1) Perfect competition occurs in a market where there are many firms, each selling 2) Which one of the following does not occur in perfect competition? 3) A price-taking firm faces a 4) In a perfectly competitive market, the market demand curve is illustrated by 5) The slope of a perfectly
competitive firm's demand curve is 6) A price taker is a firm that 7) If a firm faces a perfectly
elastic demand for its product, then 8) Marginal revenue is 9) Refer to Figure 12.1.1. The firm competes in a perfectly competitive market. Curve A represents the firm's 10) Refer to Figure 12.1.1. The firm competes in a perfectly competitive market. Curve A is a straight line because the firm
11) Refer to Table 12.1.1 which gives the demand schedule for a perfectly competitive firm. If the firm sells 5 units of output, total revenue is 12) Refer to Table 12.1.1 which gives the demand schedule for a perfectly competitive firm. If the firm sells 6 units of output, marginal revenue is 13) Refer to Table 12.1.1 which gives the demand schedule for a perfectly competitive firm. If the quantity sold by the firm rises from 5 to 6, marginal revenue is 14) For perfect competition to arise, it is necessary that market demand be 15) Assume that the leather market is a perfectly competitive market. The market demand curve for leather is ________ and each individual leather producer's demand curve is ________. 16) An example of a perfectly competitive industry is the 17) Economic profit equals 18) Lin's fortune cookies are identical to the fortune cookies made by dozens of other firms, and there is free entry in the fortune cookie market. Buyers and sellers are well informed about prices. Lin's fortune cookies operates in a ________ market. 19) Lin's fortune cookies are identical to the fortune cookies made by dozens of other firms, and there is free entry in the fortune cookie market. Buyers and sellers are well informed about prices. The price of a fortune cookie is determined by ________. The marginal revenue of a fortune cookie equals ________. 20) A perfectly competitive market is characterized by 21) When a firm is a "price taker," the firm 1) Refer to Table 12.2.1, which gives the total revenue schedule and total cost schedule of a perfectly competitive firm. The short-run equilibrium price of one unit of the good is 2) Refer to Table 12.2.1, which gives the total revenue schedule and total cost schedule of a perfectly competitive firm. The marginal revenue received from the
sale of the 4th unit of output is 3) Refer to Table 12.2.1, which gives the total revenue schedule and total cost schedule of a perfectly competitive firm. The marginal cost of increasing production from 4 units to 5 units is 4) Refer to Table 12.2.1, which gives the
total revenue schedule and total cost schedule of a perfectly competitive firm. If the firm produces 2 units of output, it 5) Refer to Table 12.2.1, which gives the total revenue schedule and total cost schedule of a perfectly competitive firm. If the
firm produces 3 units of output, it will 6) Refer to Table 12.2.1, which gives the total revenue schedule and total cost schedule of a perfectly competitive firm. Economic profit is maximized when the firm produces ________ units of output. 7) A firm shuts down if price is 8) Refer to Table 12.2.2, which gives the total cost schedule for Chip's Pizza Palace, a perfectly competitive firm. If the price of a pizza is $7,
what is Chip's profit-maximizing output per hour? 9) Refer to Table 12.2.2, which gives the total cost schedule for Chip's Pizza Palace, a perfectly competitive firm. If Chip shuts down in the short run, his total cost is 10) Refer to Table 12.2.3, which gives the total cost schedule for Brenda's Balloon Shop, a perfectly competitive firm. Brenda's total fixed cost is 11) Refer to Table 12.2.3, which gives the total cost schedule for Brenda's Balloon Shop, a perfectly competitive firm. The marginal cost of increasing production from 4 balloons an hour to 5
balloons an hour is 12) Refer to Table 12.2.3, which gives the total cost schedule for Brenda's Balloon Shop, a perfectly competitive firm. The average fixed cost of producing the 4th balloon is 13) Refer to Table 12.2.3 which gives the total cost
schedule for Brenda's Balloon Shop, a perfectly competitive firm. The average variable cost of producing the 1st balloon is 14) A firm will shut down temporarily when the price is so low that total revenue is insufficient to cover the 15) A firm that temporarily shuts down and produces no output incurs a loss equal to its 16) Suppose a firm is trying to decide whether or not to temporarily shut down to minimize total loss. If price equals average variable
