Question 1

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 2

Figure 14-6
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-6.When market price is P3,a profit-maximizing firm's profit

Accepted Answer

A)   can be represented by the area P3 *Q3.
B)   can be represented by the area P3 * Q2.
C)   can be represented by the area (P3-P2) * Q3.
D)   is zero.E) A) and D)
F) A) and C)

Question 3

In the short run,if the market price is below the firm's average total cost of production,the firm will always shut down.

Accepted Answer

A) True 
 B)False

Question 4

One of the defining characteristics of a perfectly competitive market is

Accepted Answer

A)   a small number of sellers.
B)   a large number of buyers and a small number of sellers.
C)   a similar product.
D)   significant advertising by firms to promote their products.E) A) and B)
F) B) and C)

Question 5

When new entrants into a competitive market have higher costs than existing firms,

Accepted Answer

A)   accounting profits will be the primary determinant of entry into the market.
B)   sunk costs become an important determinant of the short-run entry strategy.
C)   market price will rise.
D)   long-run supply is constant.E) A) and D)
F) A) and C)

Question 6

In a competitive market,is the long-run supply curve typically more elastic than the short-run supply curve,or is it less elastic than the short-run supply curve?

Accepted Answer

The long-run supply ...

Question 7

Figure 14-6
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-6.When market price is P3,a profit-maximizing firm's total costs

Accepted Answer

A)   can be represented by the area P2 *Q2.
B)   can be represented by the area P3 * Q2.
C)   can be represented by the area (P3-P2) * Q3.
D)   are zero.E) A) and D)
F) None of the above

Question 8

Figure 14-14  
-Refer to Figure 14-14.If the market starts in equilibrium at point C in panel (b) ,a decrease in demand will ultimately lead to

Accepted Answer

A)   more firms in the industry but lower levels of output for each firm.
B)   fewer firms in the market.
C)   a new long-run equilibrium at point D in panel (b) .
D)   lower prices once the new long-run equilibrium is reached.E) A) and D)
F) A) and B)

Question 9

In the long run,a competitive market with 1,000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

Accepted Answer

A) True 
 B)False

Question 10

Figure 14-3
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-3.If the market price is $10,what is the firm's total revenue?

Accepted Answer

A)   $15
B)   $30
C)   $35
D)   $50E) None of the above
F) C) and D)

Question 11

By comparing marginal revenue and marginal cost,a firm in a competitive market is able to adjust production to the level that achieves its objective,which we assume to be

Accepted Answer

A)   maximizing total revenue.
B)   maximizing profit.
C)   minimizing variable cost.
D)   minimizing average total cost.E) None of the above
F) A) and B)

Question 12

In the short run for a particular market,there are 500 firms.Each firm has a marginal cost of $30 when it produces 200 units of output.One point on the market supply curve is

Accepted Answer

A)   quantity = 200,price = $30.
B)   quantity = 500,price = $30.
C)   quantity = 100,000,price = $30.
D)   quantity = 100,000,price = $15,000.E) C) and D)
F) B) and D)

Question 13

Figure 14-3
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-3.If the market price is $10,what is the firm's short-run economic profit?

Accepted Answer

A)   $9
B)   $15
C)   $30
D)   $50E) C) and D)
F) B) and C)

Question 14

Figure 14-9
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 14-9.If there are 200 identical firms in this market,what level of output will be supplied to the market when price is $1.00?

Accepted Answer

A)   2,000
B)   5,000
C)   10,000
D)   20,000E) A) and B)
F) None of the above

Question 15

Figure 14-9
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 14-9.If there are 600 identical firms in this market,what is the value of Q1?

Accepted Answer

A)   6,000
B)   12,000
C)   60,000
D)   120,000E) A) and B)
F) A) and C)

Question 16

You purchase a $30,nonrefundable ticket to a play at a local theater.Ten minutes into the show you realize that it is not a very good show and place only a $10 value on seeing the remainder of the show.Alternatively you could leave the theater and go home and watch TV or read a book.You place an $8 value on watching TV and a $6 value on reading a book.

Accepted Answer

A)   You should leave the theater since the net benefit from seeing the remainder of the show is -$20,while going home will earn you at least $8 of satisfaction.
B)   You should stay and watch the remainder of the show.
C)   You should go home and watch TV.
D)   You should go home and read a book.E) None of the above
F) A) and B)

Question 17

A competitive firm's short-run supply curve is part of which of the following curves?

