Question 1

Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by

Accepted Answer

A)  decreases in production costs resulting from more firms coming into the market.
B)  a breakdown of the "free entry and exit" feature of competition.
C)  a breakdown of the "price taking" feature of competition.
D)  the fact that a resource used in the production of the good is available only in limited quantities.E) C) and D)
F) B) and D)

Question 2

A competitive market begins in a situation of long-run equilibrium. Then, there is an increase in demand. Describe the process that eventually leads to a new long-run equilibrium.

Accepted Answer

The increase in demand results in firms ...

Question 3

Table 14-8
Suppose that a firm in a competitive market faces the following revenues and costs: 
-Refer to Table 14-8. The firm will produce a quantity greater than 3 because at 3 units of output, marginal cost

Accepted Answer

A)  is greater than marginal revenue.
B)  equals marginal revenue.
C)  is less than marginal revenue.
D)  is minimized.E) None of the above
F) C) and D)

Question 4

Table 14-12 
-Refer to Table 14-12. What is the total revenue from selling 4 units?

Accepted Answer

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

Question 5

Which of the following characteristics of competitive markets is necessary for firms to be price takers?
(i) There are many sellers.
(ii) Firms can freely enter or exit the market.
(iii) Goods offered for sale are largely the same.

Accepted Answer

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

Question 6

Figure 14-14  
-Refer to Figure 14-14. Assume that the market starts in equilibrium at point W in panel (b) . An increase in demand from D0 to D1 will result in

Accepted Answer

A)  a new market equilibrium at point X.
B)  an eventual increase in the number of firms in the market and a new long-run equilibrium at point Z.
C)  rising prices and falling profits for existing firms in the market.
D)  falling prices and falling profits for existing firms in the market.E) A) and B)
F) None of the above

Question 7

Does a competitive firm have the ability to influence the quantity of output it supplies? Does it have the ability to influence its average revenue?

Accepted Answer

A competitive firm has the abi...

Question 8

When it produces and sells 90 units of output, a competitive firm's average total cost is $42 and its profit is $360. What is the firm's marginal revenue if it sells 100 units of output?

Accepted Answer

At

, profit is

, s...

Question 9

Figure 14-1
Suppose that a firm in a competitive market has the following cost curves: 
-Refer to Figure 14-1. If the market price falls below $4.50, the firm will earn

Accepted Answer

A)  positive economic profits in the short run.
B)  negative economic profits in the short run but remain in business.
C)  negative economic profits in the short run and shut down.
D)  zero economic profits in the short run.E) B) and D)
F) B) and C)

Question 10

Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-2. Which of the four prices corresponds to a firm earning positive economic profits in the short run?

Accepted Answer

A)  Pa
B)  Pb
C)  Pc
D)  PdE) A) and B)
F) A) and C)

Question 11

If some resources used in the production of a good are only available in limited quantities, then the long run market supply curve will be perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 12

A popular resort restaurant will maximize profits if it chooses to stay open during the less-crowded "off season" when its total revenues exceed its variable costs.

Accepted Answer

A) True 
 B)False

Question 13

In the long run, a firm will enter a competitive industry if

Accepted Answer

A)  total revenue exceeds total cost.
B)  the price exceeds average total cost.
C)  the firm can earn economic profits.
D)  All of the above are correct.E) A) and D)
F) A) and B)

Question 14

Scenario 14-1. A competitive firm sells its output for $20 per unit. When the firm produces 200 units of output, average variable cost is $16, marginal cost is $18, and average total cost is $23.
-Refer to Scenario 14-1. Calculate the firm's total revenue, total cost, and profit at 200 units of output.

Accepted Answer

The answer of Scenario 14-1. A competitive firm sells its...

Question 15

Figure 14-13
Suppose a firm in a competitive industry has the following cost curves: 
-Refer to Figure 14-13. If the price is $4.50 in the short run, what will happen in the long run?

Accepted Answer

A)  Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry.
B)  Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.
C)  Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.
D)  Because the price is below the firm's average variable costs, the firms will shut down.E) C) and D)
F) All of the above

Question 16

​Firms operating in a perfectly competitive market have an incentive to advertise their products since this will increase the demand for their products.

Accepted Answer

A) True 
 B)False

Question 17

Because nothing can be done about sunk costs, they are irrelevant to decisions about business strategy.

Accepted Answer

A) True 
 B)False

Question 18

Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-2. If the market price is Pb, in the short run the firm will earn

Accepted Answer

A)  positive economic profits.
B)  negative economic profits but will try to remain open.
C)  negative economic profits and will shut down.
D)  zero economic profits.E) A) and D)
F) C) and D)

Question 19

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct?
(i) Marginal revenue equals $5.
(ii) Average revenue equals $5.
(iii) Price equals $5.

Accepted Answer

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

Question 20

Figure 14-8
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-8. Which segment of the supply curve represents the firm shutting down?

Accepted Answer

A)  ABCD
B)  BCD
C)  CD
D)  ABE) B) and D)
F) B) and C)

Exam 14: Firms in Competitive Markets

A popular resort restaurant will maximize profits if it chooses to stay open during the less-crowded "off season" when its total revenues exceed its variable costs.

Correct Answer
verified

A competitive market begins in a situation of long-run equilibrium. Then, there is an increase in demand. Describe the process that eventually leads to a new long-run equilibrium.

