Question 1

Table 14-2
The table represents a demand curve faced by a firm in a competitive market. 
-Refer to Table 14-2. For this firm, the marginal revenue from selling the 3rd unit is

Accepted Answer

A)  $12.
B)  $4.
C)  $3.
D)  $1.E) A) and B)
F) None of the above

Question 2

You purchase a $30, nonrefundable ticket to a play at a local theater. Ten minutes into the show you realize that it is not a very good show and place only a $10 value on seeing the remainder of the show. Alternatively you could leave the theater and go home and watch TV or read a book. You place an $8 value on watching TV and a $12 value on reading a book.

Accepted Answer

A)  You should stay and watch the remainder of the show.
B)  You should go home and watch TV.
C)  You should go home and read a book.
D)  You should go home and either watch TV or read a book.E) A) and C)
F) C) and D)

Question 3

Figure 14-3
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-3. The firm will earn zero economic profit if the market price is

Accepted Answer

A)  $0.
B)  $6.
C)  $7.
D)  $10.E) All of the above
F) B) and C)

Question 4

The term shutdown

Accepted Answer

A)  and the term exit both refer to short-run decisions that a firm might make.
B)  and the term exit both refer to long-run decisions that a firm might make.
C)  refers to a short-run decision that a firm might make, whereas the term exit refers to a long-run decision that a firm might make.
D)  refers to a long-run decision that a firm might make, whereas the term exit refers to a short-run decision that a firm might make.E) B) and C)
F) A) and D)

Question 5

The firm will make the most profits if it produces the quantity of output at which

Accepted Answer

A)  marginal cost equals average cost.
B)  profit per unit is greatest.
C)  marginal revenue equals total revenue.
D)  marginal revenue equals marginal cost.E) A) and B)
F) None of the above

Question 6

Table 14-1 
-Refer to Table 14-1. If the firm doubles its output from 3 to 6 units, total revenue will

Accepted Answer

A)  increase by less than $15.
B)  increase by exactly $15.
C)  increase by more than $15.
D)  Total revenue cannot be determined from the information provided.E) B) and C)
F) A) and D)

Question 7

Profit-maximizing firms enter a competitive market when existing firms in that market have

Accepted Answer

A)  total revenues that exceed fixed costs.
B)  total revenues that exceed total variable costs.
C)  average total costs that exceed average revenue.
D)  average total costs less than market price.E) A) and D)
F) B) and C)

Question 8

When a resource used in the production of a good sold in a competitive market is available in only limited quantities, the long-run supply curve is likely to be upward sloping.

Accepted Answer

A) True 
 B)False

Question 9

If all firms have the same costs of production, then in long-run equilibrium,

Accepted Answer

A)  price exceeds average total cost for all firms.
B)  price exceeds marginal cost for all firms.
C)  some firms may earn positive economic profits.
D)  all firms have zero economic profits and just cover their opportunity costs.E) B) and C)
F) A) and B)

Question 10

In a perfectly competitive market, the horizontal sum of all the individual firms' supply curves is

Accepted Answer

A)  zero.
B)  equal to the industry profits.
C)  the market supply curve.
D)  a horizontal line.E) None of the above
F) A) and B)

Question 11

A firm that has little ability to influence market prices operates in a

Accepted Answer

A)  competitive market.
B)  strategic market.
C)  thin market.
D)  power market.E) C) and D)
F) A) and B)

Question 12

Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market where firms are experiencing economic losses. Identify costs, revenue, and the economic losses on your graph. Using your graph, determine whether an individual firm will shut down in the short run, or choose to remain in the market. Explain your answer.

Accepted Answer

The losses and revenues are identified o...

Question 13

A miniature golf course is a good example of where fixed costs become relevant to the decision of when to open and when to close for the season.

Accepted Answer

A) True 
 B)False

Question 14

If a firm notices that its average revenue equals the current market price, that firm must be participating in a competitive market.

Accepted Answer

A) True 
 B)False

Question 15

A competitive firm's short-run supply curve intersects its average-total-cost curve at the point  
What is the value of marginal cost at Q = 450?

Accepted Answer

The firm's...

Question 16

If Bradley's Butcher Shop sells its product in a competitive market, then

Accepted Answer

A)  the price of that product depends on the quantity of the product that Bradley's Butcher Shop produces and sells because the firm's demand curve is downward sloping.
B)  Bradley's Butcher Shop's total cost must be a constant multiple of its quantity of output.
C)  Bradley's Butcher Shop's total revenue must be proportional to its quantity of output.
D)  Bradley's Butcher Shop's total revenue must be equal to its average revenue.E) None of the above
F) A) and B)

Question 17

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) A) and D)
F) A) and C)

Question 18

When a firm sells 1 million coat hangers, its total revenue is $2 million. When it sells 2 million coat hangers, its total revenue is $3.5 million. Is this firm a price taker? Explain.

Accepted Answer

No. When the firm sells 1 million coat h...

Question 19

A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $4.75. The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses).