cost, then 17) The shutdown point occurs at the point of minimum 18) A firm maximizes profit by producing the output at which marginal cost equals 19) In a perfectly competitive market, a firm maximizes its profit by producing the quantity of output at which 20) If price falls below minimum average variable cost, the best a firm can do is 21) Refer to Figure 12.2.1, which shows a perfectly competitive firm's total revenue and total cost curves. Which one of the following statements is false? 22) Refer to Figure 12.2.2, which
shows a perfectly competitive firm's economic profit and loss. The firm is incurring a loss at 23) Refer to Figure 12.2.2, which shows a perfectly competitive firm's economic profit and loss. The firm is breaking even at points 24) A perfectly competitive firm's supply curve includes its marginal cost curve at all prices above minimum 25) A perfectly competitive firm is maximizing profit if 26) If a perfectly competitive firm is producing an output at which price is equal to average total cost, the firm 27) If a perfectly competitive firm's marginal revenue is less than its marginal cost, the firm 28) The maximum loss a firm
will experience in the short run equals 29) In the price range below minimum average variable cost, a perfectly competitive firm's supply curve is 30) In the price range above minimum average variable cost, a perfectly competitive firm's supply curve is 31) If a perfectly competitive firm is producing in the short run at an
output where price is less than average total cost, the firm 32) If a perfectly competitive firm's
marginal revenue is greater than its marginal cost, the firm 33) In a perfectly competitive market, the market price is $8. An individual firm is producing the output at which MC = $8. AVC at that output is
$10. What should the firm do to maximize its economic profit in the short run? 34) If a perfectly competitive firm in the short run is able to pay its variable costs and part, but not all, of its fixed costs, then it is operating in the range on its marginal cost curve that is anywhere 35) If a perfectly competitive firm in the short run is able to pay its variable costs and all of its fixed costs and more, then it is operating in the range on its marginal cost curve that is 36) In a perfectly competitive industry, the market price is $5. An individual firm is producing the level of output where marginal cost is $5 and is increasing, and average total cost is $25. What should the firm do to maximize its economic profit in the short run? 37) Refer to Table 12.2.4. The market is perfectly competitive and there are 1,000 firms that produce paper. 38) A firm is producing the profit-maximizing amount of output when it is producing where its ________ curve
intersects its ________ curve. 39) As a firm in a perfectly competitive market increases its output, its marginal revenue ________ and its marginal cost ________. 1) In which one of the following situations will a perfectly competitive firm make an economic profit? 2) In which one of the following situations will a perfectly competitive firm incur an economic loss? 3) A firm in a perfectly competitive industry is maximizing its economic profit by producing 500 units of output. At 500 units of output, which one of the following must be false? 4) If a profit-maximizing firm in a perfectly
competitive market is making an economic profit, then it must be producing a level of output where 5) If a profit-maximizing firm in a perfectly competitive market is incurring an
economic loss, then it must be producing a level of output where 6) In a perfectly competitive market, the short-run market supply curve is 7) Refer to Figure 12.3.1, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive industry. In the short run, if the market price of the good is $10, the firm
produces ________ units of output and ________. 8) Refer to Figure 12.3.1 which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive industry. In the short run, the firm will
9) Refer to Figure 12.3.2 which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive industry, The firm is 11) Refer to Figure 12.3.4 which shows cost curves of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces ________ frames each week, makes ________ of total revenue, and makes zero ________ profit 12) Refer to Figure 12.3.5, which shows the cost curves and the marginal revenue curve for a perfectly competitive firm. To maximize its profit, the firm produces ________ units of output and the price is ________ a unit. 1) Refer to Fact 12.4.1. If the price of fiddleheads last month was $15 per bag, Franklin 2) Refer to Fact 12.4.1. Suppose the price of fiddleheads is expected to stay at $10 per bag for the foreseeable future, and Franklin's production and cost figures are expected to stay the same. His total fixed cost consists entirely
of rent on land, and his five-year lease on the land runs out at the end of the month. Should Franklin renew the lease? 3) Refer to Figure 12.4.1, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run, market 4) Refer to Figure 12.4.1
