Question 1

Because there are many buyers and sellers in a perfectly competitive market,no one seller can influence the market price.

Accepted Answer

A) True 
 B)False

Question 2

A profit-maximizing firm will shut down in the short run when

Accepted Answer

A)   price is less than average variable cost.
B)   price is less than average total cost.
C)   average revenue is greater than marginal cost.
D)   average revenue is greater than average fixed cost.E) B) and C)
F) All of the above

Question 3

Scenario 13-4
As part of an estate settlement Mary received $1 million.She decided to use the money to purchase a small business in Anywhere,USA.Her business operates in a perfectly competitive industry.If Mary would have invested the $1 million in a risk-free bond fund she could have earned $100,000 each year.She also quit her job with Lucky.Com Inc.to devote all of her time to her new business.Her salary at Lucky.Com Inc.was $75,000 per year.
-Refer to Scenario 13-4.At the end of the first year of operating her new business,Mary's accountant reported an accounting profit of $150,000.What was Mary's economic profit?

Accepted Answer

A)   -$150,000
B)   -$50,000
C)   -$25,000
D)   $25,000E) B) and C)
F) A) and D)

Question 4

In a perfectly competitive market,the process of entry and exit will end when (i) accounting profits are zero.
(ii) economic profits are zero.
(iii) price equals minimum marginal cost.
(iv) 
Price equals minimum average total cost.

Accepted Answer

A)   (i) and (ii) only
B)   (ii) and (iii) only
C)   (ii) and (iv) only
D)   (i) ,(ii) ,(iii) ,and (iv) E) None of the above
F) A) and D)

Question 5

Give two reasons why the long-run industry supply curve may slope upward.Use an example to demonstrate your reasons.

Accepted Answer

1)Some resource used in production may b...

Question 6

The long-run market supply curve in a competitive market will

Accepted Answer

A)   always be horizontal.
B)   be the portion of the MC that lies above the minimum of AVC for the marginal firm.
C)   typically be more elastic than the short-run supply curve.
D)   be above the competitive firm's efficient scale.E) A) and B)
F) None of the above

Question 7

In the short run,a firm should exit the industry if its marginal cost exceeds its marginal revenue.

Accepted Answer

A) True 
 B)False

Question 8

In a competitive market,the actions of any single buyer or seller will

Accepted Answer

A)   discourage entry by competitors.
B)   influence the profits of other firms in the market.
C)   have a negligible impact on the market price.
D)   None of the above is correct.E) None of the above
F) B) and D)

Question 9

A firm operating in a perfectly competitive market may earn positive,negative,or zero economic profit in the long run.

Accepted Answer

A) True 
 B)False

Question 10

Suppose a firm is considering producing zero units of output.We call this shutting down in the short run and exiting an industry in the long run.

Accepted Answer

A) True 
 B)False

Question 11

When an individual firm in a competitive market increases its production,it is likely that the market price will fall.

Accepted Answer

A) True 
 B)False

Question 12

Figure 13-3
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 13-3.If the market price is $10,what is the firm's total cost?

Accepted Answer

A)   $15
B)   $30
C)   $35
D)   $50E) A) and D)
F) A) and B)

Question 13

A firm operating in a perfectly competitive industry will shut down in the short run if its economic profits fall to zero because it is likely to be earning negative accounting profits.

Accepted Answer

A) True 
 B)False

Question 14

Consider a firm operating in a competitive market.The firm is producing 40 units of output,has an average total cost of production equal to $6,and is earning $240 economic profit in the short run.What is the current market price?

Accepted Answer

A)   $0
B)   $6
C)   $10
D)   $12E) All of the above
F) B) and C)

Question 15

Table 13-13
Diana's Dress Emporium
 
-Refer to Table 13-13.What is the marginal cost of the 1st unit?

Accepted Answer

A)   $50
B)   $75
C)   $80
D)   $150E) All of the above
F) A) and D)

Question 16

Figure 13-2
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 13-2.Which of the four prices corresponds to a firm earning negative economic profits in the short run but trying to remain open?

Accepted Answer

A)   P1
B)   P2
C)   P3
D)   P4E) B) and D)
F) A) and B)

Question 17

A competitive market is in long-run equilibrium.If demand increases,we can be certain that price will

Accepted Answer

A)   rise in the short run.Some firms will enter the industry.Price will then rise to reach the new long-run equilibrium.
B)   rise in the short run.Some firms will enter the industry.Price will then fall to reach the new long-run equilibrium.
C)   fall in the short run.All,some,or no firms will shut down,and some of them will exit the industry.Price will then rise to reach the new long-run equilibrium.
D)   not rise in the short run because firms will enter to maintain the price.E) C) and D)
F) A) and D)

Question 18

If all firms have the same costs of production,then in long-run equilibrium,

Accepted Answer

A)   price exceeds average total cost for all firms.
B)   price exceeds marginal cost for all firms.
C)   some firms may earn positive economic profits.
D)   all firms have zero economic profits and just cover their opportunity costs.E) B) and D)
F) A) and B)

Question 19

The short-run supply curve for a firm in a perfectly competitive market is

Accepted Answer

A)   horizontal.
B)   likely to slope downward.
C)   determined by forces external to the firm.
D)   the portion of its marginal cost curve that lies above its average variable cost.E) A) and D)
F) A) and C)

Question 20

Figure 13-10
In the figure below,panel (a) depicts the linear marginal cost of a firm in a competitive market,and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms.  
-Refer to Figure 13-10.If there are 500 identical firms in this market,what is the value of Q1?