Accepted Answer

A) True 
 B)False

Question 20

Use a graph to demonstrate the circumstances that would prevail in a competitive market where firms are earning economic profits. Can this scenario be maintained in the long run? Explain your answer.

Accepted Answer

In a competitive market where firms are ...

Exam 14: Firms in Competitive Markets

When a firm sells 1 million coat hangers, its total revenue is $2 million. When it sells 2 million coat hangers, its total revenue is $3.5 million. Is this firm a price taker? Explain.

Correct Answer
verified
No. When the firm sells 1 million coat h...
View Answer

If all firms have the same costs of production, then in long-run equilibrium,

Correct Answer
verified

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3. The firm will earn zero economic profit if the market price is

Correct Answer
verified

Table 14-2 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-2. For this firm, the marginal revenue from selling the 3rd unit is

Correct Answer
verified

When a resource used in the production of a good sold in a competitive market is available in only limited quantities, the long-run supply curve is likely to be upward sloping.

Correct Answer
verified

A miniature golf course is a good example of where fixed costs become relevant to the decision of when to open and when to close for the season.

Correct Answer
verified

If a firm notices that its average revenue equals the current market price, that firm must be participating in a competitive market.

Correct Answer
verified

A firm that has little ability to influence market prices operates in a

Correct Answer
verified

Correct Answer
verified
The losses and revenues are identified o...
View Answer

A competitive firm's short-run supply curve intersects its average-total-cost curve at the point What is the value of marginal cost at Q = 450?

Correct Answer
verified
The firm's...
View Answer

A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $4.75. The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses).

Correct Answer
verified

Use a graph to demonstrate the circumstances that would prevail in a competitive market where firms are earning economic profits. Can this scenario be maintained in the long run? Explain your answer.

Correct Answer
verified
In a competitive market where firms are ...
View Answer

If Bradley's Butcher Shop sells its product in a competitive market, then

Correct Answer
verified

In a perfectly competitive market, the horizontal sum of all the individual firms' supply curves is

Correct Answer
verified

The term shutdown

Correct Answer
verified

Profit-maximizing firms enter a competitive market when existing firms in that market have

Correct Answer
verified

The firm will make the most profits if it produces the quantity of output at which

Correct Answer
verified

Table 14-1 -Refer to Table 14-1. If the firm doubles its output from 3 to 6 units, total revenue will

Correct Answer
verified

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 this market, an increase in demand will

Correct Answer
verified

Exam 14: Firms in Competitive Markets

When a firm sells 1 million coat hangers, its total revenue is $2 million. When it sells 2 million coat hangers, its total revenue is $3.5 million. Is this firm a price taker? Explain.

Correct AnswerverifiedNo. When the firm sells 1 million coat h...View AnswerShow Answer

If all firms have the same costs of production, then in long-run equilibrium,

Correct AnswerverifiedShow Answer

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3. The firm will earn zero economic profit if the market price is

Correct AnswerverifiedShow Answer

Table 14-2 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-2. For this firm, the marginal revenue from selling the 3rd unit is

Correct AnswerverifiedShow Answer

When a resource used in the production of a good sold in a competitive market is available in only limited quantities, the long-run supply curve is likely to be upward sloping.

Correct AnswerverifiedShow Answer

A miniature golf course is a good example of where fixed costs become relevant to the decision of when to open and when to close for the season.

Correct AnswerverifiedShow Answer

If a firm notices that its average revenue equals the current market price, that firm must be participating in a competitive market.

Correct AnswerverifiedShow Answer

A firm that has little ability to influence market prices operates in a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe losses and revenues are identified o...View AnswerShow Answer

A competitive firm's short-run supply curve intersects its average-total-cost curve at the point What is the value of marginal cost at Q = 450?

Correct AnswerverifiedThe firm's...View AnswerShow Answer

A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $4.75. The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses).

Correct AnswerverifiedShow Answer

Use a graph to demonstrate the circumstances that would prevail in a competitive market where firms are earning economic profits. Can this scenario be maintained in the long run? Explain your answer.

Correct AnswerverifiedIn a competitive market where firms are ...View AnswerShow Answer

If Bradley's Butcher Shop sells its product in a competitive market, then

Correct AnswerverifiedShow Answer

In a perfectly competitive market, the horizontal sum of all the individual firms' supply curves is

Correct AnswerverifiedShow Answer

The term shutdown

Correct AnswerverifiedShow Answer

Profit-maximizing firms enter a competitive market when existing firms in that market have

Correct AnswerverifiedShow Answer

The firm will make the most profits if it produces the quantity of output at which

Correct AnswerverifiedShow Answer

Table 14-1 -Refer to Table 14-1. If the firm doubles its output from 3 to 6 units, total revenue will

Correct AnswerverifiedShow Answer

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

Correct Answer
verified
No. When the firm sells 1 million coat h...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The losses and revenues are identified o...
View Answer

Correct Answer
verified
The firm's...
View Answer

Correct Answer
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Correct Answer
verified
In a competitive market where firms are ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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