Accepted Answer

A)   marginal revenue
B)   average variable cost
C)   average total cost
D)   marginal costE) A) and B)
F) A) and C)

Question 18

Carol owns a running shoe store that operates in a perfectly competitive market.If running shoes sell for $120 per pair and the average total cost per pair of shoes is $125 at the profit-maximizing output level,then in the long run

Accepted Answer

A)   more firms will enter the market.
B)   some firms will exit from the market.
C)   the equilibrium price per pair of shoes will fall.
D)   average total costs will fall.E) C) and D)
F) All of the above

Question 19

Figure 14-1 
-Refer to Figure 14-1.Suppose AVC = $113 when the firm produces 515 units of output.Then the firm's fixed cost amounts to

Accepted Answer

A)   $5,500 and its profit amounts to $20,375.
B)   $5,750 and its profit amounts to $20,375
C)   $5,980 and its profit amounts to $25,750.
D)   $6,180 and its profit amounts to $25,750.E) B) and C)
F) A) and C)

Question 20

When entry and exit behavior of firms in an industry does not affect a firm's cost structure,

Accepted Answer

A)   the long-run market supply curve must be horizontal.
B)   the long-run market supply curve must be upward-sloping.
C)   the long-run market supply curve must be downward-sloping.
D)   we do not have sufficient information to determine the shape of the long-run market supply curve.E) A) and B)
F) A) and C)

Exam 14: Firms in Competitive Markets

In a competitive market,is the long-run supply curve typically more elastic than the short-run supply curve,or is it less elastic than the short-run supply curve?

Correct Answer
verified
The long-run supply ...
View Answer

Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6.When market price is P3,a profit-maximizing firm's total costs

Correct Answer
verified

Carol owns a running shoe store that operates in a perfectly competitive market.If running shoes sell for $120 per pair and the average total cost per pair of shoes is $125 at the profit-maximizing output level,then in the long run

Correct Answer
verified

In the short run for a particular market,there are 500 firms.Each firm has a marginal cost of $30 when it produces 200 units of output.One point on the market supply curve is

Correct Answer
verified

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3.If the market price is $10,what is the firm's short-run economic profit?

Correct Answer
verified

When new entrants into a competitive market have higher costs than existing firms,

Correct Answer
verified

In the short run,if the market price is below the firm's average total cost of production,the firm will always shut down.

Correct Answer
verified

Figure 14-14 -Refer to Figure 14-14.If the market starts in equilibrium at point C in panel (b) ,a decrease in demand will ultimately lead to

Correct Answer
verified

When entry and exit behavior of firms in an industry does not affect a firm's cost structure,

Correct Answer
verified

Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6.When market price is P3,a profit-maximizing firm's profit

Correct Answer
verified

In the long run,a competitive market with 1,000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

Correct Answer
verified

By comparing marginal revenue and marginal cost,a firm in a competitive market is able to adjust production to the level that achieves its objective,which we assume to be

Correct Answer
verified

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3.If the market price is $10,what is the firm's total revenue?

Correct Answer
verified

A competitive firm's short-run supply curve is part of which of the following curves?

Correct Answer
verified

Figure 14-1 -Refer to Figure 14-1.Suppose AVC = $113 when the firm produces 515 units of output.Then the firm's fixed cost amounts to

Correct Answer
verified

Correct Answer
verified

One of the defining characteristics of a perfectly competitive market is

Correct Answer
verified

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

Exam 14: Firms in Competitive Markets

In a competitive market,is the long-run supply curve typically more elastic than the short-run supply curve,or is it less elastic than the short-run supply curve?

Correct AnswerverifiedThe long-run supply ...View AnswerShow Answer

Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6.When market price is P3,a profit-maximizing firm's total costs

Correct AnswerverifiedShow Answer

Carol owns a running shoe store that operates in a perfectly competitive market.If running shoes sell for $120 per pair and the average total cost per pair of shoes is $125 at the profit-maximizing output level,then in the long run

Correct AnswerverifiedShow Answer

In the short run for a particular market,there are 500 firms.Each firm has a marginal cost of $30 when it produces 200 units of output.One point on the market supply curve is

Correct AnswerverifiedShow Answer

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3.If the market price is $10,what is the firm's short-run economic profit?

Correct AnswerverifiedShow Answer

When new entrants into a competitive market have higher costs than existing firms,

Correct AnswerverifiedShow Answer

In the short run,if the market price is below the firm's average total cost of production,the firm will always shut down.

Correct AnswerverifiedShow Answer

Figure 14-14 -Refer to Figure 14-14.If the market starts in equilibrium at point C in panel (b) ,a decrease in demand will ultimately lead to

Correct AnswerverifiedShow Answer

When entry and exit behavior of firms in an industry does not affect a firm's cost structure,

Correct AnswerverifiedShow Answer

Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6.When market price is P3,a profit-maximizing firm's profit

Correct AnswerverifiedShow Answer

In the long run,a competitive market with 1,000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

Correct AnswerverifiedShow Answer

By comparing marginal revenue and marginal cost,a firm in a competitive market is able to adjust production to the level that achieves its objective,which we assume to be

Correct AnswerverifiedShow Answer

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3.If the market price is $10,what is the firm's total revenue?

Correct AnswerverifiedShow Answer

A competitive firm's short-run supply curve is part of which of the following curves?

Correct AnswerverifiedShow Answer

Figure 14-1 -Refer to Figure 14-1.Suppose AVC = $113 when the firm produces 515 units of output.Then the firm's fixed cost amounts to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One of the defining characteristics of a perfectly competitive market is

Correct AnswerverifiedShow Answer

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

Correct Answer
verified
The long-run supply ...
View Answer

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