Question 1

Figure 14-8
In the figure below,panel (a) depicts the linear marginal cost of a firm in a competitive market,and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms.  
-Refer to Figure 14-8.If there are 600 identical firms in this market,what is the value of Q1?

Accepted Answer

A)   6,000
B)   12,000
C)   60,000
D)   120,000E) All of the above
F) B) and C)

Question 2

When new firms enter a perfectly competitive market,

Accepted Answer

A)   economic profits of existing firms will continue to be zero.
B)   entering firms will earn zero economic profit upon entry into the market.
C)   existing firms may see their costs rise if more firms compete for limited resources.
D)   prices will rise as existing firms raise prices to keep new firms out of the market.E) A) and B)
F) B) and C)

Question 3

Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In long-run equilibrium,market price is determined by

Accepted Answer

A)   the minimum point on the firms' average variable cost curve.
B)   the minimum point on the firms' average total cost curve.
C)   a firm's level of sunk costs.
D)   Both b and c are correct.E) None of the above
F) A) and B)

Question 4

Firms that operate in perfectly competitive markets try to

Accepted Answer

A)   maximize revenues.
B)   maximize profits.
C)   equate marginal revenue with average total cost.
D)   Both b and c are correct.E) All of the above
F) B) and D)

Question 5

Table 14-8
The following table presents cost and revenue information for Soper's Port Vineyard.
 
-Refer to Table 14-8.What is Soper's Port Vineyard's economic profit at their profit maximizing point?

Accepted Answer

A)   $78
B)   $243
C)   $278
D)   $375E) C) and D)
F) A) and D)

Question 6

Table 14-6
John's Vineyard
 
-Refer to Table 14-6.What is the total revenue from selling 4 units?

Accepted Answer

A)   $80
B)   $137
C)   $320
D)   $480E) C) and D)
F) B) and D)

Question 7

Which of the following statements is correct regarding a firm's decision-making?

Accepted Answer

A)   The decision to shut down and the decision to exit are both short-run decisions.
B)   The decision to shut down and the decision to exit are both long-run decisions.
C)   The decision to shut down is a short-run decision,whereas the decision to exit is a long-run decision.
D)   The decision to exit is a short-run decision,whereas the decision to shut down is a long-run decision.E) B) and C)
F) A) and D)

Question 8

If occupational safety laws were changed so that firms no longer had to take expensive steps to meet regulatory requirements,we would expect that

Accepted Answer

A)   the demand for products in this industry would increase.
B)   the market price of products in this industry would decrease in the short run but not in the long run.
C)   the firms in the industry would make a long-run economic profit.
D)   competition would force producers to pass the lower production costs on to consumers in the long run.E) A) and C)
F) All of the above

Question 9

When fixed costs are ignored because they are irrelevant to a business's production decision,they are called

Accepted Answer

A)   explicit costs.
B)   implicit costs.
C)   sunk costs.
D)   opportunity costs.E) All of the above
F) A) and D)

Question 10

Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In this market,an increase in demand will

Accepted Answer

A)   increase price in the short run but not in the long run.
B)   increase price in the long run but not in the short run.
C)   increase price both in the short and the long run.
D)   not affect price in either the short or the long run.E) B) and D)
F) All of the above

Question 11

Scenario 14-1
Assume a certain firm is producing Q = 1,000 units of output.At Q = 1,000,the firm's marginal cost equals $15 and its average total cost equals $11.The firm sells its output for $12 per unit.
-Refer to Scenario 14-1.At Q = 999,the firm's profits equal

Accepted Answer

A)   $993.
B)   $997.
C)   $1,003.
D)   $1,007.E) All of the above
F) C) and D)

Question 12

Describe the difference between average revenue and marginal revenue.Why are both of these revenue measures important to a profit-maximizing firm?

Accepted Answer

Average revenue is total revenue divided...

Question 13

In the short run,a firm operating in a competitive industry will produce the quantity of output where price equals marginal cost as long as the

Accepted Answer

A)   price is less than average total cost.
B)   marginal revenue exceeds the marginal cost.
C)   price is greater than average variable cost.
D)   marginal cost exceeds the marginal revenue.E) A) and B)
F) None of the above

Question 14

Scenario 14-4
A study sponsored by the Food Consumer Safety Board found that consumption of irradiated tomatoes increased the health of laboratory rats.As a result of national press coverage of the report,the demand for irradiated tomatoes increased dramatically.Organic farmers were able to switch from organic production of tomatoes to irradiated production with no additional cost.Assume that the tomato market satisfies all of the assumptions of perfect competition.
-Refer to Scenario 14-4.If the increased production of irradiated tomatoes caused a rise in the marginal transportation costs of moving irradiated tomatoes to market,the

Accepted Answer

A)   short-run market supply curve for irradiated tomatoes would be affected but not the long-run market supply.
B)   long-run market supply curve for irradiated tomatoes would be perfectly elastic.
C)   long-run market supply of irradiated tomatoes would be downward sloping.
D)   long-run market supply of irradiated tomatoes would be upward sloping.E) B) and C)
F) B) and D)

Question 15

In the long-run equilibrium of a market with free entry and exit,if all firms have the same cost structure,then

Accepted Answer

A)   marginal cost exceeds average total cost.
B)   the price of the good exceeds average total cost.
C)   average total cost exceeds the price of the good.
D)   firms are operating at their efficient scale.E) C) and D)
F) B) and C)

Question 16

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each.Which of the following statements is correct?

