal cost curve crosses its marginal revenue curve at an output level of 9 units.The firm experiences a

Accepted Answer

A)   profit of more than $27.
B)   profit of exactly $27.
C)   loss of more than $27.
D)   loss of exactly $27.E) All of the above
F) A) and C)

Question 5

Table 13-3
 
-Refer to Table 13-3.For a firm operating in a competitive market,the price is

Accepted Answer

A)   $0.
B)   $7.
C)   $14.
D)   $21.E) None of the above
F) A) and B)

Question 6

Figure 13-1
Suppose that a firm in a competitive market has the following cost curves: 
-Refer to Figure 13-1.The firm will earn a negative economic profit but remain in business in the short run if the market price is

Accepted Answer

A)   above $6.30 but less than $8.
B)   above $6.30.
C)   less than $6.30 but more than $4.50.
D)   less than $4.50.E) A) and C)
F) None of the above

Question 7

In order to maximize profits in the short run,a firm should produce where

Accepted Answer

A)   marginal revenue exceeds marginal cost by the greatest amount.
B)   marginal cost is minimized.
C)   average total cost is minimized.
D)   marginal cost equals marginal revenue.E) A) and C)
F) C) and D)

Question 8

A firm operating in a perfectly competitive market earns zero economic profit in the long run but remains in business because the firm's revenues cover the business owners' opportunity costs.

Accepted Answer

A) True 
 B)False

Question 9

If the market elasticity of demand for potatoes is -0.3 in a perfectly competitive market,then the individual farmer's elasticity of demand

Accepted Answer

A)   will also be -0.3.
B)   depends on how large a crop the farmer produces.
C)   will range between -0.3 and -1.0.
D)   will be infinite.E) B) and C)
F) A) and B)

Question 10

Table 13-4
 
-Refer to Table 13-4.For a firm operating in a competitive market,the marginal revenue is

Accepted Answer

A)   $45.
B)   $30.
C)   $15.
D)   $0.E) B) and C)
F) A) and D)

Question 11

When market conditions in a competitive industry are such that firms cannot cover their total production costs,then

Accepted Answer

A)   the firms will suffer long-run economic losses.
B)   the firms will suffer short-run economic losses that will be exactly offset by long-run economic profits.
C)   some firms will exit the market,causing prices to rise until the remaining firms can cover their total production costs.
D)   all firms will go out of business,since consumers will not pay prices that enable firms to cover their total production costs.E) B) and D)
F) A) and C)

Question 12

Table 13-4
 
-Refer to Table 13-4.For a firm operating in a competitive market,the price is

Accepted Answer

A)   $45.
B)   $30.
C)   $15.
D)   $0.E) B) and D)
F) A) and B)

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) A) and D)
F) B) and D)

Question 14

Assume a firm in a competitive industry is producing 800 units of output,and it sells each unit for $6.Its average total cost is $4.Its profit is

Accepted Answer

A)   $-1,600.
B)   $1,600.
C)   $3,200.
D)   $8,000.E) C) and D)
F) B) and D)

Question 15

Scenario 13-3
Suppose a certain competitive firm is producing Q=500 units of output.The marginal cost of the 500th unit is $17,and the average total cost of producing 500 units is $12.The firm sells its output for $20.
-Refer to Scenario 13-3.At Q=499,the firm's total costs equal

Accepted Answer

A)   $5,983.
B)   $5,988.
C)   $5,995.
D)   $5,999.E) B) and D)
F) A) and D)

Question 16

In a perfectly competitive market,the process of entry and exit will end when firms face

Accepted Answer

A)   marginal revenue equal to long-run average total cost.
B)   total revenue equal to average total cost.
C)   average revenue greater than marginal cost.
D)   accounting profits equal to zero.E) A) and B)
F) A) and D)

Question 17

Which of these curves is the competitive firm's short-run supply curve?

Accepted Answer

A)   the average variable cost curve above marginal cost
B)   the average total cost curve above marginal cost
C)   the marginal cost curve above average variable cost
D)   the average fixed cost curveE) B) and C)
F) A) and D)

Question 18

When a restaurant stays open for lunch service even though few customers patronize the restaurant for lunch,which of the following principles is (are) best demonstrated? (i) Fixed costs are sunk in the short run.
(ii) In the short run,only fixed costs are important to the decision to stay open for lunch.
(iii) If revenue exceeds variable cost,the restaurant owner is making a smart decision to remain open for lunch.

Accepted Answer

A)   (i) and (ii) only
B)   (ii) and (iii) only
C)   (i) and (iii) only
D)   (i) ,(ii) ,and (iii) E) B) and C)
F) A) and C)

Question 19

A firm's marginal cost has a minimum value of $2,its average variable cost has a minimum value of $4,and its average total cost has a minimum value of $5.Then the firm will shut down if the price of its product is less than

Accepted Answer

A)   $5 but more than $2.
B)   $5.
C)   $4.
D)   There is not enough information given to answer the question.E) None of the above
F) A) and D)

Question 20

When fixed costs are ignored because they are irrelevant to a business's production decision,they are called

Accepted Answer

A)   explicit costs.
B)   implicit costs.
C)   sunk costs.
D)   opportunity costs.E) A) and B)
F) A) and C)

Exam 13: Firms in Competitive Markets

When market conditions in a competitive industry are such that firms cannot cover their total production costs,then

Correct Answer
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When fixed costs are ignored because they are irrelevant to a business's production decision,they are called

Correct Answer
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Table 13-7 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-7.If the firm is currently producing 14 units,what would you advise the owners?

