Question 1

This table shows price and quantity produced for a single firm in a perfectly competitive market.  Given the information in the table shown,what is the average revenue when 24 units are produced?

Accepted Answer

A)   $240
B)   $10
C)   $24
D)   $2.40E) B) and C)
F) None of the above

Question 2

If a firm is earning a negative economic profit,it means that:

Accepted Answer

A)   the resources should not be invested in other business opportunities.
B)   more profits could be earned with the same resources in another industry.
C)   the opportunity cost is smaller than what the firm is earning.
D)   it must be earning negative accounting profit.E) None of the above
F) A) and B)

Question 3

Of the curves displayed in the graph shown,graph B is most like to be the:

Accepted Answer

A)   MC curve
B)   AVC curve
C)   AFC curve
D)   ATC curve.E) B) and C)
F) All of the above

Question 4

According to the graph shown,the profits at point A are:

Accepted Answer

A)  higher than those at point B.
B)  lower than those at point B.
C)  the same as those at point B.
D)  higher than those at point C.E) A) and C)
F) All of the above

Question 5

If a firm in a perfectly competitive market faces a market price of $4,and it decides to produce 700 units,the firm's average revenue will be:

Accepted Answer

A)   $4.
B)   $2,800.
C)   $175.
D)   $700.E) A) and B)
F) A) and C)

Question 6

If a firm in a perfectly competitive market faces a market price of $8,and it 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 D)
F) B) and C)

Question 7

Standardized goods and services refers to those that:

Accepted Answer

A)   are interchangeable.
B)   have close substitutes.
C)   are unique.
D)   are regulated by the government.E) B) and C)
F) A) and D)

Question 8

An essential characteristic of a perfectly competitive market is:

Accepted Answer

A)   buyers and sellers have no control over the market price.
B)   sellers are selling unique products.
C)   buyers have complete control over the market price and sellers have none.
D)   sellers have complete control over the market price and buyers have none.E) B) and D)
F) A) and B)

Question 9

We assume that in the short run in a perfectly competitive market firms:

Accepted Answer

A)   can enter and exit the market.
B)   can enter, but not exit the market.
C)   can exit, but not enter the market.
D)   cannot enter or exit the market.E) B) and D)
F) B) and C)

Question 10

As the equilibrium price falls in a perfectly competitive market,so do firms':

Accepted Answer

A)   revenue and so do their profits.
B)   average costs and so do their profits.
C)   revenue, and their profits rise.
D)   total costs, and their profits rise.E) A) and B)
F) B) and C)

Question 11

If a firm in a perfectly competitive market is producing at a level of output where marginal costs exceed marginal revenue,its profits:

Accepted Answer

A)   must be negative.
B)   are maximized.
C)   will increase if it produces less.
D)   cannot be determined.E) A) and C)
F) A) and B)

Question 12

This graph represents the cost and revenue curves of a firm in a perfectly competitive market.  According to the graph shown,if a firm is producing at Q2,and it is identical to others in the market:

Accepted Answer

A)   profits are not being maximized.
B)   firms will enter this market.
C)   economic profits are zero.
D)   firms will leave this market.E) None of the above
F) A) and B)

Question 13

If the 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) None of the above
F) A) and C)

Question 14

If a perfectly competitive firm faces a market price of $3 per unit,and it decides to produce 30,000 units,the market price will likely:

Accepted Answer

A)   increase.
B)   decrease.
C)   stay the same.
D)   increase initially and then decrease.E) B) and C)
F) None of the above

Question 15

This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market.  According to the table shown,when 1 unit is produced:

Accepted Answer

A)   marginal costs exceed marginal revenue, and the firm should produce more.
B)   marginal revenue exceeds marginal costs, and the firm should produce more.
C)   marginal revenue exceeds marginal costs, and the firm should produce less.
D)   marginal costs exceed marginal revenue, and the firm should produce less.E) C) and D)
F) A) and D)

Question 16

When economic profits are zero for a firm,it means that:

Accepted Answer

A)   no firms will enter or exit the industry.
B)   average revenue slightly above average total cost.
C)   average variable costs are minimized.
D)   accounting profits are also zero.E) A) and B)
F) B) and C)

Question 17

An example of a standardized good is:

Accepted Answer

A)   grain.
B)   granola cereal.
C)   hamburgers.
D)   digital cameras.E) A) and B)
F) A) and C)

Question 18

For firms that sell one product in a perfectly competitive market,the market price:

Accepted Answer

A)   can be influenced by one firm's output decision.
B)   is equal to the average total cost of a firm.
C)   is taken as a constant by individual firms.
D)   is higher than the marginal revenue of a firmE) A) and B)
F) A) and C)

Question 19

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) B) and D)
F) A) and D)

Question 20

In reality,the long-run supply curve for a perfectly competitive market is upward sloping because:

Accepted Answer

A)   of changing costs of production that firms may face.
B)   not all firms have identical cost structures.
C)   experienced firms will have different information and costs than new firms.
D)   All of these are true.E) A) and B)
F) C) and D)

Exam 13: Perfect Competition

When economic profits are zero for a firm,it means that:

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This table shows price and quantity produced for a single firm in a perfectly competitive market. Given the information in the table shown,what is the average revenue when 24 units are produced?

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If a firm in a perfectly competitive market faces a market price of $4,and it decides to produce 700 units,the firm's average revenue will be:

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We assume that in the short run in a perfectly competitive market firms:

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For firms that sell one product in a perfectly competitive market,the market price:

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According to the graph shown,the profits at point A are:

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An essential characteristic of a perfectly competitive market is:

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In reality,the long-run supply curve for a perfectly competitive market is upward sloping because:

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

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As the equilibrium price falls in a perfectly competitive market,so do firms':

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Standardized goods and services refers to those that:

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Of the curves displayed in the graph shown,graph B is most like to be the:

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This graph represents the cost and revenue curves of a firm in a perfectly competitive market. According to the graph shown,if a firm is producing at Q2,and it is identical to others in the market:

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This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. According to the table shown,when 1 unit is produced:

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

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

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An example of a standardized good is:

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If a perfectly competitive firm faces a market price of $3 per unit,and it decides to produce 30,000 units,the market price will likely:

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If a firm is earning a negative economic profit,it means that:

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If a firm in a perfectly competitive market is producing at a level of output where marginal costs exceed marginal revenue,its profits:

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