Question 1

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost,then

Accepted Answer

A)   a one-unit increase in output will increase the firm's profit.
B)   a one-unit decrease in output will increase the firm's profit.
C)   total revenue exceeds total cost.
D)   total cost exceeds total revenue.E) C) and D)
F) B) and D)

Question 2

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $400.In order to maximize profits,Marcia should

Accepted Answer

A)   make more than 10 dresses per month.
B)   make fewer than 10 dresses per month.
C)   continue to make 10 dresses per month.
D)   We do not have enough information with which to answer the question.E) B) and C)
F) A) and D)

Question 3

Table 13-9
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 13-9.At which quantity of output is marginal revenue equal to marginal cost?

Accepted Answer

A)   3 units
B)   6 units
C)   8 units
D)   9 unitsE) A) and B)
F) A) and C)

Question 4

Figure 13-3
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 13-3.The firm will earn zero economic profit if the market price is

Accepted Answer

A)   $0
B)   $6
C)   $7
D)   $10E) A) and B)
F) None of the above

Question 5

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $500.In order to maximize profits,Marcia should

Accepted Answer

A)   make more than 10 dresses per month.
B)   make fewer than 10 dresses per month.
C)   continue to make 10 dresses per month.
D)   We do not have enough information with which to answer the question.E) A) and B)
F) A) and C)

Question 6

At its current level of production a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10.At the market price of $12.50 per unit,the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1,000 units.What is the firm's current profit? What is likely to occur in this market and why?

Accepted Answer

Profit can be calculated as (P...

Question 7

The textile industry is composed of a large number of small firms.In recent years,these firms have suffered economic losses,and many sellers have left the industry.Economic theory suggests that these conditions will

Accepted Answer

A)   shift the demand curve outward so that price will rise to the level of production cost.
B)   cause the remaining firms to collude so that they can produce more efficiently.
C)   cause the market supply to decline and the price of textiles to rise.
D)   cause firms in the textile industry to suffer long-run economic losses.E) A) and B)
F) None of the above

Question 8

For a firm in a competitive market,an increase in the quantity produced by the firm will result in

Accepted Answer

A)   a decrease in the product's market price.
B)   an increase in the product's market price.
C)   no change in the product's market price.
D)   either an increase or no change in the product's market price depending on the number of firms in the market.E) B) and D)
F) A) and D)

Question 9

When firms in a perfectly competitive market face the same costs,in the long run they must be operating

Accepted Answer

A)   under diseconomies of scale.
B)   with small,but positive,levels of profit.
C)   at their efficient scale.
D)   where price is equal to average fixed cost.E) B) and D)
F) A) and D)

Question 10

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)   price is greater than average fixed cost but less than average variable cost.E) A) and B)
F) A) and C)

Question 11

Profit maximizing firms in competitive industries with free entry and exit face a price equal to the lowest possible

Accepted Answer

A)   marginal cost of production.
B)   fixed cost of production.
C)   total cost of production.
D)   average total cost of production.E) A) and B)
F) A) and C)

Question 12

In the short-run,a firm's supply curve is equal to the

Accepted Answer

A)   marginal cost curve above its average variable cost curve.
B)   marginal cost curve above its average total cost curve.
C)   average variable cost curve above its marginal cost curve.
D)   average total cost curve above its marginal cost curve.E) All of the above
F) B) and C)

Question 13

Figure 13-5
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 13-5.In the short run,if the market price is P4,individual firms in a competitive industry will earn

Accepted Answer

A)   positive profits.
B)   zero profits.
C)   losses but will remain in business.
D)   losses and will shut down.E) B) and C)
F) B) and D)

Question 14

The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

Accepted Answer

A)   total revenue is equal to variable cost.
B)   total revenue is equal to fixed cost.
C)   total revenue is equal to total cost.
D)   profit is maximized.E) A) and D)
F) None of the above

Question 15

Figure 13-2
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 13-2.If the market price is P2,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 B)
F) A) and C)

Question 16

Table 13-10
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 13-10.This firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to

Accepted Answer

A)   $3.
B)   $5.
C)   $7.
D)   $9.E) B) and C)
F) A) and B)

Question 17

Figure 13-6
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 13-6.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 B)
F) A) and D)

Question 18

The short-run supply curve in a competitive market must be more elastic than the long-run supply curve.

Accepted Answer

A) True 
 B)False

Question 19

Table 13-6
The following table presents cost and revenue information for a firm operating in a competitive industry.
 
