Question 1

In pure competition, the industry demand curve is infinitely price elastic.

Accepted Answer

A) True 
 B)False

Question 2

If a firm has at least some control over the price of its product, then the firm cannot be in which market model?

Accepted Answer

A)  oligopoly
B)  pure monopoly
C)  pure competition
D)  monopolistic competitionE) B) and D)
F) All of the above

Question 3

The term imperfect competition refers to every market structure besides pure competition.

Accepted Answer

A) True 
 B)False

Question 4

(Last Word)  Fixed costs for a firm are analogous to

Accepted Answer

A)  the dirt that fills up the financial hole.
B)  digging a deeper financial hole by producing when prices are too low.
C)  the cost of the shovel needed to fill the financial hole.
D)  starting out in a hole that represents economic losses if the firm produces nothing.E) C) and D)
F) A) and D)

Question 5

Price and marginal revenue are identical for an individual purely competitive seller.

Accepted Answer

A) True 
 B)False

Question 6

The accompanying table gives cost data for a firm that is selling in a purely competitive market.If the market price for the firm's product is $32, the competitive firm will produce

Accepted Answer

A)  8 units at an economic profit of $16.
B)  6 units at an economic profit of $7.98.
C)  10 units at an economic profit of $4.
D)  7 units at an economic profit of $41.50.E) A) and B)
F) None of the above

Question 7

Average revenue and marginal revenue are equal at each output level in

Accepted Answer

A)  pure competition.
B)  monopolistic competition.
C)  monopoly.
D)  oligopoly.E) A) and B)
F) A) and C)

Question 8

In the short run, a competitive firm will always choose to shut down if product price is less than the lowest attainable average total cost.

Accepted Answer

A) True 
 B)False

Question 9

For a purely competitive seller, price equals

Accepted Answer

A)  average revenue.
B)  marginal revenue.
C)  total revenue divided by output.
D)  all of these.E) A) and C)
F) C) and D)

Question 10

If a purely competitive firm is producing a level of output where the marginal revenue is less than the marginal cost, then its profits must be negative.

Accepted Answer

A) True 
 B)False

Question 11

The accompanying table gives cost data for a firm that is selling in a purely competitive market.Which of the following tables gives the firm's short- run supply schedule?

Accepted Answer

A)   
B)   
C)   
D)   E) A) and B)
F) B) and C)

Question 12

The short-run supply curve slopes upward because producers must be compensated for rising marginal costs.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements applies to a purely competitive producer?

Accepted Answer

A)  It will not advertise its product.
B)  In long-run equilibrium, it will earn an economic profit.
C)  Its product will have a brand name that elicits customer loyalty.
D)  Its product is slightly different from those of its competitors.E) C) and D)
F) None of the above

Question 14

Xavier produces and sells tomatoes in a purely competitive market.This implies that Xavier's marginal revenue from an extra unit of tomatoes is always equal to the

Accepted Answer

A)  unit price.
B)  average cost.
C)  variable cost.
D)  unit profit.E) None of the above
F) All of the above

Question 15

The short-run supply curve for a competitive firm is the

Accepted Answer

A)  entire MC curve.
B)  segment of the MC curve lying below the AVC curve.
C)  segment of the MC curve lying above the AVC curve.
D)  segment of the AVC curve lying to the right of the MC curve.E) All of the above
F) A) and C)

Question 16

Local electric or gas utility companies mostly operate in which market structure?

Accepted Answer

A)  monopolistic competition
B)  pure competition
C)  pure monopoly
D)  oligopolyE) A) and B)
F) A) and C)

Question 17

Which of the following is not a basic characteristic of pure competition?

Accepted Answer

A)  considerable nonprice competition
B)  no barriers to the entry or exit of firms
C)  a standardized or homogeneous product
D)  a large number of buyers and sellersE) A) and B)
F) A) and D)

Question 18

A purely competitive firm currently producing 20 units of output earns marginal revenues of $12 from each extra unit of output it sells.If it sells 30 units, then its total revenues would be

Accepted Answer

A)  $120.
B)  $240.
C)  $360.
D)  indeterminate based on the given information.E) None of the above
F) B) and D)

Question 19

On a per-unit basis, economic profit can be determined as the difference between

Accepted Answer

A)  marginal revenue and product price.
B)  product price and average total cost.
C)  marginal revenue and marginal cost.
D)  average fixed cost and product price.E) A) and D)
F) A) and C)

Question 20

For a purely competitive firm, total revenue

Accepted Answer

A)  is price times quantity sold.
B)  increases by a constant absolute amount as output expands.
C)  graphs as a straight upsloping line from the origin.
D)  has all of these characteristics.E) A) and D)
F) B) and D)

Exam 10: Pure Competition in the Short Run

(Last Word) Fixed costs for a firm are analogous to

Correct AnswerverifiedShow Answer

For a purely competitive seller, price equals

Correct AnswerverifiedShow Answer

Which of the following is not a basic characteristic of pure competition?

Correct AnswerverifiedShow Answer

Local electric or gas utility companies mostly operate in which market structure?

Correct AnswerverifiedShow Answer

If a purely competitive firm is producing a level of output where the marginal revenue is less than the marginal cost, then its profits must be negative.

Correct AnswerverifiedShow Answer

Which of the following statements applies to a purely competitive producer?

Correct AnswerverifiedShow Answer

In pure competition, the industry demand curve is infinitely price elastic.

Correct AnswerverifiedShow Answer

The accompanying table gives cost data for a firm that is selling in a purely competitive market.Which of the following tables gives the firm's short- run supply schedule?

Correct AnswerverifiedShow Answer

On a per-unit basis, economic profit can be determined as the difference between

Correct AnswerverifiedShow Answer

In the short run, a competitive firm will always choose to shut down if product price is less than the lowest attainable average total cost.

Correct AnswerverifiedShow Answer

The short-run supply curve slopes upward because producers must be compensated for rising marginal costs.

Correct AnswerverifiedShow Answer

The accompanying table gives cost data for a firm that is selling in a purely competitive market.If the market price for the firm's product is $32, the competitive firm will produce

Correct AnswerverifiedShow Answer

The term imperfect competition refers to every market structure besides pure competition.

Correct AnswerverifiedShow Answer

Price and marginal revenue are identical for an individual purely competitive seller.

Correct AnswerverifiedShow Answer

Average revenue and marginal revenue are equal at each output level in

Correct AnswerverifiedShow Answer

Xavier produces and sells tomatoes in a purely competitive market.This implies that Xavier's marginal revenue from an extra unit of tomatoes is always equal to the

Correct AnswerverifiedShow Answer

The short-run supply curve for a competitive firm is the

Correct AnswerverifiedShow Answer

For a purely competitive firm, total revenue

Correct AnswerverifiedShow Answer

A purely competitive firm currently producing 20 units of output earns marginal revenues of $12 from each extra unit of output it sells.If it sells 30 units, then its total revenues would be

Correct AnswerverifiedShow Answer

If a firm has at least some control over the price of its product, then the firm cannot be in which market model?

Correct AnswerverifiedShow Answer

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