which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run, 5) Refer to Figure 12.4.2 which shows the cost curves and marginal revenue curve of a firm in a
perfectly competitive market. In the long run, market 6) Refer to Figure 12.4.2 which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run, 7) Refer to Figure 12.4.3. which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run, market 8) Refer to Figure 12.4.3 which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run, 9) Refer to Figure 12.4.3 which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. Firms are 10) If firms exit an market, the 11)
When a perfectly competitive market is in long-run equilibrium 12) Long-run equilibrium occurs in a competitive market when 13) Which one of the following does not occur in the long run when firms in a market make an economic profit? 14) Firms will stop exiting an market only when 15) If firms in a perfectly competitive market are making an economic
profit, new firms will enter. This entry shifts the market 16) If firms in a perfectly competitive market are incurring an economic loss, some firms will exit. This exit shifts the
market 17) A perfectly competitive market is in short-run equilibrium with price below average total cost. Which one of the following is not a prediction of the long-run consequences of
such a situation? 18) Suppose that the market in which bakeries compete is a perfectly competitive market. Which one of the following reasons does not explain why it is difficult for a bakery to make an economic profit in the long run? 19) Refer to Table 12.4.1. The top table shows the market demand schedule for paper. 20) Refer to Figure 12.4.4, which shows the cost curves for a perfectly competitive firm. If all firms in the market have the same cost
curves and the price is $16 per unit, 21) Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's total revenue from the sale of donuts is $12,000 a
year. Homer's costs are $16,000 in annual rental payments for its five-year lease on its store and $5,000 for ingredients. Should Homer's exit the market in the long run? 1) Consider a perfectly competitive market with long-run external diseconomies. When demand increases permanently, the equilibrium price 2) Consider a perfectly competitive market with long-run external economies. When demand increases permanently, the equilibrium price 3) What is the effect of a permanent increase in demand in a perfectly competitive market, with no external economies or diseconomies? 4) Technological change spreads through a
perfectly competitive market. Choose the statement that is incorrect. 5) External economies are factors beyond the control of an individual firm which 6) Refer to Figure 12.5.1. Given the increase in market demand from D0 to D1, the graph represents 7) The long-run market supply curve is positively sloped when 8) The long-run market supply curve is negatively sloped if 9)
Which one of the following is not true of a new long-run equilibrium which is the result of a new technology in a perfectly competitive market? 10) If a market experiences external economies, the long-run market
supply 11) If a market experiences external diseconomies, the long-run market supply 12) A perfectly competitive market, with no external economies or diseconomies, is initially in long-run equilibrium. There is a permanent decrease in demand. After adjustment to the new long-run equilibrium 13) A perfectly competitive market, with no external economies or diseconomies, is initially in long-run equilibrium. There is a permanent increase in demand. After adjustment to the new long-run equilibrium 14) A market with constant costs is in long-run equilibrium when it experiences a
permanent increase in demand. 15) A market with constant costs is in long-run equilibrium when it experiences a permanent increase in demand. 16) A market with constant costs is in long-run equilibrium when it experiences a permanent decrease in demand. 17) Initially, a perfectly competitive market that has 1,000 firms is in long-run equilibrium. Then 100 firms in the industry adopt a new technology that reduces the average cost of producing the good.
In the short run, the price ________, firms with the new technology make ________ economic profit, and firms with the old technology ________. 1) Which one of the following need not be satisfied to achieve allocative efficiency? 2) All of the following statements are true except 3) An efficient allocation is achieved when 4) Resources are used efficiently when 5) Producers choose ________. 6) Consumers choose ________. 7) In a competitive market, the market demand curve measures the ________ if ________ exist. 8) Choose the correct statement. |