Question 1

In a perfectly competitive market,producers:

Accepted Answer

A)  are able to sell as much as they want without affecting the market price.
B)  can influence the price upward by restricting output.
C)  often undercut the competition's price and force firms to leave the market.
D)  None of these is true of perfectly competitive markets.E) None of the above
F) C) and D)

Question 2

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

Accepted Answer

A)  is calculated by total output divided by total revenue.
B)  is equal to marginal cost.
C)  is equal to the market price.
D)  None of these is true.E) B) and C)
F) A) and B)

Question 3

This graph represents the cost and revenue curves of a firm in a perfectly competitive market. 
According to the graph shown,the long-run output decision for this firm is:

Accepted Answer

A)  Q1,P1.
B)  Q1,P2.
C)  Q2,P1.
D)  Q3,P3.E) All of the above
F) A) and B)

Question 4

Most markets in the United States:

Accepted Answer

A)  have some degree of competitiveness,but are not perfectly competitive.
B)  have very little competitive features and so are regulated by the government.
C)  are monopolies.
D)  are perfectly competitive.E) None of the above
F) C) and D)

Question 5

This graph represents the cost and revenue curves of a firm in a perfectly competitive market. 
According to the graph shown,if a firm is producing at Q3:

Accepted Answer

A)  profits are being maximized.
B)  average total costs exceed the market price.
C)  the firm should expand production.
D)  All of these are true.E) B) and D)
F) All of the above

Question 6

If a firm in a perfectly competitive market faces a market price of $5,and it decides to produce 400 units,the firm's total revenue will be:

Accepted Answer

A)  $5.
B)  $400.
C)  $2,000.
D)  Cannot be determined without knowing the firm's total cost.E) B) and C)
F) None of the above

Question 7

In a perfectly competitive market,when the price is greater than the minimum average total cost for all firms:

Accepted Answer

A)  positive economic profits are being earned.
B)  firms will enter,causing the price to increase.
C)  firms will exit,causing the price to drop.
D)  None of these is true.E) All of the above
F) C) and D)

Question 8

If a firm is earning a negative economic profit,it means that:

Accepted Answer

A)  the resources should be invested in other business opportunities.
B)  more profits could be earned with the same resources in another industry.
C)  the opportunity cost is larger than what the firm is earning.
D)  All of these are true.E) B) and C)
F) A) and D)

Question 9

Firms in perfectly competitive markets who wish to maximize profits ought to:

Accepted Answer

A)  produce where marginal revenue equals market price.
B)  produce as many units as their scale allows.
C)  produce at capacity and plan to expand in the long run.
D)  None of these is true.E) None of the above
F) C) and D)

Question 10

If a firm in a perfectly competitive market faces a market price of $8,and it decides to increase its production from 300 units to 550 units,the firm's total revenue:

Accepted Answer

A)  will increase from $2,400 to $4,400.
B)  will decrease from $4,400 to $2,400.
C)  will stay the same at $8.
D)  will likely rise,but it cannot be determined by how much.E) None of the above
F) C) and D)

Question 11

Collusion:

Accepted Answer

A)  is more likely when the threat of market entry is missing.
B)  is more likely in perfectly competitive markets.
C)  is less likely when the threat of market entry is missing.
D)  None of these is true.E) A) and D)
F) C) and D)

Question 12

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

Question 13

In a perfectly competitive market,when the price is greater than the minimum average total cost for most firms,some will:

Accepted Answer

A)  exit until the price drops to equal minimum ATC.
B)  enter until the price drops to equal minimum ATC.
C)  exit until the price increases to equal minimum ATC.
D)  enter until the price increases to equal minimum ATC.E) B) and C)
F) A) and D)

Question 14

In the short run,when a firm stops producing:

Accepted Answer

A)  it avoids paying fixed costs.
B)  it avoids paying variable costs.
C)  it can avoid earning profits less than zero.
D)  None of these is true.E) A) and D)
F) A) and C)

Question 15

In the long run,firms in a perfectly competitive market produce:

Accepted Answer

A)  where average total costs are minimized.
B)  at the most efficient scale.
C)  where price equals marginal cost.
D)  All of these are true.E) All of the above
F) A) and C)

Question 16

This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. rd unit produced? A) $50 B) $90 C) $150 D) $60" class="answers-bank-image d-inline" rel="preload" >
According to the table shown,what is the firm's marginal revenue from the 3rd unit produced?

Accepted Answer

A)  $50
B)  $90
C)  $150
D)  $60E) All of the above
F) A) and B)

Question 17

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 market price?

Accepted Answer

A)  $20
B)  $10
C)  $2
D)  $260E) None of the above
F) A) and D)

Question 18

Perfectly competitive markets:

Accepted Answer

A)  are more 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) B) and D)
F) All of the above

Question 19

As the equilibrium price falls in a perfectly competitive market,so do firms':

Accepted Answer

A)  revenue and so do their profits.
B)  total costs and so do their profits.
C)  revenue,and their profits rise.
D)  total costs,and their profits rise.E) All of the above
F) A) and B)

Question 20

A firm realizes that the market price has fallen below its average total costs,and it is now earning a loss.What is the best action for the firm to take in the short run?

Accepted Answer

A)  Produce where MC = MR to minimize losses if P > AVC.
B)  Shut down if price is greater than average variable costs.
C)  Produce where MC = MR to minimize losses if P 
D)  Shut down if total revenue is less than fixed costs.E) B) and C)
F) All of the above

Exam 13: Perfect Competition

In a perfectly competitive market,when the price is greater than the minimum average total cost for most firms,some will:

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This graph represents the cost and revenue curves of a firm in a perfectly competitive market. According to the graph shown,if a firm is producing at Q3:

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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 market price?

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In the short run,when a firm stops producing:

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Collusion:

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As the equilibrium price falls in a perfectly competitive market,so do firms':

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If a firm is earning a negative economic profit,it means that:

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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 marginal revenue from the 3rd unit produced?

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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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Firms in perfectly competitive markets who wish to maximize profits ought to:

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If a firm in a perfectly competitive market faces a market price of $8,and it decides to increase its production from 300 units to 550 units,the firm's total revenue:

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Most markets in the United States:

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If a firm in a perfectly competitive market faces a market price of $5,and it decides to produce 400 units,the firm's total revenue will be:

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Perfectly competitive markets:

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In a perfectly competitive market,producers:

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

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In the long run,firms in a perfectly competitive market produce:

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In a perfectly competitive market,when the price is greater than the minimum average total cost for all firms:

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This graph represents the cost and revenue curves of a firm in a perfectly competitive market. According to the graph shown,the long-run output decision for this firm is:

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A firm realizes that the market price has fallen below its average total costs,and it is now earning a loss.What is the best action for the firm to take in the short run?

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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 marginal revenue from the 3^rd unit produced?

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