Question 1

The figure given below shows the demand and cost curves of a perfectly competitive firm. Figure: 9.4  D: Demand curve
MC: Marginal cost curve
ATC: Average-total cost curve
AVC: Average-variable-cost curve
Refer to Figure 9.4.The presence of the average-variable-cost curve suggests that the firm is operating:

Accepted Answer

A)  in the short run.
B)  in the long run.
C)  at a gain.
D)  in a monopoly.
E)  at a zero profit.F) A) and C)
G) C) and E)

Question 2

In the short run a competitive firm is said to break-even if, at the equilibrium:

Accepted Answer

A)  price is equal to marginal revenue.
B)  price is equal to average revenue.
C)  price is equal to average variable cost.
D)  price is equal to the average total cost.
E)  price is equal to marginal cost.F) A) and E)
G) A) and D)

Question 3

Some competitive firms are willing to operate at a loss in the short run because their revenues are at least able to cover their variable costs.

Accepted Answer

A) True 
 B)False

Question 4

The figure given below shows the revenue and the cost curves of a perfectly competitive firm. Figure 9.3  In Figure 9.3, the profit maximizing output of the firm is _____ units.

Accepted Answer

A)  4
B)  16
C)  11
D)  7
E)  14F) A) and D)
G) A) and C)

Question 5

If a firm in a perfectly competitive market raises its price:

Accepted Answer

A)  it will sell less but earn more revenue.
B)  it will sell less but earn the same revenue.
C)  it will sell exactly the same amount.
D)  whether it sells less or more depends on elasticity.
E)  it will sell nothing.F) D) and E)
G) C) and D)

Question 6

Some competitive firms are willing to operate at a loss in the short run because:

Accepted Answer

A)  their average variable cost is less than the price.
B)  their fixed costs are less than their current losses.
C)  their average total cost is less than the price.
D)  they do not attempt to maximize profits or minimize losses.
E)  their revenues are at least able to cover their fixed costs.F) None of the above
G) B) and D)

Question 7

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 9.2  MC: Marginal cost curve
MR: Marginal revenue curve
ATC: Average-total-cost curve
AVC: Average-variable-cost curve
Refer to Figure 9.2.If the market price falls to $10, the firm would produce:

Accepted Answer

A)  nothing.
B)  15 units.
C)  5 units.
D)  10 units.
E)  20 units.F) None of the above
G) A) and D)

Question 8

If significant barriers to entry exist in a market, then the market is best described through the model of perfect competition.

Accepted Answer

A) True 
 B)False

Question 9

The perfectly competitive producer's demand curve is:

Accepted Answer

A)  perfectly elastic.
B)  the market-demand curve.
C)  downward sloping but more elastic than the market-demand curve.
D)  perfectly inelastic.
E)  vertical.F) C) and D)
G) A) and B)

Question 10

Which of the following faces a horizontal demand curve?

Accepted Answer

A)  A monopolistic firm
B)  An oligopolistic firm
C)  A perfectly competitive firm
D)  A monopolistically competitive firm
E)  A duopolistic firmF) B) and E)
G) A) and E)

Question 11

Why do the perfectly competitive firms earn only normal profits in the long run?

Accepted Answer

A)  Entry or exit is barred
B)  Firms produce identical products
C)  A large number of buyers and sellers exist in the market
D)  Aggregate demand remains constant
E)  There is free entry and exit of firmsF) A) and E)
G) None of the above

Question 12

When the perfectly competitive firm's demand curve lies above its average total cost curve, the firm incurs an economic loss at that level of output.

Accepted Answer

A) True 
 B)False

Question 13

The profit of a perfectly competitive firm is maximized at a level of output where its marginal cost is rising.

Accepted Answer

A) True 
 B)False

Question 14

In long-run equilibrium in perfect competition, the entry and exit of firms will drive economic profits to zero.

Accepted Answer

A) True 
 B)False

Question 15

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: 9.1
 According to the information in Table 9.1, this firm will maximize profit when total output is equal to _____ units.

Accepted Answer

A)  nine
B)  eight
C)  seven
D)  six
E)  fiveF) All of the above
G) A) and E)

Question 16

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

Question 17

For a perfectly competitive firm in the short run, which of the following statements is true?

Accepted Answer

A)  A price above minimum average variable cost, but below average total cost will produce an economic profit.
B)  A price below minimum average variable cost will cause the firm to shut down.
C)  Marginal cost is parallel to the axis showing quantity of output.
D)  Price is always greater than marginal revenue.
E)  Every firm contributes a significant amount to the total market output.F) A) and B)
G) A) and C)

Question 18

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: 9.1
 Refer to Table 9.1.The firm depicted in the table is a(n) :

Accepted Answer

A)  monopolist.
B)  oligopolist.
C)  monopolistically competitive firm.
D)  perfectly competitive firm.
E)  monopsonist.F) None of the above
G) C) and D)

Question 19

The governmental interference with the market exchange often reduces the total surplus.