Correct Answer
verified
The increase in demand results in firms ...
View Answer

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5.

Correct Answer
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Correct Answer
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Which of the following characteristics of competitive markets is necessary for firms to be price takers? (i) There are many sellers. (ii) Firms can freely enter or exit the market. (iii) Goods offered for sale are largely the same.

Correct Answer
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In the long run, a firm will enter a competitive industry if

Correct Answer
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Figure 14-14 -Refer to Figure 14-14. Assume that the market starts in equilibrium at point W in panel (b) . An increase in demand from D0 to D1 will result in

Correct Answer
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Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-2. If the market price is Pb, in the short run the firm will earn

Correct Answer
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Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by

Correct Answer
verified

If some resources used in the production of a good are only available in limited quantities, then the long run market supply curve will be perfectly elastic.

Correct Answer
verified

Table 14-8 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-8. The firm will produce a quantity greater than 3 because at 3 units of output, marginal cost

Correct Answer
verified

Table 14-12 -Refer to Table 14-12. What is the total revenue from selling 4 units?

Correct Answer
verified

Because nothing can be done about sunk costs, they are irrelevant to decisions about business strategy.

Correct Answer
verified

Does a competitive firm have the ability to influence the quantity of output it supplies? Does it have the ability to influence its average revenue?

Correct Answer
verified
A competitive firm has the abi...
View Answer

Firms operating in a perfectly competitive market have an incentive to advertise their products since this will increase the demand for their products.

Correct Answer
verified

Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-2. Which of the four prices corresponds to a firm earning positive economic profits in the short run?

Correct Answer
verified

When it produces and sells 90 units of output, a competitive firm's average total cost is $42 and its profit is $360. What is the firm's marginal revenue if it sells 100 units of output?

Correct Answer
verified
At , profit is , s...
View Answer

Figure 14-8 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-8. Which segment of the supply curve represents the firm shutting down?

Correct Answer
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Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 14-1. If the market price falls below $4.50, the firm will earn

Correct Answer
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Figure 14-13 Suppose a firm in a competitive industry has the following cost curves: -Refer to Figure 14-13. If the price is $4.50 in the short run, what will happen in the long run?

Correct Answer
verified

Exam 14: Firms in Competitive Markets

A popular resort restaurant will maximize profits if it chooses to stay open during the less-crowded "off season" when its total revenues exceed its variable costs.

Correct AnswerverifiedShow Answer

A competitive market begins in a situation of long-run equilibrium. Then, there is an increase in demand. Describe the process that eventually leads to a new long-run equilibrium.

Correct AnswerverifiedThe increase in demand results in firms ...View AnswerShow Answer

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following characteristics of competitive markets is necessary for firms to be price takers? (i) There are many sellers. (ii) Firms can freely enter or exit the market. (iii) Goods offered for sale are largely the same.

Correct AnswerverifiedShow Answer

In the long run, a firm will enter a competitive industry if

Correct AnswerverifiedShow Answer

Figure 14-14 -Refer to Figure 14-14. Assume that the market starts in equilibrium at point W in panel (b) . An increase in demand from D0 to D1 will result in

Correct AnswerverifiedShow Answer

Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-2. If the market price is Pb, in the short run the firm will earn

Correct AnswerverifiedShow Answer

Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by

Correct AnswerverifiedShow Answer

If some resources used in the production of a good are only available in limited quantities, then the long run market supply curve will be perfectly elastic.

Correct AnswerverifiedShow Answer

Table 14-8 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-8. The firm will produce a quantity greater than 3 because at 3 units of output, marginal cost

Correct AnswerverifiedShow Answer

Table 14-12 -Refer to Table 14-12. What is the total revenue from selling 4 units?

Correct AnswerverifiedShow Answer

Because nothing can be done about sunk costs, they are irrelevant to decisions about business strategy.

Correct AnswerverifiedShow Answer

Does a competitive firm have the ability to influence the quantity of output it supplies? Does it have the ability to influence its average revenue?

Correct AnswerverifiedA competitive firm has the abi...View AnswerShow Answer

​Firms operating in a perfectly competitive market have an incentive to advertise their products since this will increase the demand for their products.

Correct AnswerverifiedShow Answer

Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-2. Which of the four prices corresponds to a firm earning positive economic profits in the short run?

Correct AnswerverifiedShow Answer

When it produces and sells 90 units of output, a competitive firm's average total cost is $42 and its profit is $360. What is the firm's marginal revenue if it sells 100 units of output?

Correct AnswerverifiedAt , profit is , s...View AnswerShow Answer

Figure 14-8 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-8. Which segment of the supply curve represents the firm shutting down?

Correct AnswerverifiedShow Answer

Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 14-1. If the market price falls below $4.50, the firm will earn

Correct AnswerverifiedShow Answer

Figure 14-13 Suppose a firm in a competitive industry has the following cost curves: -Refer to Figure 14-13. If the price is $4.50 in the short run, what will happen in the long run?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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The increase in demand results in firms ...
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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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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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Correct Answer
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Correct Answer
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A competitive firm has the abi...
View Answer

Firms operating in a perfectly competitive market have an incentive to advertise their products since this will increase the demand for their products.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
At , profit is , s...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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