Question 1

In a perfectly competitive market,when the price is below the minimum average total cost for all firms:

Accepted Answer

A)   accounting profits will be positive.
B)   firms will likely enter the market.
C)   the price will eventually rise once enough firms have left the market.
D)   economic profits will be equal to zero.E) A) and D)
F) B) and C)

Question 2

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

Accepted Answer

A)   number of firms is fixed.
B)   total quantity supplied is fixed.
C)   price is fixed.
D)   All of these are true of the short run.E) None of the above
F) All of the above

Question 3

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,the firm's profit is:

Accepted Answer

A)   maximized at 3 units of output.
B)   maximized at 4 units of output.
C)   maximized at 5 units of output.
D)   not maximized at any level of output given.E) A) and D)
F) All of the above

Question 4

An essential characteristic of a perfectly competitive market is that buyers and sellers have:

Accepted Answer

A)   no competition and so must set the market price on their own.
B)   so much competition that they must work together perfectly to set a market price.
C)   so much competition that they have no ability set their own price.
D)   no control over the price they set because it is determined by government.E) A) and C)
F) A) and B)

Question 5

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

Accepted Answer

A)   experience a loss due to increased competition.
B)   set prices artificially higher permanently.
C)   enter the market in hopes of capturing some profits.
D)   have to engage in more advertising in order to further stimulate the increase in demand.E) A) and B)
F) A) and C)

Question 6

When demand increases in a perfectly competitive market,in the short run __________________,and in the long run __________________.

Accepted Answer

A)   prices increase; supply increases
B)   prices increase; prices stay permanently higher
C)   quantity supplied increases; prices increase
D)   quantity supplied decreases; prices decreaseE) None of the above
F) All of the above

Question 7

When a firm faces a perfectly competitive market and buys its inputs from perfectly competitive markets,the only choice the firm has to affect its profits is to:

Accepted Answer

A)   increase its selling price.
B)   change the quantity it produces.
C)   decrease the selling price.
D)   decrease its cost of production lower than other firms.E) A) and D)
F) C) and D)

Question 8

For firms that sell one product in a perfectly competitive market,marginal revenue is:

Accepted Answer

A)   the additional revenue gained from selling one more unit.
B)   equal to average revenue.
C)   equal to market price.
D)   All of these are true.E) B) and D)
F) A) and D)

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 so are regulated by the government.
C)   are monopolies.
D)   are perfectly competitive.E) None of the above
F) A) and B)

Question 10

Which is not an essential characteristic of a perfectly competitive market?

Accepted Answer

A)   Goods are standardized.
B)   Buyers have perfect information.
C)   Goods from one seller cannot be distinguished from another's.
D)   Firms have limited market power.E) A) and B)
F) All of the above

Question 11

The MC of a firm:

Accepted Answer

A)   crosses TC at its minimum.
B)   crosses AVC and ATC at its minimum.
C)   crosses MR at the above the profit-maximizing level of output.
D)   is a horizontal line indicating that costs are constant in perfect competition.E) All of the above
F) B) and D)

Question 12

We assume that in the long run in a perfectly competitive market:

Accepted Answer

A)   the firms can enter or exit.
B)   the number of firms is fixed.
C)   the price will be constant.
D)   collusion will set in without government regulation.E) C) and D)
F) B) and D)

Question 13

When demand increases in a perfectly competitive market,in the short run _______________,and in the long run _______________.

Accepted Answer

A)   quantity supplied increases; supply increases
B)   quantity supplied increases; supply decreases
C)   quantity supplied decreases; supply decreases
D)   quantity supplied decreases; supply increasesE) All of the above
F) None of the above

Question 14

Firms in perfectly competitive markets who wish to maximize profits ought to produce:

Accepted Answer

A)   where marginal revenue equals market price.
B)   as many units as their scale allows.
C)   at capacity and plan to expand in the long run.
D)   where total profit is the greatest.E) B) and C)
F) None of the above

Question 15

In the short run,the fixed costs of a firm:

Accepted Answer

A)   must be paid regardless of level of output.
B)   should be strongly considered in deciding whether to shut down production.
C)   are zero when quantity produced is zero.
D)   must be higher than variable costs for the firm.E) B) and D)
F) A) and C)

Question 16

If a firm in a perfectly competitive market faces the curves in the graph shown and observes a market price of $16,the firm:

Accepted Answer

A)   can make positive profits by producing less than 43 units.
B)   can make positive profits by producing where MC = MR.
C)   cannot make positive profits and should shut down in the short run.
D)   should continue to operate in the short run, but plan to exit in the long run.E) All of the above
F) B) and C)

Exam 13: Perfect Competition

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

Correct Answer
verified

When demand increases in a perfectly competitive market,in the short run ,and in the long run .

Correct Answer
verified

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

Correct Answer
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Firms in perfectly competitive markets who wish to maximize profits ought to produce:

Correct Answer
verified

The MC of a firm:

Correct Answer
verified

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,the firm's profit is:

Correct Answer
verified

For firms that sell one product in a perfectly competitive market,marginal revenue is:

Correct Answer
verified

In the short run,the fixed costs of a firm:

Correct Answer
verified

When a firm faces a perfectly competitive market and buys its inputs from perfectly competitive markets,the only choice the firm has to affect its profits is to:

Correct Answer
verified

If a firm in a perfectly competitive market faces the curves in the graph shown and observes a market price of $16,the firm:

Correct Answer
verified

In a perfectly competitive market,when the price is below the minimum average total cost for all firms:

Correct Answer
verified

Most markets in the United States:

Correct Answer
verified

An essential characteristic of a perfectly competitive market is that buyers and sellers have:

Correct Answer
verified

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

Correct Answer
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Which is not an essential characteristic of a perfectly competitive market?

Correct Answer
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We assume that in the long run in a perfectly competitive market:

Correct Answer
verified

Exam 13: Perfect Competition

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

Correct AnswerverifiedShow Answer

When demand increases in a perfectly competitive market,in the short run __________________,and in the long run __________________.

Correct AnswerverifiedShow Answer

When demand increases in a perfectly competitive market,in the short run _______________,and in the long run _______________.

Correct AnswerverifiedShow Answer

Firms in perfectly competitive markets who wish to maximize profits ought to produce:

Correct AnswerverifiedShow Answer

The MC of a firm:

Correct AnswerverifiedShow Answer

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,the firm's profit is:

Correct AnswerverifiedShow Answer

For firms that sell one product in a perfectly competitive market,marginal revenue is:

Correct AnswerverifiedShow Answer

In the short run,the fixed costs of a firm:

Correct AnswerverifiedShow Answer

When a firm faces a perfectly competitive market and buys its inputs from perfectly competitive markets,the only choice the firm has to affect its profits is to:

Correct AnswerverifiedShow Answer

If a firm in a perfectly competitive market faces the curves in the graph shown and observes a market price of $16,the firm:

Correct AnswerverifiedShow Answer

In a perfectly competitive market,when the price is below the minimum average total cost for all firms:

Correct AnswerverifiedShow Answer

Most markets in the United States:

Correct AnswerverifiedShow Answer

An essential characteristic of a perfectly competitive market is that buyers and sellers have:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which is not an essential characteristic of a perfectly competitive market?

Correct AnswerverifiedShow Answer

We assume that in the long run in a perfectly competitive market:

Correct AnswerverifiedShow Answer

Correct Answer
verified

When demand increases in a perfectly competitive market,in the short run ,and in the long run .

Correct Answer
verified

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

Correct Answer
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