Accepted Answer

A) True 
 B)False

Question 20

Graphically, consumer surplus is the area:

Accepted Answer

A)  above the equilibrium price and below the demand curve.
B)  below the equilibrium price and above the supply curve.
C)  above the equilibrium price and below the supply curve.
D)  below the equilibrium price and above the demand curve.
E)  above the equilibrium price and above the supply curve.F) A) and C)
G) B) and D)

Exam 14: Perfect Competition

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: 9.1 Refer to Table 9.1.The firm depicted in the table is a(n) :

Correct Answer
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Some competitive firms are willing to operate at a loss in the short run because their revenues are at least able to cover their variable costs.

Correct Answer
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The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 9.2 MC: Marginal cost curve MR: Marginal revenue curve ATC: Average-total-cost curve AVC: Average-variable-cost curve Refer to Figure 9.2.If the market price falls to $10, the firm would produce:

Correct Answer
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The figure given below shows the revenue and the cost curves of a perfectly competitive firm. Figure 9.3 In Figure 9.3, the profit maximizing output of the firm is _____ units.

Correct Answer
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Which of the following faces a horizontal demand curve?

Correct Answer
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In the short run a competitive firm is said to break-even if, at the equilibrium:

Correct Answer
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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: 9.1 According to the information in Table 9.1, this firm will maximize profit when total output is equal to _____ units.

Correct Answer
verified

If significant barriers to entry exist in a market, then the market is best described through the model of perfect competition.

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

When the perfectly competitive firm's demand curve lies above its average total cost curve, the firm incurs an economic loss at that level of output.

Correct Answer
verified

If a firm in a perfectly competitive market raises its price:

Correct Answer
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In long-run equilibrium in perfect competition, the entry and exit of firms will drive economic profits to zero.

Correct Answer
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Why do the perfectly competitive firms earn only normal profits in the long run?

Correct Answer
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Graphically, consumer surplus is the area:

Correct Answer
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The profit of a perfectly competitive firm is maximized at a level of output where its marginal cost is rising.

Correct Answer
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Correct Answer
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The perfectly competitive producer's demand curve is:

Correct Answer
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For a perfectly competitive firm in the short run, which of the following statements is true?

Correct Answer
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Some competitive firms are willing to operate at a loss in the short run because:

Correct Answer
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The governmental interference with the market exchange often reduces the total surplus.

Correct Answer
verified

Exam 14: Perfect Competition

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: 9.1 Refer to Table 9.1.The firm depicted in the table is a(n) :

Correct AnswerverifiedShow Answer

Some competitive firms are willing to operate at a loss in the short run because their revenues are at least able to cover their variable costs.

Correct AnswerverifiedShow Answer

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 9.2 MC: Marginal cost curve MR: Marginal revenue curve ATC: Average-total-cost curve AVC: Average-variable-cost curve Refer to Figure 9.2.If the market price falls to $10, the firm would produce:

Correct AnswerverifiedShow Answer

The figure given below shows the revenue and the cost curves of a perfectly competitive firm. Figure 9.3 In Figure 9.3, the profit maximizing output of the firm is _____ units.

Correct AnswerverifiedShow Answer

Which of the following faces a horizontal demand curve?

Correct AnswerverifiedShow Answer

In the short run a competitive firm is said to break-even if, at the equilibrium:

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: 9.1 According to the information in Table 9.1, this firm will maximize profit when total output is equal to _____ units.

Correct AnswerverifiedShow Answer

If significant barriers to entry exist in a market, then the market is best described through the model of perfect competition.

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

When the perfectly competitive firm's demand curve lies above its average total cost curve, the firm incurs an economic loss at that level of output.

Correct AnswerverifiedShow Answer

If a firm in a perfectly competitive market raises its price:

Correct AnswerverifiedShow Answer

In long-run equilibrium in perfect competition, the entry and exit of firms will drive economic profits to zero.

Correct AnswerverifiedShow Answer

Why do the perfectly competitive firms earn only normal profits in the long run?

Correct AnswerverifiedShow Answer

Graphically, consumer surplus is the area:

Correct AnswerverifiedShow Answer

The profit of a perfectly competitive firm is maximized at a level of output where its marginal cost is rising.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The perfectly competitive producer's demand curve is:

Correct AnswerverifiedShow Answer

For a perfectly competitive firm in the short run, which of the following statements is true?

Correct AnswerverifiedShow Answer

Some competitive firms are willing to operate at a loss in the short run because:

Correct AnswerverifiedShow Answer

The governmental interference with the market exchange often reduces the total surplus.

Correct AnswerverifiedShow Answer

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