Question 1

When demand increases in a perfectly competitive market, quantity supplied _______ in the short run, and supply _______ in the long run.

Accepted Answer

A)  increases; increases
B)  increases; decreases
C)  decreases; decreases
D)  decreases; increasesE) A) and C)
F) B) and D)

Question 2

The graph shown displays the marginal cost, average total cost, and marginal revenue curves for a perfectly competitive firm. What is the market price?

Accepted Answer

A)  $12
B)  $8
C)  $120
D)  $14E) None of the above
F) All of the above

Question 3

When some firms leave a perfectly competitive market, the price _______ and the profits of those left _______.

Accepted Answer

A)  decreases; rise
B)  decreases; fall
C)  increases; rise
D)  increases; fallE) A) and D)
F) A) and C)

Question 4

If firms are producing at a profit-maximizing level of output where the price exceeds the average total cost:

Accepted Answer

A)  accounting profits must be positive, but economic profits are likely zero.
B)  economic profits must be positive.
C)  other firms will exit the market.
D)  firms will exit the market.E) A) and D)
F) A) and C)

Question 5

Standardized goods are:

Accepted Answer

A)  regulated by government quality standards.
B)  easily substitutable and not distinguishable.
C)  the most common type of good produced.
D)  sold in markets with regulated price systems.E) None of the above
F) A) and C)

Question 6

In a perfectly competitive market in which all firms have identical cost structures, the short run supply curve is _______ and the long run supply curve is _______.

Accepted Answer

A)  upward-sloping; upward-sloping
B)  upward-sloping; perfectly elastic
C)  perfectly elastic; upward-sloping
D)  downward-sloping; upward-slopingE) B) and C)
F) All of the above

Question 7

Given the shutdown rule, the firm's short run supply curve is the section of the:

Accepted Answer

A)  average total cost curve to the right of its minimum.
B)  marginal cost curve that lies above the average total cost curve.
C)  marginal cost curve that lies above the average variable cost curve.
D)  average variable cost curve to the right of its minimum.E) A) and B)
F) B) and C)

Question 8

In a perfectly competitive market, price takers exist because there are:

Accepted Answer

A)  few sellers and many buyers.
B)  few buyers and many sellers.
C)  many buyers and sellers.
D)  few sellers and buyers.E) C) and D)
F) B) and C)

Question 9

Most markets in the United States:

Accepted Answer

A)  have some degree of competitiveness but are not perfectly competitive.
B)  have very few competitive features and are regulated by the government.
C)  are monopolies.
D)  are perfectly competitive.E) B) and C)
F) All of the above

Question 10

If a firm in a perfectly competitive market facing a market price of $8 decides to increase its production from 300 units to 550 units, the firm's total revenue will:

Accepted Answer

A)  increase from $2,400 to $4,400.
B)  decrease from $4,400 to $2,400.
C)  stay the same at $8.
D)  likely rise, but it cannot be determined by how much.E) B) and C)
F) A) and B)

Question 11

The table shown displays the total costs for various levels of output for a firm operating in a perfectly competitive market.

When five units are produced:

Accepted Answer

A)  profits are maximized.
B)  profits are positive.
C)  the firm is producing less than the profit-maximizing quantity.
D)  the firm is producing more than the profit-maximizing quantity.E) A) and B)
F) B) and D)

Question 12

A competitive market is one in which:

Accepted Answer

A)  fully informed price-taking buyers and sellers easily trade a standardized good.
B)  a few large sellers compete for a majority of the market share.
C)  government oversees the market's operation.
D)  individual sellers and buyers have a lot of influence over market price.E) All of the above
F) B) and D)

Question 13

The profit-maximizing level of output for any firm in a perfectly competitive market is to produce where:

Accepted Answer

A)  MC = MR.
B)  MC > MR.
C)  MC 
D)  MR = P*.E) A) and B)
F) None of the above

Question 14

The table shown displays the total and marginal costs for a single firm in a perfectly competitive market.

If the price in this market is $12, what is the total revenue when 6 units are produced?

