Question 1

If the price is greater than both the marginal cost and the average variable cost,what should the firm do?

Accepted Answer

A)   increase its production level
B)   decrease its production level
C)   stop producing
D)   reduce the price
E)   increase the priceF) D) and E)
G) C) and E)

Question 2

Real-life examples of competitive markets

Accepted Answer

A)   are more common than any other market structure.
B)   are usually far short of perfection.
C)   include the fast-food industry and soda industry.
D)   are difficult to break into as an entrepreneur.
E)   do not benefit society.F) B) and E)
G) A) and B)

Question 3

Use the following scenario to answer the following questions:
Carmela's Churros is a perfectly competitive firm that sells desserts in Houston,Texas.Carmela's Churros currently is taking in $40,000 in revenues,and has $15,000 in explicit costs and $25,000 in implicit costs.
-Holding all else constant,the price of churros in this market will

Accepted Answer

A)   increase in the long run.
B)   decrease in the long run.
C)   increase in the short run.
D)   decrease in the short run.
E)   stay where it is.F) A) and B)
G) None of the above

Question 4

What is true for the perfectly competitive firm's output level at the break-even point?

Accepted Answer

A) price = marginal revenue = average total cost
B) marginal revenue =price $\lt$ marginal cost
C) marginal revenue =price $\gt$ marginal cost
D) marginal revenue $\lt$ price = marginal cost
E) price $\gt$ marginal revenue = marginal cost

F) A) and B)
G) C) and D)

Correct Answer
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Question 5

Which is an example of an almost perfectly competitive market?

Accepted Answer

A)   Major League Baseball
B)   restaurants
C)   cruise liners
D)   airlines
E)   farmers' marketsF) A) and C)
G) A) and B)

Question 6

Firms will break even if the price they charge is

Accepted Answer

A)   less than their minimum average total cost (AT
C)  .
B)   less than their minimum average variable cost (AV
C)  .
C)   greater than their minimum average variable cost (AV
C)  .
D)   greater than their minimum average total cost (AT
C)  .
E)   equal to their minimum average total cost (AT
C)  .F) A) and E)
G) A) and B)

Question 7

What should the firm do when it faces the following conditions: Average total cost=$60
Average variable cost = $40
Marginal cost =$35
Marginal revenue = $35

Accepted Answer

A)   lower the price
B)   shut down
C)   increase production
D)   decrease production
E)   raise the priceF) None of the above
G) A) and B)

Question 8

When talking about economic profits in a perfectly competitive market,the difference between the long run and the short run is that in the short run,firms

Accepted Answer

A)   can earn positive economic profits,but in the long run,firms have zero economic profits.
B)   can earn negative economic profits,but in the long run,firms have zero economic profits.
C)   can earn positive or negative economic profits,but in the long run,firms have negative economic profits.
D)   earn negative economic profits,but in the long run,firms have positive economic profits.
E)   can earn positive or negative economic profits,but in the long run,firms have zero economic profits.F) B) and D)
G) A) and C)

Question 9

The accompanying table outlines the explicit and implicit costs incurred by a small graphic design company in France that takes in annual revenues equal to $250,000.
  
a.What would this company's accounting profits equal for a year?
b.What would this company's economic profits equal for a year?
c.What would we expect to happen in the long run for this market? Why?

Accepted Answer

a.To calculate accounting profits,you ne...

Question 10

Refer to the accompanying set of graphs to answer the following questions. 
-Which graph would result in firms exiting a perfectly competitive market in the long run?

Accepted Answer

A)   A
B)   B
C)   C
D)   D
E)   EF) A) and B)
G) All of the above

Question 11

In the short run,under what conditions should the firm shut down?

Accepted Answer

A)   average total cost at the minimum point
B)   price greater than average variable cost
C)   price less than average variable cost
D)   marginal revenue greater than marginal cost
E)   marginal revenue greater than average total costF) B) and E)
G) C) and D)

Question 12

The accompanying table represents the quantity produced, the total revenue, and the total cost of a firm operating in a perfectly competitive market. Refer to this table to answer the following questions. 
-When profits are maximized,profits are equal to

Accepted Answer

A)   $5.
B)   $3.
C)   $2.
D)   $10.
E)   $9.F) A) and B)
G) C) and E)

Question 13

Refer to the accompanying table.A firm participating in a competitive market with these costs would be indifferent about producing or shutting down if the price is

Accepted Answer

A)   $6.
B)   $8.
C)   $4.
D)   $2.
E)   either $6 or $8.F) All of the above
G) A) and D)

Question 14

Refer to the accompanying figure to answer the following questions. 
-If the price is $3,the firm is making

Accepted Answer

A)   a loss and will exit the market.
B)   a profit and will exit the market.
C)   a loss and more firms will enter the market.
D)   a profit and more firms will enter the market.
E)   zero profits and the market is at long-run equilibrium.F) A) and D)
G) A) and C)

Question 15

A firm characterized as a price taker

Accepted Answer

A)   has control over the price it pays,or receives,in the market.
B)   sets the price for the market.
C)   has no control over the price it pays,or receives,in the market.
D)   is not a characteristic of a perfectly competitive market.
E)   takes the price that is determined from the lowest price consumers are willing to pay for an item.F) A) and B)
G) B) and C)

Question 16

If Firm A is making zero economic profits,

Accepted Answer

A)   Firm A is also making negative accounting profits.
B)   Firm A is breaking even when opportunity cost is taken into consideration.
C)   other firms want to enter the market.
D)   Firm A wants to leave the market.
E)   Firm A wants to shut down in the short run.F) All of the above
G) B) and D)

Question 17

Total revenue minus total cost equals

Accepted Answer

A)   marginal revenue.
B)   marginal cost.
C)   change in profit.
D)   profit.
E)   quantity.F) D) and E)
G) A) and B)

Question 18

A farmers' market is close to being a perfectly competitive market.Which characteristic of a perfectly competitive market do most farmers' markets violate?