Accepted Answer

A)   10,000
B)   20,000
C)   50,000
D)   150,000E) A) and B)
F) A) and C)

Exam 13: Firms in Competitive Markets

Figure 13-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-2.Which of the four prices corresponds to a firm earning negative economic profits in the short run but trying to remain open?

Correct Answer
verified

A firm operating in a perfectly competitive industry will shut down in the short run if its economic profits fall to zero because it is likely to be earning negative accounting profits.

Correct Answer
verified

Consider a firm operating in a competitive market.The firm is producing 40 units of output,has an average total cost of production equal to $6,and is earning $240 economic profit in the short run.What is the current market price?

Correct Answer
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Table 13-13 Diana's Dress Emporium -Refer to Table 13-13.What is the marginal cost of the 1st unit?

Correct Answer
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Figure 13-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-3.If the market price is $10,what is the firm's total cost?

Correct Answer
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A firm operating in a perfectly competitive market may earn positive,negative,or zero economic profit in the long run.

Correct Answer
verified

Suppose a firm is considering producing zero units of output.We call this shutting down in the short run and exiting an industry in the long run.

Correct Answer
verified

Correct Answer
verified

When an individual firm in a competitive market increases its production,it is likely that the market price will fall.

Correct Answer
verified

A competitive market is in long-run equilibrium.If demand increases,we can be certain that price will

Correct Answer
verified

In a perfectly competitive market,the process of entry and exit will end when (i) accounting profits are zero. (ii) economic profits are zero. (iii) price equals minimum marginal cost. (iv) Price equals minimum average total cost.

Correct Answer
verified

Correct Answer
verified

A profit-maximizing firm will shut down in the short run when

Correct Answer
verified

If all firms have the same costs of production,then in long-run equilibrium,

Correct Answer
verified

Give two reasons why the long-run industry supply curve may slope upward.Use an example to demonstrate your reasons.

Correct Answer
verified
1)Some resource used in production may b...
View Answer

In a competitive market,the actions of any single buyer or seller will

Correct Answer
verified

In the short run,a firm should exit the industry if its marginal cost exceeds its marginal revenue.

Correct Answer
verified

Because there are many buyers and sellers in a perfectly competitive market,no one seller can influence the market price.

Correct Answer
verified

The long-run market supply curve in a competitive market will

Correct Answer
verified

The short-run supply curve for a firm in a perfectly competitive market is

Correct Answer
verified

Exam 13: Firms in Competitive Markets

Figure 13-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-2.Which of the four prices corresponds to a firm earning negative economic profits in the short run but trying to remain open?

Correct AnswerverifiedShow Answer

A firm operating in a perfectly competitive industry will shut down in the short run if its economic profits fall to zero because it is likely to be earning negative accounting profits.

Correct AnswerverifiedShow Answer

Consider a firm operating in a competitive market.The firm is producing 40 units of output,has an average total cost of production equal to $6,and is earning $240 economic profit in the short run.What is the current market price?

Correct AnswerverifiedShow Answer

Table 13-13 Diana's Dress Emporium -Refer to Table 13-13.What is the marginal cost of the 1st unit?

Correct AnswerverifiedShow Answer

Figure 13-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-3.If the market price is $10,what is the firm's total cost?

Correct AnswerverifiedShow Answer

A firm operating in a perfectly competitive market may earn positive,negative,or zero economic profit in the long run.

Correct AnswerverifiedShow Answer

Suppose a firm is considering producing zero units of output.We call this shutting down in the short run and exiting an industry in the long run.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When an individual firm in a competitive market increases its production,it is likely that the market price will fall.

Correct AnswerverifiedShow Answer

A competitive market is in long-run equilibrium.If demand increases,we can be certain that price will

Correct AnswerverifiedShow Answer

In a perfectly competitive market,the process of entry and exit will end when (i) accounting profits are zero. (ii) economic profits are zero. (iii) price equals minimum marginal cost. (iv) Price equals minimum average total cost.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A profit-maximizing firm will shut down in the short run when

Correct AnswerverifiedShow Answer

If all firms have the same costs of production,then in long-run equilibrium,

Correct AnswerverifiedShow Answer

Give two reasons why the long-run industry supply curve may slope upward.Use an example to demonstrate your reasons.

Correct Answerverified1)Some resource used in production may b...View AnswerShow Answer

In a competitive market,the actions of any single buyer or seller will

Correct AnswerverifiedShow Answer

In the short run,a firm should exit the industry if its marginal cost exceeds its marginal revenue.

Correct AnswerverifiedShow Answer

Because there are many buyers and sellers in a perfectly competitive market,no one seller can influence the market price.

Correct AnswerverifiedShow Answer

The long-run market supply curve in a competitive market will

Correct AnswerverifiedShow Answer

The short-run supply curve for a firm in a perfectly competitive market is

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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1)Some resource used in production may b...
View Answer

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Correct Answer
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