Question 1

Graph 14-2
 3 to P4, the firm finds that: A)  average revenue exceeds marginal revenue at a production level of Q4 B)  fixed costs are lower at a production level of Q4 C)  it can earn profits by increasing production to Q4 D)  profits are maximised at a production level of Q3" class="answers-bank-image d-inline" rel="preload" > This graph depicts the cost structure for a firm in a competitive market. Use the graph to answer the following question(s) .
-Refer to Graph 14-2. When price rises from P3 to P4, the firm finds that:

Accepted Answer

A)   average revenue exceeds marginal revenue at a production level of Q4
B)   fixed costs are lower at a production level of Q4
C)   it can earn profits by increasing production to Q4
D)   profits are maximised at a production level of Q3E) C) and D)
F) None of the above

Question 2

When marginal revenue equals marginal cost:

Accepted Answer

A)   the firm must be generating economic profits
B)   the profit-maximising firm should always increase its level of production
C)   the firm must be generating economic losses
D)   losses may be minimised, rather than profits being maximisedE) None of the above
F) B) and C)

Question 3

When a firm has market power, it can:

Accepted Answer

A)   sell as much as it wants at any market price
B)   control the number of firms that will operate in an industry
C)   influence the market price of the good it sells
D)   choose to disregard government regulationE) A) and B)
F) None of the above

Question 4

When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is:

Accepted Answer

A)   upward-sloping
B)   vertical
C)   downward-sloping
D)   horizontalE) B) and D)
F) B) and C)

Question 5

In the long run, a competitive market with 1000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

Accepted Answer

A) True 
 B)False

Question 6

Suppose a firm is operating in a competitive market where the price of the good is $12. If, at the current level of output, the firm's average cost is $15, marginal cost is $17, and fixed costs are $10, then the firm will:

Accepted Answer

A)   increase profit by increasing output
B)   increase profit by decreasing output
C)   maximise profit by keeping output constant
D)   we cannot say without more informationE) A) and D)
F) All of the above

Question 7

Graph 14-4
 2, a profit-maximising firm's losses can be represented by the area: A)  (P3 - P2) *Q2 B)  (P2 - P1)  *Q2 C)  at a market price of P2, the firm does not have losses D)  at a market price of P2, the firm has losses, but the reference points in the graph don't identify the losses" class="answers-bank-image d-inline" rel="preload" > The graph depicts the cost structure of a firm in a competitive market. Use the graph to answer the following question(s) .
-Refer to Graph 14-4. When market price is P2, a profit-maximising firm's losses can be represented by the area:

Accepted Answer

A)   (P3 - P2) *Q2
B)   (P2 - P1)  *Q2
C)   at a market price of P2, the firm does not have losses
D)   at a market price of P2, the firm has losses, but the reference points in the graph don't identify the lossesE) A) and C)
F) A) and B)

Question 8

As a general rule, when accountants calculate profit they account for explicit costs but miss:

Accepted Answer

A)   sunk costs
B)   goodwill costs
C)   operating costs
D)   implicit costsE) B) and D)
F) A) and D)

Question 9

If all firms in a market are identical, have upward sloping marginal cost curves, and input prices are perfectly elastic, then the competitive long-run market supply curve will be:

Accepted Answer

A)   upward sloping
B)   downward sloping
C)   horizontal
D)   we cannot say without more informationE) A) and B)
F) B) and D)

Exam 14: Firms in Competitive Markets

When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is:

Correct Answer
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Graph 14-2 This graph depicts the cost structure for a firm in a competitive market. Use the graph to answer the following question(s) . -Refer to Graph 14-2. When price rises from P₃ to P₄, the firm finds that:

Correct Answer
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Graph 14-4 The graph depicts the cost structure of a firm in a competitive market. Use the graph to answer the following question(s) . -Refer to Graph 14-4. When market price is P₂, a profit-maximising firm's losses can be represented by the area:

Correct Answer
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As a general rule, when accountants calculate profit they account for explicit costs but miss:

Correct Answer
verified

When marginal revenue equals marginal cost:

Correct Answer
verified

Suppose a firm is operating in a competitive market where the price of the good is $12. If, at the current level of output, the firm's average cost is $15, marginal cost is $17, and fixed costs are $10, then the firm will:

Correct Answer
verified

When a firm has market power, it can:

Correct Answer
verified

If all firms in a market are identical, have upward sloping marginal cost curves, and input prices are perfectly elastic, then the competitive long-run market supply curve will be:

Correct Answer
verified

In the long run, a competitive market with 1000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

Correct Answer
verified

Exam 14: Firms in Competitive Markets

When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is:

Correct AnswerverifiedShow Answer

Graph 14-2 This graph depicts the cost structure for a firm in a competitive market. Use the graph to answer the following question(s) . -Refer to Graph 14-2. When price rises from P3 to P4, the firm finds that:

Correct AnswerverifiedShow Answer

Graph 14-4 The graph depicts the cost structure of a firm in a competitive market. Use the graph to answer the following question(s) . -Refer to Graph 14-4. When market price is P2, a profit-maximising firm's losses can be represented by the area:

Correct AnswerverifiedShow Answer

As a general rule, when accountants calculate profit they account for explicit costs but miss:

Correct AnswerverifiedShow Answer

When marginal revenue equals marginal cost:

Correct AnswerverifiedShow Answer

Suppose a firm is operating in a competitive market where the price of the good is $12. If, at the current level of output, the firm's average cost is $15, marginal cost is $17, and fixed costs are $10, then the firm will:

Correct AnswerverifiedShow Answer

When a firm has market power, it can:

Correct AnswerverifiedShow Answer

If all firms in a market are identical, have upward sloping marginal cost curves, and input prices are perfectly elastic, then the competitive long-run market supply curve will be:

Correct AnswerverifiedShow Answer

In the long run, a competitive market with 1000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Graph 14-2 This graph depicts the cost structure for a firm in a competitive market. Use the graph to answer the following question(s) . -Refer to Graph 14-2. When price rises from P₃ to P₄, the firm finds that:

Correct Answer
verified

Graph 14-4 The graph depicts the cost structure of a firm in a competitive market. Use the graph to answer the following question(s) . -Refer to Graph 14-4. When market price is P₂, a profit-maximising firm's losses can be represented by the area:

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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