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Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: -Refer to Table 14-11.The marginal revenue from producing the 3rd unit equals (i) $5. (ii) the price. (iii) the marginal cost. A) (i) only B) (i) and (ii) only C) (ii) only D) (i) , (ii) , and (iii) -Refer to Table 14-11.The marginal revenue from producing the 3rd unit equals (i) $5. (ii) the price. (iii) the marginal cost.


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

E) None of the above
F) C) and D)

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Figure 14-14 Figure 14-14 -Refer to Figure 14-14.Assume that the market starts in equilibrium at point A in panel (b) and that panel (a) illustrates the cost curves facing individual firms.Suppose that demand increases from D0 to D1.Which of the following statements is correct? A) Points A, B, and C represent both short-run and long-run equilibria. B) Points A, B, C, and D represent short-run equilibria. C) Points A and B represent long-run equilibria. D) Points A and C represent long-run equilibria. Figure 14-14 -Refer to Figure 14-14.Assume that the market starts in equilibrium at point A in panel (b) and that panel (a) illustrates the cost curves facing individual firms.Suppose that demand increases from D0 to D1.Which of the following statements is correct? A) Points A, B, and C represent both short-run and long-run equilibria. B) Points A, B, C, and D represent short-run equilibria. C) Points A and B represent long-run equilibria. D) Points A and C represent long-run equilibria. -Refer to Figure 14-14.Assume that the market starts in equilibrium at point A in panel (b) and that panel (a) illustrates the cost curves facing individual firms.Suppose that demand increases from D0 to D1.Which of the following statements is correct?


A) Points A, B, and C represent both short-run and long-run equilibria.
B) Points A, B, C, and D represent short-run equilibria.
C) Points A and B represent long-run equilibria.
D) Points A and C represent long-run equilibria.

E) A) and D)
F) B) and C)

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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


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) B) and C)

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A seller in a competitive market can


A) sell all he wants at the going price, so he has little reason to charge less.
B) influence the market price by adjusting his output.
C) influence the profits earned by competing firms by adjusting his output.
D) All of the above are correct.

E) All of the above
F) None of the above

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A firm will shut down in the short run if revenue is not sufficient to cover its variable costs of production.

A) True
B) False

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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.

A) True
B) False

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In a competitive market,the actions of any single buyer or seller will


A) have a negligible impact on the market price.
B) have little effect on market equilibrium quantity but will affect market equilibrium price.
C) affect marginal revenue and average revenue but not price.
D) adversely affect the profitability of more than one firm in the market.

E) B) and C)
F) B) and D)

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In the long-run equilibrium of a market with free entry and exit,if all firms have the same cost structure,then


A) marginal cost exceeds average total cost.
B) the price of the good exceeds average total cost.
C) average total cost exceeds the price of the good.
D) firms are operating at their efficient scale.

E) None of the above
F) A) and C)

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For an individual firm operating in a competitive market,marginal revenue equals


A) average revenue and the price for all levels of output.
B) average revenue, which is greater than the price for all levels of output.
C) average revenue, the price, and marginal cost for all levels of output.
D) marginal cost, which is greater than average revenue for all levels of output.

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

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Scenario 14-2 Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit. -Refer to Scenario 14-2.At Q = 1,000,the firm's profits equal


A) $-5,000.
B) $2,500.
C) $5,000.
D) $10,000.

E) B) and C)
F) None of the above

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If occupational safety laws were changed so that firms no longer had to take expensive steps to meet regulatory requirements,we would expect that


A) the demand for products in this industry would increase.
B) the market price of products in this industry would decrease in the short run but not in the long run.
C) the firms in the industry would make a long-run economic profit.
D) competition would force producers to pass the lower production costs on to consumers in the long run.

E) C) and D)
F) B) and D)

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If identical firms that remain in a competitive market over the long run make zero economic profit,why do these firms choose to remain in the market?

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Because a normal rate of retur...

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Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8.00.What would be the firm's total revenue if it instead produced and sold 4 units of output?


A) $4
B) $8
C) $32
D) $64

E) A) and D)
F) A) and B)

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Scenario 14-4 As part of an estate settlement Mary received $1 million. She decided to use the money to purchase a small business in Anywhere, USA. Her business operates in a perfectly competitive industry. If Mary would have invested the $1 million in a risk-free bond fund she could have earned $100,000 each year. She also quit her job with Lucky.Com Inc. to devote all of her time to her new business. Her salary at Lucky.Com Inc. was $75,000 per year. -Refer to Scenario 14-4.What are Mary's opportunity costs of operating her new business?


A) $25,000
B) $75,000
C) $100,000
D) $175,000

E) A) and D)
F) All of the above

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Figure 14-13 Suppose a firm in a competitive industry has the following cost curves: Figure 14-13 Suppose a firm in a competitive industry has the following cost curves: -Refer to Figure 14-13.If the price is P3 in the short run,what will happen in the long run? 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. -Refer to Figure 14-13.If the price is P3 in the short run,what will happen in the long run?


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

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If Cathy's Coffee Emporium sells its product in a competitive market,then


A) the price of that product depends on the quantity of the product that Cathy's Coffee Emporium produces and sells because Cathy's Coffee Emporium's demand curve is downward sloping.
B) Cathy's Coffee Emporium's total revenue must be proportional to its quantity of output.
C) Cathy's Coffee Emporium's total cost must be a constant multiple of its quantity of output.
D) Cathy's Coffee Emporium's total revenue must be equal to its average revenue.

E) A) and B)
F) All of the above

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Table 14-13 Diana's Dress Emporium Table 14-13 Diana's Dress Emporium -Refer to Table 14-13.What is the marginal cost of the 1st unit? A) $50 B) $75 C) $80 D) $150 -Refer to Table 14-13.What is the marginal cost of the 1st unit?


A) $50
B) $75
C) $80
D) $150

E) None of the above
F) A) and C)

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In competitive markets,firms that raise their prices are typically rewarded with larger profits.

A) True
B) False

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


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 C)
F) A) and C)

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In the transition from the short run to the long run,the number of firms in a competitive industry is


A) fixed.
B) increasing at a constant rate.
C) decreasing.
D) able to adjust to market conditions.

E) C) and D)
F) A) and B)

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