Correct Answer
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Sam sells soybeans to a broker in Chicago,Illinois.Because the market for soybeans is generally considered to be competitive,Sam maximizes his profit by choosing

Correct Answer
verified

If the market elasticity of demand for potatoes is -0.3 in a perfectly competitive market,then the individual farmer's elasticity of demand

Correct Answer
verified

Figure 13-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 13-1.The firm will earn a negative economic profit but remain in business in the short run if the market price is

Correct Answer
verified

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

A firm operating in a perfectly competitive market earns zero economic profit in the long run but remains in business because the firm's revenues cover the business owners' opportunity costs.

Correct Answer
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Correct Answer
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A profit-maximizing firm in a competitive market is able to sell its product for $7.At its current level of output,the firm's average total cost is $10.The firm's marginal cost curve crosses its marginal revenue curve at an output level of 9 units.The firm experiences a

Correct Answer
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Correct Answer
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Scenario 13-3 Suppose a certain competitive firm is producing Q=500 units of output.The marginal cost of the 500th unit is $17,and the average total cost of producing 500 units is $12.The firm sells its output for $20. -Refer to Scenario 13-3.At Q=499,the firm's total costs equal

Correct Answer
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Table 13-4 -Refer to Table 13-4.For a firm operating in a competitive market,the marginal revenue is

Correct Answer
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Table 13-3 -Refer to Table 13-3.For a firm operating in a competitive market,the price is

Correct Answer
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Assume a firm in a competitive industry is producing 800 units of output,and it sells each unit for $6.Its average total cost is $4.Its profit is

Correct Answer
verified

Table 13-4 -Refer to Table 13-4.For a firm operating in a competitive market,the price is

Correct Answer
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In order to maximize profits in the short run,a firm should produce where

Correct Answer
verified

A firm's marginal cost has a minimum value of $2,its average variable cost has a minimum value of $4,and its average total cost has a minimum value of $5.Then the firm will shut down if the price of its product is less than

Correct Answer
verified

Which of these curves is the competitive firm's short-run supply curve?

Correct Answer
verified

In a perfectly competitive market,the process of entry and exit will end when firms face

Correct Answer
verified

Exam 13: Firms in Competitive Markets

When market conditions in a competitive industry are such that firms cannot cover their total production costs,then

Correct AnswerverifiedShow Answer

When fixed costs are ignored because they are irrelevant to a business's production decision,they are called

Correct AnswerverifiedShow Answer

Table 13-7 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-7.If the firm is currently producing 14 units,what would you advise the owners?

Correct AnswerverifiedShow Answer

Sam sells soybeans to a broker in Chicago,Illinois.Because the market for soybeans is generally considered to be competitive,Sam maximizes his profit by choosing

Correct AnswerverifiedShow Answer

If the market elasticity of demand for potatoes is -0.3 in a perfectly competitive market,then the individual farmer's elasticity of demand

Correct AnswerverifiedShow Answer

Figure 13-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 13-1.The firm will earn a negative economic profit but remain in business in the short run if the market price is

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

A firm operating in a perfectly competitive market earns zero economic profit in the long run but remains in business because the firm's revenues cover the business owners' opportunity costs.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A profit-maximizing firm in a competitive market is able to sell its product for $7.At its current level of output,the firm's average total cost is $10.The firm's marginal cost curve crosses its marginal revenue curve at an output level of 9 units.The firm experiences a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Scenario 13-3 Suppose a certain competitive firm is producing Q=500 units of output.The marginal cost of the 500th unit is $17,and the average total cost of producing 500 units is $12.The firm sells its output for $20. -Refer to Scenario 13-3.At Q=499,the firm's total costs equal

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Table 13-4 -Refer to Table 13-4.For a firm operating in a competitive market,the marginal revenue is

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Table 13-3 -Refer to Table 13-3.For a firm operating in a competitive market,the price is

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Assume a firm in a competitive industry is producing 800 units of output,and it sells each unit for $6.Its average total cost is $4.Its profit is

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Table 13-4 -Refer to Table 13-4.For a firm operating in a competitive market,the price is

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In order to maximize profits in the short run,a firm should produce where

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A firm's marginal cost has a minimum value of $2,its average variable cost has a minimum value of $4,and its average total cost has a minimum value of $5.Then the firm will shut down if the price of its product is less than

Correct AnswerverifiedShow Answer

Which of these curves is the competitive firm's short-run supply curve?

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In a perfectly competitive market,the process of entry and exit will end when firms face

Correct AnswerverifiedShow Answer

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