Question 1

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D0 to D1, in the long run: 0 to D1, in the long run:   A)  new firms will enter this market and the price will return to P0. B)  new firms will enter this market and the price will remain at P1. C)  some firms will exit this market and the price will return to P0. D)  some firms will exit this market and the price will remain at P1." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   new firms will enter this market and the price will return to P0.
B)   new firms will enter this market and the price will remain at P1.
C)   some firms will exit this market and the price will return to P0.
D)   some firms will exit this market and the price will remain at P1.E) A) and B)
F) A) and C)

Question 2

An increase in market price, given a fixed number of firms, causes market supply to shift to the right.

Accepted Answer

A) True 
 B)False

Question 3

A perfectly competitive firm in the long run:

Accepted Answer

A)   can earn positive or negative economic profits.
B)   can earn negative accounting profits as long as economic profits are positive.
C)   makes zero economic profits.
D)   makes zero accounting profits.E) All of the above
F) B) and D)

Question 4

Refer to the graph shown. If the firm is producing 120 units of output, profit is equal to:

Accepted Answer

A)   $38.
B)   −$38.
C)   $0.
D)   $30.E) None of the above
F) A) and B)

Question 5

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand increases from D0 to D1, in the long run: 0 to D1, in the long run:   A)  new firms will enter this market and price will return to P0. B)  new firms will enter this market and price will remain at P1. C)  some firms will exit this market and price will return to P0. D)  some firms will exit this market and price will remain at P1." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   new firms will enter this market and price will return to P0.
B)   new firms will enter this market and price will remain at P1.
C)   some firms will exit this market and price will return to P0.
D)   some firms will exit this market and price will remain at P1.E) B) and D)
F) B) and C)

Question 6

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D0 to D1, the firm will: 0 to D1, the firm will:   A)  lower the price it charges. B)  earn negative economic profit in the short run. C)  earn positive economic profit in the short run. D)  earn positive economic profit in the long run." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   lower the price it charges.
B)   earn negative economic profit in the short run.
C)   earn positive economic profit in the short run.
D)   earn positive economic profit in the long run.E) All of the above
F) None of the above

Question 7

An increase in the number of firms in a perfectly competitive market causes:

Accepted Answer

A)   a movement along the market supply curve.
B)   an increase in each firm's supply curve.
C)   an increase in the market supply curve.
D)   a decrease in the market supply curve.E) C) and D)
F) B) and D)

Question 8

During a recession, the price of restaurant meals falls by over 10 percent. The most likely cause is:

Accepted Answer

A)   a shift of the demand curve to the left.
B)   a shift of the supply curve to the left.
C)   a shift of the supply curve to the right.
D)   a shift of the demand curve to the right.E) B) and D)
F) A) and B)

Question 9

A firm will continue to operate in the long run as long as price exceeds long-run average variable cost.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the graph shown. Assuming that the industry continues to operate under conditions of perfect competition and that the cost curves do not shift, in the long run this firm will produce:

Accepted Answer

A)   800 units of output.
B)   1,000 units of output.
C)   1,200 units of output.
D)   1,400 units of output.E) A) and B)
F) All of the above

Question 11

Refer to the graph shown depicting a perfectly competitive firm. If average variable cost is $3 at quantity 450, points A through E represent the:

Accepted Answer

A)   firm's total cost curve.
B)   firm's total revenue curve.
C)   demand for the firm's product.
D)   firm's supply curve.E) A) and B)
F) A) and C)

Question 12

Refer to the graph shown. If the firm is producing 450 units of output, profit is equal to:

Accepted Answer

A)   $38.
B)   −$30.
C)   $0.
D)   $30.E) A) and B)
F) B) and C)

Question 13

Refer to the graph shown. If the firm increases output from 40 to 50, total revenue will increase:

Accepted Answer

A)   more than total cost, and so profit will increase.
B)   more than total cost, and so profit will decrease.
C)   less than total cost, and so profit will increase.
D)   less than total cost, and so profit will decrease.E) B) and D)
F) B) and C)

