Question 1

A firm maximizes its profit by selling 2,500 units of output with an average revenue of $6.99.The firm's marginal cost at 2,500 units of output is __________.

Accepted Answer

The answer of A firm maximizes its profit by selling...

Question 2

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) None of the above
F) B) and D)

Question 3

When price exceeds average variable cost in the short run,a competitive firm's marginal cost curve is regarded as its supply curve because

Accepted Answer

A)   the position of the marginal cost curve determines the price for which the firm should sell its product.
B)   among the various cost curves,the marginal cost curve is the only one that slopes upward.
C)   the marginal cost curve determines the quantity of output the firm is willing to supply at any price.
D)   the firm is aware that marginal revenue must exceed marginal cost in order for profit to be maximized.E) C) and D)
F) B) and C)

Question 4

The entry of new firms into a competitive market will

Accepted Answer

A)   increase market supply and increase market price.
B)   increase market supply and decrease market price.
C)   decrease market supply and increase market price.
D)   decrease market supply and decrease market price.E) All of the above
F) C) and D)

Question 5

Table 14-15
 
-Refer to Table 14-15.What is the lowest price at which this firm would operate in the short run?

Accepted Answer

A)   $3.
B)   $4.
C)   $5.
D)   $6.E) All of the above
F) None of the above

Question 6

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales.If the firm increases its output to 200 units,the average revenue of the 200th unit will be

Accepted Answer

A)   less than $12.
B)   more than $12.
C)   $12.
D)   Any of the above may be correct depending on the price elasticity of demand for the product.E) All of the above
F) C) and D)

Question 7

Table 14-1
 
-Refer to Table 14-1.Over which range of output is average revenue equal to price?

Accepted Answer

A)   1 to 5 units
B)   3 to 7 units
C)   5 to 9 units
D)   Average revenue is equal to price over the entire range of output.E) A) and D)
F) A) and C)

Question 8

The supply curve of a firm in a competitive market is the average variable cost curve above the minimum of marginal cost.

Accepted Answer

A) True 
 B)False

Question 9

In the long run,assuming that the owner of a firm in a competitive industry has positive opportunity costs,she

Accepted Answer

A)   should exit the industry unless her economic profits are positive.
B)   will earn zero accounting profits but positive economic profits.
C)   will earn zero economic profits but positive accounting profits.
D)   should ignore opportunity costs because they are a type of sunk cost that disappears in the long run.E) None of the above
F) B) and C)

Question 10

In a competitive market,

Accepted Answer

A)   no single buyer or seller can influence the price of the product.
B)   there are only a small number of sellers.
C)   the goods offered by the different sellers are unique.
D)   accounting profit is driven to zero as firms freely enter and exit the market.E) C) and D)
F) All of the above

Question 11

In a long-run equilibrium,the marginal firm has

Accepted Answer

A)   price equal to average total cost.
B)   total revenue equal to total cost.
C)   economic profit equal to zero.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 12

Whenever a perfectly competitive firm chooses to change its level of output,its marginal revenue

Accepted Answer

A)   increases if MR  ATC.
B)   does not change.
C)   increases.
D)   decreases.E) A) and B)
F) None of the above

Question 13

A firm in a competitive market has the following cost structure:  If the firm's fixed cost of production is $3,and the market price is $10,how many units should the firm produce to maximize profit?

Accepted Answer

A)   1 unit
B)   2 units
C)   3 units
D)   4 unitsE) A) and B)
F) A) and C)

Question 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?

Accepted Answer

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

Question 15

When a resource used in the production of a good sold in a competitive market is available in only limited quantities,the long-run supply curve is likely to be upward sloping.

Accepted Answer

A) True 
 B)False

Question 16

In a market with a fixed number of firms,as long as price is

Accepted Answer

A)   above average variable cost,each firm's marginal-cost curve is its supply curve.
B)   above average variable cost,each firm's average-total-cost curve is its supply curve.
C)   above average total cost,each firm's marginal-cost curve is its supply curve.
D)   above average total cost,each firm's average-total-cost curve is its supply curve.E) All of the above
F) C) and D)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Table 14-3
 
-Refer to Table 14-3.For a firm operating in a competitive market,the price is

Accepted Answer

A)   $0.
B)   $7.
C)   $14.
D)   $21.E) A) and B)
F) None of the above

Question 19

In the long run,each firm in a competitive industry earns

Accepted Answer

A)   zero accounting profits.
B)   zero economic profits.
C)   positive economic profits.
D)   positive,negative,or zero economic profits.E) None of the above
F) A) and B)

Question 20

The competitive firm's short-run supply curve is that portion of the

Accepted Answer

A)   average variable cost curve that lies above marginal cost.
B)   average total cost curve that lies above marginal cost.
C)   marginal cost curve that lies above average variable cost.
D)   marginal cost curve that lies above average total cost.E) A) and B)
F) C) and D)

Exam 14: Firms in Competitive Markets

A firm maximizes its profit by selling 2,500 units of output with an average revenue of $6.99.The firm's marginal cost at 2,500 units of output is __________.

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When price exceeds average variable cost in the short run,a competitive firm's marginal cost curve is regarded as its supply curve because

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Table 14-15 -Refer to Table 14-15.What is the lowest price at which this firm would operate in the short run?

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The entry of new firms into a competitive market will

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In the long run,each firm in a competitive industry earns

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Whenever a perfectly competitive firm chooses to change its level of output,its marginal revenue

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In a market with a fixed number of firms,as long as price is

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In a competitive market,

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The competitive firm's short-run supply curve is that portion of the

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

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Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales.If the firm increases its output to 200 units,the average revenue of the 200th unit will be

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

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When a resource used in the production of a good sold in a competitive market is available in only limited quantities,the long-run supply curve is likely to be upward sloping.

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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?

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Table 14-1 -Refer to Table 14-1.Over which range of output is average revenue equal to price?

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Table 14-3 -Refer to Table 14-3.For a firm operating in a competitive market,the price is

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A firm in a competitive market has the following cost structure: If the firm's fixed cost of production is $3,and the market price is $10,how many units should the firm produce to maximize profit?

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The supply curve of a firm in a competitive market is the average variable cost curve above the minimum of marginal cost.

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In a long-run equilibrium,the marginal firm has

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In the long run,assuming that the owner of a firm in a competitive industry has positive opportunity costs,she

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