Accepted Answer

A)   many buyers
B)   many sellers
C)   free entry into the market
D)   free exit from the market
E)   similar goods producedF) All of the above
G) A) and B)

Question 19

Refer to the accompanying figure to answer the following questions. 
-If the price is $5,the firm is making

Accepted Answer

A)   a loss and will exit the market.
B)   a profit and will exit the market.
C)   a loss and more firms will enter the market.
D)   a profit and more firms will enter the market.
E)   zero profits and the market is at long-run equilibrium.F) D) and E)
G) B) and E)

Question 20

Refer to the accompanying figure to answer the following questions. 
-This firm would shut down in the long run if the price

Accepted Answer

A)   fell below $3.
B)   fell below $8.
C)   rose above $5.
D)   rose above $8.
E)   fell below $5.F) B) and C)
G) B) and E)

Exam 9: Firms in a Competitive Market

Total revenue minus total cost equals

Correct Answer
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A farmers' market is close to being a perfectly competitive market.Which characteristic of a perfectly competitive market do most farmers' markets violate?

Correct Answer
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Refer to the accompanying set of graphs to answer the following questions. -Which graph would result in firms exiting a perfectly competitive market in the long run?

Correct Answer
verified

What is true for the perfectly competitive firm's output level at the break-even point?

Correct Answer
verified

Firms will break even if the price they charge is

Correct Answer
verified

When talking about economic profits in a perfectly competitive market,the difference between the long run and the short run is that in the short run,firms

Correct Answer
verified

What should the firm do when it faces the following conditions: Average total cost=$60 Average variable cost = $40 Marginal cost =$35 Marginal revenue = $35

Correct Answer
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Which is an example of an almost perfectly competitive market?

Correct Answer
verified

Real-life examples of competitive markets

Correct Answer
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Correct Answer
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a.To calculate accounting profits,you ne...
View Answer

Correct Answer
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A firm characterized as a price taker

Correct Answer
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Refer to the accompanying figure to answer the following questions. -This firm would shut down in the long run if the price

Correct Answer
verified

If the price is greater than both the marginal cost and the average variable cost,what should the firm do?

Correct Answer
verified

The accompanying table represents the quantity produced, the total revenue, and the total cost of a firm operating in a perfectly competitive market. Refer to this table to answer the following questions. -When profits are maximized,profits are equal to

Correct Answer
verified

Refer to the accompanying figure to answer the following questions. -If the price is $5,the firm is making

Correct Answer
verified

Refer to the accompanying table.A firm participating in a competitive market with these costs would be indifferent about producing or shutting down if the price is

Correct Answer
verified

In the short run,under what conditions should the firm shut down?

Correct Answer
verified

Refer to the accompanying figure to answer the following questions. -If the price is $3,the firm is making

Correct Answer
verified

If Firm A is making zero economic profits,

Correct Answer
verified

Exam 9: Firms in a Competitive Market

Total revenue minus total cost equals

Correct AnswerverifiedShow Answer

A farmers' market is close to being a perfectly competitive market.Which characteristic of a perfectly competitive market do most farmers' markets violate?

Correct AnswerverifiedShow Answer

Refer to the accompanying set of graphs to answer the following questions. -Which graph would result in firms exiting a perfectly competitive market in the long run?

Correct AnswerverifiedShow Answer

What is true for the perfectly competitive firm's output level at the break-even point?

Correct AnswerverifiedShow Answer

Firms will break even if the price they charge is

Correct AnswerverifiedShow Answer

When talking about economic profits in a perfectly competitive market,the difference between the long run and the short run is that in the short run,firms

Correct AnswerverifiedShow Answer

What should the firm do when it faces the following conditions: Average total cost=$60 Average variable cost = $40 Marginal cost =$35 Marginal revenue = $35

Correct AnswerverifiedShow Answer

Which is an example of an almost perfectly competitive market?

Correct AnswerverifiedShow Answer

Real-life examples of competitive markets

Correct AnswerverifiedShow Answer

Correct Answerverifieda.To calculate accounting profits,you ne...View AnswerShow Answer

Correct AnswerverifiedShow Answer

A firm characterized as a price taker

Correct AnswerverifiedShow Answer

Refer to the accompanying figure to answer the following questions. -This firm would shut down in the long run if the price

Correct AnswerverifiedShow Answer

If the price is greater than both the marginal cost and the average variable cost,what should the firm do?

Correct AnswerverifiedShow Answer

The accompanying table represents the quantity produced, the total revenue, and the total cost of a firm operating in a perfectly competitive market. Refer to this table to answer the following questions. -When profits are maximized,profits are equal to

Correct AnswerverifiedShow Answer

Refer to the accompanying figure to answer the following questions. -If the price is $5,the firm is making

Correct AnswerverifiedShow Answer

Refer to the accompanying table.A firm participating in a competitive market with these costs would be indifferent about producing or shutting down if the price is

Correct AnswerverifiedShow Answer

In the short run,under what conditions should the firm shut down?

Correct AnswerverifiedShow Answer

Refer to the accompanying figure to answer the following questions. -If the price is $3,the firm is making

Correct AnswerverifiedShow Answer

If Firm A is making zero economic profits,

Correct AnswerverifiedShow Answer

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a.To calculate accounting profits,you ne...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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