Accepted Answer

A)  $72
B)  $4
C)  $12
D)  $58E) B) and C)
F) A) and D)

Question 15

If demand in a perfectly competitive market decreases, the price will:

Accepted Answer

A)  temporarily increase.
B)  temporarily decrease.
C)  increase permanently.
D)  decrease permanently.E) C) and D)
F) None of the above

Question 16

The table shown displays the total costs for various levels of output for a firm operating in a perfectly competitive market.

What is the market price?

Accepted Answer

A)  $500
B)  $150
C)  $50
D)  $27.50E) B) and D)
F) B) and C)

Question 17

In the long run, firms in a perfectly competitive market produce:

Accepted Answer

A)  where average variable costs are minimized.
B)  at a quantity with positive economic profits.
C)  where price equals marginal cost.
D)  where marginal cost is at its lowest point.E) A) and B)
F) C) and D)

Question 18

If demand decreases in a perfectly competitive market, firms will likely:

Accepted Answer

A)  experience negative profits in the short run.
B)  experience zero profits in the long run.
C)  exit the market in hopes of capturing profits elsewhere.
D)  All of these are correct.E) A) and D)
F) All of the above

Question 19

The market price has fallen below a firm's average total costs, but is above the firm's average variable cost curve. In the short run, the firm:

Accepted Answer

A)  has greater marginal costs than marginal revenue.
B)  can minimize its losses by continuing to produce.
C)  is earning positive profits.
D)  is covering all of its fixed costs, but not all of its variable costs.E) A) and C)
F) C) and D)

Question 20

The table shown displays the total costs for various levels of output for a firm operating in a perfectly competitive market.
 increases up through the third unit, then decreases." class="answers-bank-image d-inline" rel="preload" >
This firm's marginal revenue:

Accepted Answer

A)  is constant.
B)  increases as output increases.
C)  decreases as output increases.
D)   increases up through the third unit, then decreases.E) None of the above
F) A) and D)

Exam 13: Perfect Competition

Given the shutdown rule, the firm's short run supply curve is the section of the:

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The table shown displays the total costs for various levels of output for a firm operating in a perfectly competitive market. When five units are produced:

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The table shown displays the total costs for various levels of output for a firm operating in a perfectly competitive market. What is the market price?

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Most markets in the United States:

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If demand decreases in a perfectly competitive market, firms will likely:

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<p><b><b><span style="font-size:20pt;"><span style="color:#FF0000;"> </span></span> </b> The graph shown displays the marginal cost, average total cost, and marginal revenue curves for a perfectly competitive firm. What is the market price?

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If demand in a perfectly competitive market decreases, the price will:

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The profit-maximizing level of output for any firm in a perfectly competitive market is to produce where:

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A competitive market is one in which:

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The table shown displays the total and marginal costs for a single firm in a perfectly competitive market. If the price in this market is $12, what is the total revenue when 6 units are produced?

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In a perfectly competitive market, price takers exist because there are:

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Standardized goods are:

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If firms are producing at a profit-maximizing level of output where the price exceeds the average total cost:

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When some firms leave a perfectly competitive market, the price _______ and the profits of those left _______.

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In a perfectly competitive market in which all firms have identical cost structures, the short run supply curve is _______ and the long run supply curve is _______.

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In the long run, firms in a perfectly competitive market produce:

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The table shown displays the total costs for various levels of output for a firm operating in a perfectly competitive market. This firm's marginal revenue:

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When demand increases in a perfectly competitive market, quantity supplied _______ in the short run, and supply _______ in the long run.

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If a firm in a perfectly competitive market facing a market price of $8 decides to increase its production from 300 units to 550 units, the firm's total revenue will:

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The market price has fallen below a firm's average total costs, but is above the firm's average variable cost curve. In the short run, the firm:

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When some firms leave a perfectly competitive market, the price _ and the profits of those left _.

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In a perfectly competitive market in which all firms have identical cost structures, the short run supply curve is _ and the long run supply curve is _.

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When demand increases in a perfectly competitive market, quantity supplied _ in the short run, and supply _ in the long run.

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