Accepted Answer

A)   i) only
B)   iii) only
C)   i) and ii) only
D)   i) ,ii) ,and iii) E) A) and B)
F) A) and C)

Question 17

The long-run supply curve for a competitive industry

Accepted Answer

A)   may be horizontal if entry into the industry lowers average total cost.
B)   may be upward-sloping if higher-cost firms enter the industry.
C)   will be horizontal if there is free entry into the industry.
D)   will be upward-sloping if there are barriers to entry into the industry.E) All of the above
F) None of the above

Question 18

Suppose a firm is considering producing zero units of output.We call this exiting an industry in the short run and shutting down in the long run.

Accepted Answer

A) True 
 B)False

Question 19

Figure 14-8
In the figure below,panel (a) depicts the linear marginal cost of a firm in a competitive market,and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms.  
-Refer to Figure 14-8.If there are 200 identical firms in this market,what level of output will be supplied to the market when price is $2.00?

Accepted Answer

A)   2,000
B)   10,000
C)   20,000
D)   40,000E) A) and B)
F) B) and C)

Question 20

Figure 14-5 
-Refer to Figure 14-5.Firms will shut down in the short run if the market price

Accepted Answer

A)   exceeds P3.
B)   is less than P1.
C)   is greater than P1 but less than P3.
D)   exceeds P2.E) A) and D)
F) C) and D)

Exam 14: Firms in Competitive Markets

When new firms enter a perfectly competitive market,

Correct Answer
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Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In this market,an increase in demand will

Correct Answer
verified

In the long-run equilibrium of a market with free entry and exit,if all firms have the same cost structure,then

Correct Answer
verified

Correct Answer
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Table 14-8 The following table presents cost and revenue information for Soper's Port Vineyard. -Refer to Table 14-8.What is Soper's Port Vineyard's economic profit at their profit maximizing point?

Correct Answer
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Suppose a firm is considering producing zero units of output.We call this exiting an industry in the short run and shutting down in the long run.

Correct Answer
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Which of the following statements is correct regarding a firm's decision-making?

Correct Answer
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When fixed costs are ignored because they are irrelevant to a business's production decision,they are called

Correct Answer
verified

Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In long-run equilibrium,market price is determined by

Correct Answer
verified

Describe the difference between average revenue and marginal revenue.Why are both of these revenue measures important to a profit-maximizing firm?

Correct Answer
verified
Average revenue is total revenue divided...
View Answer

Figure 14-5 -Refer to Figure 14-5.Firms will shut down in the short run if the market price

Correct Answer
verified

If occupational safety laws were changed so that firms no longer had to take expensive steps to meet regulatory requirements,we would expect that

Correct Answer
verified

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each.Which of the following statements is correct?

Correct Answer
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Correct Answer
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Scenario 14-1 Assume a certain firm is producing Q = 1,000 units of output.At Q = 1,000,the firm's marginal cost equals $15 and its average total cost equals $11.The firm sells its output for $12 per unit. -Refer to Scenario 14-1.At Q = 999,the firm's profits equal

Correct Answer
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Table 14-6 John's Vineyard -Refer to Table 14-6.What is the total revenue from selling 4 units?

Correct Answer
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The long-run supply curve for a competitive industry

Correct Answer
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Firms that operate in perfectly competitive markets try to

Correct Answer
verified

In the short run,a firm operating in a competitive industry will produce the quantity of output where price equals marginal cost as long as the

Correct Answer
verified

Correct Answer
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Exam 14: Firms in Competitive Markets

When new firms enter a perfectly competitive market,

Correct AnswerverifiedShow Answer

Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In this market,an increase in demand will

Correct AnswerverifiedShow Answer

In the long-run equilibrium of a market with free entry and exit,if all firms have the same cost structure,then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 14-8 The following table presents cost and revenue information for Soper's Port Vineyard. -Refer to Table 14-8.What is Soper's Port Vineyard's economic profit at their profit maximizing point?

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Suppose a firm is considering producing zero units of output.We call this exiting an industry in the short run and shutting down in the long run.

Correct AnswerverifiedShow Answer

Which of the following statements is correct regarding a firm's decision-making?

Correct AnswerverifiedShow Answer

When fixed costs are ignored because they are irrelevant to a business's production decision,they are called

Correct AnswerverifiedShow Answer

Consider a competitive market with a large number of identical firms.The firms in this market do not use any resources that are available only in limited quantities.In long-run equilibrium,market price is determined by

Correct AnswerverifiedShow Answer

Describe the difference between average revenue and marginal revenue.Why are both of these revenue measures important to a profit-maximizing firm?

Correct AnswerverifiedAverage revenue is total revenue divided...View AnswerShow Answer

Figure 14-5 -Refer to Figure 14-5.Firms will shut down in the short run if the market price

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If occupational safety laws were changed so that firms no longer had to take expensive steps to meet regulatory requirements,we would expect that

Correct AnswerverifiedShow Answer

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Scenario 14-1 Assume a certain firm is producing Q = 1,000 units of output.At Q = 1,000,the firm's marginal cost equals $15 and its average total cost equals $11.The firm sells its output for $12 per unit. -Refer to Scenario 14-1.At Q = 999,the firm's profits equal

Correct AnswerverifiedShow Answer

Table 14-6 John's Vineyard -Refer to Table 14-6.What is the total revenue from selling 4 units?

Correct AnswerverifiedShow Answer

The long-run supply curve for a competitive industry

Correct AnswerverifiedShow Answer

Firms that operate in perfectly competitive markets try to

Correct AnswerverifiedShow Answer

In the short run,a firm operating in a competitive industry will produce the quantity of output where price equals marginal cost as long as the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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Average revenue is total revenue divided...
View Answer

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