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 total revenue when 23 units are produced?

Accepted Answer

A)  $230
B)  $10
C)  $23
D)  $2.30E) A) and B)
F) B) and C)

Question 2

In the short run,a firm that finds itself earning a loss should compare the market price to which cost in order to determine how to minimize its losses?

Accepted Answer

A)  Average total costs
B)  Average variable costs
C)  Marginal costs
D)  Fixed costsE) C) and D)
F) B) and C)

Question 3

In the long run,firms will enter a perfectly competitive market if the existing firms are making:

Accepted Answer

A)  a profit.
B)  negative profits.
C)  zero profits.
D)  Any of these could be true.E) A) and C)
F) All of the above

Question 4

If the 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 true.E) C) and D)
F) None of the above

Question 5

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

Accepted Answer

A)  that earns zero economic profits.
B)  that does not cover minimum average variable costs.
C)  where marginal costs are less than average variable costs.
D)  All of these are true.E) A) and B)
F) A) and C)

Question 6

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

Accepted Answer

A)  must be paid regardless of level of output.
B)  are irrelevant in deciding whether to shut down production.
C)  are greater than zero when quantity produced is zero.
D)  All of these are true.E) C) and D)
F) All of the above

Question 7

A firm realizes that the market price has fallen below its average total costs,and it is now earning a loss.What is the best action for the firm to take in the short run?

Accepted Answer

A)  Stay open if price is greater than average variable costs.
B)  Shut down immediately and pay fixed costs only.
C)  Stay open if total revenue is greater than fixed costs.
D)  Shut down if price is greater than average variable costs.E) B) and C)
F) A) and C)

Question 8

As long as average revenue remains above average total cost:

Accepted Answer

A)  total revenue will be higher than total cost.
B)  the firm will be making profits.
C)  price will be greater than average total cost.
D)  All of these are true.E) A) and C)
F) B) and C)

Question 9

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)  None of these is true.E) B) and D)
F) B) and C)

Question 10

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:

Accepted Answer

A)  firms will not enter this market.
B)  profits are being maximized.
C)  it is producing at an efficient scale.
D)  All of these are true.E) A) and B)
F) A) and C)

Question 11

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

Accepted Answer

A)  produce a quantity that maximizes profits.
B)  earn a zero economic profit.
C)  choose the level of output that minimizes average total costs.
D)  All of these are true.E) A) and C)
F) All of the above

Question 12

In a perfectly competitive market,total revenue:

Accepted Answer

A)  measures how much revenue the firm takes in from all sales.
B)  is equal to price multiplied by quantity sold.
C)  only varies due to changes in quantity,since price is constant.
D)  All of these are true.E) A) and D)
F) None of the above

Question 13

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) None of the above

Question 14

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)  None of these is true.E) A) and B)
F) B) and D)

Question 15

This graph represents the cost and revenue curves of a firm in a perfectly competitive market. 
According the graph shown,the firm's most efficient scale of operation is to produce quantity:

Accepted Answer

A)  Q1.
B)  Q2.
C)  Q3.
D)  Any quantity as long as P1 is charged.E) B) and D)
F) All of the above

Question 16

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

Accepted Answer

A)  marginal revenue and marginal cost are equal.
B)  marginal revenue and market price are equal.
C)  marginal revenue and average revenue are equal.
D)  marginal cost and average cost are equal.E) A) and C)
F) B) and D)

Question 17

For a firm in a perfectly competitive market,if it is producing at a level of output where marginal costs are equal to marginal revenue:

Accepted Answer

A)  it should cut back production to increase profits.
B)  it should increase production to increase profits.
C)  it is producing a profit-maximizing quantity.
D)  The firm is not maximizing profits,but it is impossible to tell how quantity should be changed without more information.E) B) and C)
F) C) and D)

Question 18

Which of the following holds true at the chosen level of output in the long run for firms in a perfectly competitive market?

Accepted Answer

A)  P = MC
B)  P = minimum ATC
C)  MR = MC
D)  All of these are true.E) None of the above
F) A) and B)

Question 19

This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. nd unit? A) $10.00 B) $7.50 C) $27.50 D) $20.00" class="answers-bank-image d-inline" rel="preload" >
According to the table shown,what is the firm's marginal cost from producing the 2nd unit?

Accepted Answer

A)  $10.00
B)  $7.50
C)  $27.50
D)  $20.00E) B) and D)
F) A) and C)

Question 20

The opposite of being a price taker is:

Accepted Answer

A)  having market power.
B)  having no control over the market price.
C)  being able to influence the market price.
D)  None of these describe the opposite of price taker.E) B) and D)
F) C) and D)

Exam 13: Perfect Competition

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

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

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Which of the following holds true at the chosen level of output in the long run for firms in a perfectly competitive market?

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In a perfectly competitive market,total revenue:

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As long as average revenue remains above average total cost:

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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:

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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,what is the firm's marginal cost from producing the 2nd unit?

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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:

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This graph represents the cost and revenue curves of a firm in a perfectly competitive market. According the graph shown,the firm's most efficient scale of operation is to produce quantity:

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For a firm in a perfectly competitive market,if it is producing at a level of output where marginal costs are equal to marginal revenue:

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

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The opposite of being a price taker is:

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

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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 total revenue when 23 units are produced?

Correct AnswerverifiedShow Answer

In the short run,a firm that finds itself earning a loss should compare the market price to which cost in order to determine how to minimize its losses?

Correct AnswerverifiedShow Answer

A firm realizes that the market price has fallen below its average total costs,and it is now earning a loss.What is the best action for the firm to take in the short run?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Standardized goods and services refers to those that:

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In the long run,firms will enter a perfectly competitive market if the existing firms are making:

Correct AnswerverifiedShow Answer

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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,what is the firm's marginal cost from producing the 2^nd unit?

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