-Refer to Table 13-6.What is the marginal revenue from selling the 3rd unit?

Accepted Answer

A)   $55
B)   $120
C)   $137
D)   $140E) B) and C)
F) B) and D)

Question 20

In the long run,when price is less than average total cost for all possible levels of production,a firm in a competitive market will choose to exit (or not enter)the market.

Accepted Answer

A) True 
 B)False

Exam 13: Firms in Competitive Markets

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost,then

Correct Answer
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In the long run,when price is less than average total cost for all possible levels of production,a firm in a competitive market will choose to exit (or not enter)the market.

Correct Answer
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Profit can be calculated as (P...
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Profit maximizing firms in competitive industries with free entry and exit face a price equal to the lowest possible

Correct Answer
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Table 13-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-9.At which quantity of output is marginal revenue equal to marginal cost?

Correct Answer
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Figure 13-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-3.The firm will earn zero economic profit if the market price is

Correct Answer
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The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

Correct Answer
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Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $400.In order to maximize profits,Marcia should

Correct Answer
verified

Figure 13-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-2.If the market price is P2,in the short run the firm will earn

Correct Answer
verified

The textile industry is composed of a large number of small firms.In recent years,these firms have suffered economic losses,and many sellers have left the industry.Economic theory suggests that these conditions will

Correct Answer
verified

Figure 13-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-5.In the short run,if the market price is P4,individual firms in a competitive industry will earn

Correct Answer
verified

When firms in a perfectly competitive market face the same costs,in the long run they must be operating

Correct Answer
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Table 13-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 13-6.What is the marginal revenue from selling the 3rd unit?

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

For a firm in a competitive market,an increase in the quantity produced by the firm will result in

Correct Answer
verified

In the short-run,a firm's supply curve is equal to the

Correct Answer
verified

Figure 13-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-6.Firms will shut down in the short run if the market price

Correct Answer
verified

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $500.In order to maximize profits,Marcia should

Correct Answer
verified

Table 13-10 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-10.This firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to

Correct Answer
verified

The short-run supply curve in a competitive market must be more elastic than the long-run supply curve.

Correct Answer
verified

Exam 13: Firms in Competitive Markets

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost,then

Correct AnswerverifiedShow Answer

In the long run,when price is less than average total cost for all possible levels of production,a firm in a competitive market will choose to exit (or not enter)the market.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedProfit can be calculated as (P...View AnswerShow Answer

Profit maximizing firms in competitive industries with free entry and exit face a price equal to the lowest possible

Correct AnswerverifiedShow Answer

Table 13-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-9.At which quantity of output is marginal revenue equal to marginal cost?

Correct AnswerverifiedShow Answer

Figure 13-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-3.The firm will earn zero economic profit if the market price is

Correct AnswerverifiedShow Answer

The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

Correct AnswerverifiedShow Answer

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $400.In order to maximize profits,Marcia should

Correct AnswerverifiedShow Answer

Figure 13-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-2.If the market price is P2,in the short run the firm will earn

Correct AnswerverifiedShow Answer

The textile industry is composed of a large number of small firms.In recent years,these firms have suffered economic losses,and many sellers have left the industry.Economic theory suggests that these conditions will

Correct AnswerverifiedShow Answer

Figure 13-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-5.In the short run,if the market price is P4,individual firms in a competitive industry will earn

Correct AnswerverifiedShow Answer

When firms in a perfectly competitive market face the same costs,in the long run they must be operating

Correct AnswerverifiedShow Answer

Table 13-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 13-6.What is the marginal revenue from selling the 3rd unit?

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

For a firm in a competitive market,an increase in the quantity produced by the firm will result in

Correct AnswerverifiedShow Answer

In the short-run,a firm's supply curve is equal to the

Correct AnswerverifiedShow Answer

Figure 13-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-6.Firms will shut down in the short run if the market price

Correct AnswerverifiedShow Answer

Marcia is a fashion designer who runs a small clothing business in a competitive industry.Marcia specializes in making designer dresses.Marcia sells 10 dresses per month.Her monthly total revenue is $5,000.The marginal cost of making a dress is $500.In order to maximize profits,Marcia should

Correct AnswerverifiedShow Answer

Table 13-10 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-10.This firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to

Correct AnswerverifiedShow Answer

The short-run supply curve in a competitive market must be more elastic than the long-run supply curve.

Correct AnswerverifiedShow Answer

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Profit can be calculated as (P...
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