Question 1

In the long run,an entrepreneur who owns a perfectly competitive firm will earn no income from that firm.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would result from a technological advance in a perfectly competitive market?

Accepted Answer

A)   The market demand curve will shift rightward.
B)   Consumers will benefit as the price declines.
C)   Producers will benefit as long-run profits rise.
D)   The market supply curve will shift leftward.
E)   In a constant-cost industry,the price will not change in the long run.F) A) and E)
G) None of the above

Question 3

Which of the following helps to classify an industry's market structure?

Accepted Answer

A)   the long-run equilibrium price
B)   the impact of industry expansion on input prices
C)   the existence of barriers to entry
D)   the shape of the short-run average total cost curve
E)   the existence of economic profit in the short runF) A) and B)
G) B) and E)

Question 4

If expansion of an industry's output causes a downward shift of firms' average total cost curves,

Accepted Answer

A)   each firm earns a long-run economic profit
B)   all of the following are correct
C)   there will be long-run economic profits
D)   it is a decreasing-cost industry
E)   it is an increasing-cost industryF) B) and C)
G) A) and E)

Question 5

In an increasing-cost industry,the long-run market supply curve is

Accepted Answer

A)   horizontal
B)   vertical
C)   upward sloping
D)   downward sloping
E)   nonexistentF) A) and C)
G) C) and D)

Question 6

In a constant-cost industry,the long-run market supply curve is

Accepted Answer

A)   horizontal
B)   vertical
C)   upward sloping
D)   downward sloping
E)   the same slope as the typical firm's supply curveF) All of the above
G) A) and C)

Question 7

A firm maximizes its profit by producing that quantity of output for which

Accepted Answer

A)   marginal revenue equals total revenue
B)   marginal revenue exceeds marginal cost by the greatest amount
C)   price is the greatest distance above average total cost
D)   the difference between total revenue and total cost is the greatest
E)   marginal cost equals average costF) A) and D)
G) A) and C)

Question 8

Suppose that a firm chose an output level where the total cost and total revenue curves intersect.At this level of output,

Accepted Answer

A)   the firm is maximizing profits
B)   the firm is minimizing losses
C)   profit is zero
D)   total revenue is maximized
E)   total cost is minimizedF) C) and E)
G) A) and B)

Question 9

In the long run,each perfectly competitive firm produces at the lowest point on

Accepted Answer

A)   its short-run average total cost curve
B)   its long-run average total cost curve
C)   its marginal cost curve
D)   both its short-run and long-run average total cost curves
E)   both its short-run average cost curve and its marginal cost curveF) A) and D)
G) D) and E)

Question 10

-The perfectly competitive firm pictured in Figure 9-19 will maximize profits by producing

Accepted Answer

A)   0 units.
B)   100 units.
C)   140 units.
D)   220 units.E) A) and D)
F) C) and D)

Question 11

If demand increases in a perfectly competitive market,

Accepted Answer

A)   then,in the short run,existing firms will find their profits diminishing,or their losses increasing
B)   existing firms will earn an economic profit
C)   the market price will decrease
D)   each firm will produce more along its short-run supply curve and total output will increase along the short-run market supply curve
E)   quantity demanded will increase and quantity supplied will decreaseF) A) and D)
G) A) and E)

Question 12

If price exceeds average total cost in the short run,then in the long run the market demand curve will shift to the right.

Accepted Answer

A) True 
 B)False

Question 13

The demand curve facing a typical firm in a perfectly competitive market is horizontal.

Accepted Answer

A) True 
 B)False

Question 14

The long-run supply curve is horizontal in a(n)

Accepted Answer

A)   increasing-cost industry
B)   constant-cost industry
C)   decreasing-cost industry
D)   labor-intensive industry
E)   capital-intensive industryF) C) and D)
G) B) and C)

Question 15

The difference between price and average total cost is

Accepted Answer

A)   a tax write off
B)   total economic profit (or loss) 
C)   fixed cost
D)   the profit (or loss) per unit of output
E)   average variable costF) B) and E)
G) A) and B)

Question 16

The term price taker is used to describe a situation in which consumers have no influence over the market price for a good or service and must take whatever price is set by the economically powerful firms.

Accepted Answer

A) True 
 B)False

Question 17

In the short run,a perfectly competitive firm is producing an output level where marginal cost equals $10,average total cost equals $7,and marginal revenue equals $9.Which of the following statements is correct?

Accepted Answer

A)   The firm is earning an economic profit which could be increased by raising output.
B)   The firm is earning an economic profit which could be increased by lowering output.
C)   The firm is maximizing its economic profit.
D)   The firm is suffering an economic loss which could be decreased by raising output.
E)   The firm is suffering an economic loss which could be decreased by lowering output.F) A) and B)
G) A) and C)

Question 18

Carla's Candy Store is maximizing profits by producing 1,000 pounds of candy per day.If Carla's fixed costs unexpectedly increase and the market price remains constant,then the profit-maximizing level of output

Accepted Answer

A)   is less than 1,000 pounds
B)   is still 1,000 pounds
C)   is more than 1,000 pounds
D)   will increase
E)   cannot be determined without more informationF) A) and D)
G) A) and B)

Question 19

In the short run,

Accepted Answer

A)   economic profit is always zero
B)   economic loss is always zero
C)   some inputs are fixed
D)   the number of firms in an industry can vary
E)   technology is indeterminateF) A) and B)
G) D) and E)

Question 20

-In Figure 9-13,assume the initial equilibrium at point A is disturbed by an increase in demand.If long-run equilibrium is established at point C,this is a(n)

Accepted Answer

A)   constant cost industry
B)   increasing-cost industry
C)   decreasing-cost industryD) A) and B)
E) A) and C)

Exam 9: Perfect Competition

A firm maximizes its profit by producing that quantity of output for which

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-The perfectly competitive firm pictured in Figure 9-19 will maximize profits by producing

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The term price taker is used to describe a situation in which consumers have no influence over the market price for a good or service and must take whatever price is set by the economically powerful firms.

Correct AnswerverifiedShow Answer

In the long run,each perfectly competitive firm produces at the lowest point on

Correct AnswerverifiedShow Answer

If expansion of an industry's output causes a downward shift of firms' average total cost curves,

Correct AnswerverifiedShow Answer

The difference between price and average total cost is

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The demand curve facing a typical firm in a perfectly competitive market is horizontal.

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Suppose that a firm chose an output level where the total cost and total revenue curves intersect.At this level of output,

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If demand increases in a perfectly competitive market,

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Which of the following would result from a technological advance in a perfectly competitive market?

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In the short run,

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-In Figure 9-13,assume the initial equilibrium at point A is disturbed by an increase in demand.If long-run equilibrium is established at point C,this is a(n)

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The long-run supply curve is horizontal in a(n)

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In an increasing-cost industry,the long-run market supply curve is

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In the long run,an entrepreneur who owns a perfectly competitive firm will earn no income from that firm.

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If price exceeds average total cost in the short run,then in the long run the market demand curve will shift to the right.

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In the short run,a perfectly competitive firm is producing an output level where marginal cost equals $10,average total cost equals $7,and marginal revenue equals $9.Which of the following statements is correct?

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Which of the following helps to classify an industry's market structure?

Correct AnswerverifiedShow Answer

Carla's Candy Store is maximizing profits by producing 1,000 pounds of candy per day.If Carla's fixed costs unexpectedly increase and the market price remains constant,then the profit-maximizing level of output

Correct AnswerverifiedShow Answer

In a constant-cost industry,the long-run market supply curve is

Correct AnswerverifiedShow Answer

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