Question 14

In a perfectly competitive constant-cost industry:

Accepted Answer

A)   factor prices do not change as industry output increases.
B)   factor prices rise as industry output increases.
C)   factor prices fall as industry output increases.
D)   there is no way to predict what will happen to factor prices as industry output increases.E) All of the above
F) A) and D)

Question 15

Refer to the table shown. The maximum profit that the perfectly competitive firm represented by the above data could earn is:   Quantity  Tatal Cast  Tatal Revenue 10$255020601003010515040160200\begin{array} { | c | c | c | } \hline 	ext { Quantity } & 	ext { Tatal Cast } & 	ext { Tatal Revenue } \\hline 10 & \$ 25 & 50 \\hline 20 & 60 & 100 \\hline 30 & 105 & 150 \\hline 40 & 160 & 200 \\hline\end{array} Quantity 10203040​ Tatal Cast $2560105160​ Tatal Revenue 50100150200​​

Accepted Answer

A)   $25.
B)   $35.
C)   $45.
D)   $55. E) B) and D)
F) C) and D)

Question 16

Barriers to entry:

Accepted Answer

A)   do not affect the number of firms in an industry.
B)   exist only in perfectly competitive markets.
C)   restrict the number of firms in an industry.
D)   limit output in an industry.E) B) and C)
F) A) and B)

Question 17

Refer to the graph shown, which depicts a perfectly competitive firm. To maximize profit, the firm represented will produce:

Accepted Answer

A)   40 units of output.
B)   90 units of output.
C)   110 units of output.
D)   130 units of output.E) A) and C)
F) None of the above

Question 18

Many fast-food restaurants have begun offering value meals with fruit or salad instead of French fries. If consumers find this idea attractive, the market demand for potatoes will most likely:

Accepted Answer

A)   decrease, which may result in short-run losses for potato growers.
B)   decrease but have no effect on the profits earned by potato growers in the short run.
C)   increase, which may result in short-run losses for potato growers.
D)   increase but have no effect on the profits earned by potato growers in the short run.E) B) and D)
F) B) and C)

Question 19

Suppose there are 1,000 firms in a perfectly competitive market and each maximizes profit at 25 units of output when market price is $1.00 per unit. One of the points on the market supply curve must be at:

Accepted Answer

A)   Price = $25 and Quantity supplied = 125.
B)   Price = $25 and Quantity supplied = 24,000.
C)   Price = $1 and Quantity supplied = 125.
D)   Price = $1 and Quantity supplied = 25,000.E) None of the above
F) All of the above

Question 20

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0, the: 0, the:   A)  firm shown in the graph will produce q0, but all of the firms in the market will produce a total of Q0. B)  firm shown in the graph will produce q1, but all of the firms in the market will produce a total of Q1. C)  output of the firm shown in the graph is the same as quantity supplied in the market. D)  firm is not producing where profit is maximized." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   firm shown in the graph will produce q0, but all of the firms in the market will produce a total of Q0.
B)   firm shown in the graph will produce q1, but all of the firms in the market will produce a total of Q1.
C)   output of the firm shown in the graph is the same as quantity supplied in the market.
D)   firm is not producing where profit is maximized.E) All of the above
F) B) and C)

Exam 13: Perfect Competition

Correct Answer
verified

Many fast-food restaurants have begun offering value meals with fruit or salad instead of French fries. If consumers find this idea attractive, the market demand for potatoes will most likely:

Correct Answer
verified

In a perfectly competitive constant-cost industry:

Correct Answer
verified

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand increases from D₀ to D₁, in the long run:

Correct Answer
verified

Refer to the graph shown, which depicts a perfectly competitive firm. To maximize profit, the firm represented will produce:

Correct Answer
verified

A perfectly competitive firm in the long run:

Correct Answer
verified

Barriers to entry:

Correct Answer
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Refer to the graph shown. Assuming that the industry continues to operate under conditions of perfect competition and that the cost curves do not shift, in the long run this firm will produce:

Correct Answer
verified

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D₀ to D₁, the firm will:

Correct Answer
verified

Refer to the graph shown depicting a perfectly competitive firm. If average variable cost is $3 at quantity 450, points A through E represent the:

Correct Answer
verified

An increase in the number of firms in a perfectly competitive market causes:

Correct Answer
verified

Suppose there are 1,000 firms in a perfectly competitive market and each maximizes profit at 25 units of output when market price is $1.00 per unit. One of the points on the market supply curve must be at:

Correct Answer
verified

Refer to the graph shown. If the firm is producing 450 units of output, profit is equal to:

Correct Answer
verified

A firm will continue to operate in the long run as long as price exceeds long-run average variable cost.

Correct Answer
verified

Refer to the graph shown. If the firm is producing 120 units of output, profit is equal to:

Correct Answer
verified

Refer to the graph shown. If the firm increases output from 40 to 50, total revenue will increase:

Correct Answer
verified

During a recession, the price of restaurant meals falls by over 10 percent. The most likely cause is:

Correct Answer
verified

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀, the:

Correct Answer
verified

An increase in market price, given a fixed number of firms, causes market supply to shift to the right.

Correct Answer
verified

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D₀ to D₁, in the long run:

Correct Answer
verified

Exam 13: Perfect Competition

Correct AnswerverifiedShow Answer

Many fast-food restaurants have begun offering value meals with fruit or salad instead of French fries. If consumers find this idea attractive, the market demand for potatoes will most likely:

Correct AnswerverifiedShow Answer

In a perfectly competitive constant-cost industry:

Correct AnswerverifiedShow Answer

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand increases from D0 to D1, in the long run:

Correct AnswerverifiedShow Answer

Refer to the graph shown, which depicts a perfectly competitive firm. To maximize profit, the firm represented will produce:

Correct AnswerverifiedShow Answer

A perfectly competitive firm in the long run:

Correct AnswerverifiedShow Answer

Barriers to entry:

Correct AnswerverifiedShow Answer

Refer to the graph shown. Assuming that the industry continues to operate under conditions of perfect competition and that the cost curves do not shift, in the long run this firm will produce:

Correct AnswerverifiedShow Answer

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D0 to D1, the firm will:

Correct AnswerverifiedShow Answer

Refer to the graph shown depicting a perfectly competitive firm. If average variable cost is $3 at quantity 450, points A through E represent the:

Correct AnswerverifiedShow Answer

An increase in the number of firms in a perfectly competitive market causes:

Correct AnswerverifiedShow Answer

Suppose there are 1,000 firms in a perfectly competitive market and each maximizes profit at 25 units of output when market price is $1.00 per unit. One of the points on the market supply curve must be at:

Correct AnswerverifiedShow Answer

Refer to the graph shown. If the firm is producing 450 units of output, profit is equal to:

Correct AnswerverifiedShow Answer

A firm will continue to operate in the long run as long as price exceeds long-run average variable cost.

Correct AnswerverifiedShow Answer

Refer to the graph shown. If the firm is producing 120 units of output, profit is equal to:

Correct AnswerverifiedShow Answer

Refer to the graph shown. If the firm increases output from 40 to 50, total revenue will increase:

Correct AnswerverifiedShow Answer

During a recession, the price of restaurant meals falls by over 10 percent. The most likely cause is:

Correct AnswerverifiedShow Answer

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0, the:

Correct AnswerverifiedShow Answer

An increase in market price, given a fixed number of firms, causes market supply to shift to the right.

Correct AnswerverifiedShow Answer

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D0 to D1, in the long run:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand increases from D₀ to D₁, in the long run:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D₀ to D₁, the firm will:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀, the:

Correct Answer
verified

Correct Answer
verified

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D₀ to D₁, in the long run:

Correct Answer
verified