Question 1

The definition of a price taker is:

Accepted Answer

A)   having market power.
B)   having no control over the market price.
C)   being competitive.
D)   having government determine what you sell goods and services for.E) C) and D)
F) All of the above

Question 2

Given the shutdown rule,what does the firm's short-run supply curve look like? It is the section of the:

Accepted Answer

A)   ATC curve to the right of its minimum.
B)   MC curve that lies above the ATC curve.
C)   MC curve that lies above the AVC curve.
D)   AVC curve to the right of its minimum.E) All of the above
F) C) and D)

Question 3

Because firms in perfectly competitive markets can sell any quantity without driving down prices,they should:

Accepted Answer

A)   produce as much as possible to maximize profits.
B)   produce at the lowest cost per unit to maximize profits.
C)   try to flood the market.
D)   increase quantity until the additional profit it earns on its last unit sold is zero.E) None of the above
F) A) and D)

Question 4

In reality,the long-run supply curve tends to be:

Accepted Answer

A)   perfectly elastic.
B)   perfectly inelastic.
C)   upward sloping.
D)   downward sloping.E) A) and B)
F) All of the above

Question 5

If a firm in a perfectly competitive market faces the cost curves in the graph shown,which of the following is true? The firm:

Accepted Answer

A)   if it produces at profit-maximizing level of output it will make positive profits when price is higher than $15.
B)   if it produces at profit-maximizing level of output it will make positive profits when price is higher than $11.
C)   should always produce at least 43 units in order to maximize profits.
D)   will shut down if market price is below $15, but above $11.E) B) and C)
F) None of the above

Question 6

Perfectly competitive markets:

Accepted Answer

A)   are more of an idealized model economists use than a real-life occurrence.
B)   are the most common type of market in the United States.
C)   tend to have relatively few buyers.
D)   tend to have relatively few sellers.E) A) and C)
F) B) and C)

Question 7

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 total revenue when 4 units are produced?

Accepted Answer

A)   $160
B)   $50
C)   $200
D)   $40E) B) and C)
F) A) and C)

Question 8

This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. rd unit, then decreases." class="answers-bank-image d-inline" rel="preload" > According to the table shown,the firm's marginal revenue:

Accepted Answer

A)   is constant.
B)   increases as output increases.
C)   decreases as output increases.
D)   increases until the 3rd unit, then decreases.E) B) and D)
F) None of the above

Question 9

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

Accepted Answer

A)   greater than market price.
B)   less than market price.
C)   the same as market price.
D)   equal to average total cost.E) All of the above
F) A) and D)

Question 10

A characteristic that is important,but not essential to defining a perfectly competitive market is:

Accepted Answer

A)   goods are standardized.
B)   buyers and sellers are price takers.
C)   firms can freely enter and exit the market.
D)   All of these are necessary to define a perfectly competitive market.E) All of the above
F) C) and D)

Question 11

In the short run,when a firm stops producing it:

Accepted Answer

A)   avoids paying fixed costs.
B)   avoids paying variable costs.
C)   can avoid earning profits less than zero.
D)   must be that ATC is lower than market price.E) None of the above
F) B) and C)

Question 12

For firms that sell one product in a perfectly competitive market,average revenue will:

Accepted Answer

A)   increase if marginal revenue is greater than it.
B)   decrease if marginal revenue is greater than it.
C)   always be the same as marginal revenue.
D)   always be greater than average total cost.E) A) and C)
F) A) and B)

Question 13

Collusion is:

Accepted Answer

A)   more likely when the threat of market entry is missing.
B)   more likely in perfectly competitive markets.
C)   less likely when the threat of market entry is missing.
D)   not affected by firm's ability to enter a market.E) A) and B)
F) A) and C)

Question 14

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,fixed costs must be:

Accepted Answer

A)   $10.
B)   $200.
C)   $60.
D)   Fixed costs cannot be determined by the information in the table.E) All of the above
F) None of the above

Question 15

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) A) and B)
F) A) and C)

Question 16

Standardized goods are:

Accepted Answer

A)   goods which are regulated by government quality standards.
B)   goods which are easily substitutable and not distinguishable.
C)   the most common type of good produced.
D)   those sold in markets with regulated price systems.E) A) and B)
F) A) and C)

Question 17

If a firm in a perfectly competitive market is producing at a level of output where marginal costs are less than marginal revenue,its profit:

Accepted Answer

A)   must be positive.
B)   are maximized.
C)   will increase if it produces less.
D)   will increase if it produces more.E) A) and B)
F) A) and C)

Question 18

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 marginal revenue when 25 units are produced?

Accepted Answer

A)   $250
B)   $25
C)   $10
D)   $20E) A) and D)
F) None of the above

Question 19

If firms are producing at a profit-maximizing level of output where the price is less than the average total cost:

Accepted Answer

A)   economic profits may be positive.
B)   accounting profits will be zero.
C)   economic profits are negative.
D)   accounting profits must be positive.E) B) and C)
F) None of the above

Question 20

A firm in a perfectly competitive market can maximize its profits by producing:

Accepted Answer

A)   the level of output where marginal cost equals marginal revenue.
B)   any level below where marginal cost equals marginal revenue.
C)   any level beyond where marginal cost equals marginal revenue.
D)   slightly below its maximal capacity.E) B) and D)
F) A) and D)

Exam 13: Perfect Competition

In reality,the long-run supply curve tends to be:

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Perfectly competitive markets:

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Because firms in perfectly competitive markets can sell any quantity without driving down prices,they should:

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Collusion is:

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If a firm in a perfectly competitive market faces the cost curves in the graph shown,which of the following is true? The firm:

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

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If firms are producing at a profit-maximizing level of output where the price is less than the average total cost:

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If a firm in a perfectly competitive market is producing at a level of output where marginal costs are less than marginal revenue,its profit:

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In the short run,when a firm stops producing it:

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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 marginal revenue when 25 units are produced?

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A characteristic that is important,but not essential to defining a perfectly competitive market is:

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Given the shutdown rule,what does the firm's short-run supply curve look like? It is the section of the:

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For firms that sell one product in a perfectly competitive market,average revenue will:

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Standardized goods are:

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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 total revenue when 4 units are produced?

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

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A firm in a perfectly competitive market can maximize its profits by producing:

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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,fixed costs must be:

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The definition of a price taker is:

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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,the firm's marginal revenue:

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