Question 1

Table 13-10
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 13-10.The marginal cost of producing the 4th unit is

Accepted Answer

A)   $7.
B)   $8.
C)   $10.
D)   $23.

Question 2

Figure 13-5
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 13-5.When market price is P2,a profit-maximizing firm's losses can be represented by the area

Accepted Answer

A)   (P4 - P2) * Q2.
B)   (P2 - P1) * (Q2-Q1) .
C)   At a market price of P2,the firm earns profits,not losses.
D)   At a market price of P2 the firm has losses,but the reference points in the figure don't identify the losses.

Question 3

Because nothing can be done about sunk costs,they are irrelevant to decisions about business strategy.

Accepted Answer

A) True 
 B)False

Question 4

For a firm operating in a perfectly competitive industry,marginal revenue and average revenue are equal.

Accepted Answer

A) True 
 B)False

Question 5

Suppose that a firm in a competitive market is currently maximizing its short-run profit at an output of 50 units.If the current price is $9,the marginal cost of the 50th unit is $9,and the average total cost of producing 50 units is $4,what is the firm's profit?

Accepted Answer

A)   $0
B)   $200
C)   $250
D)   $450

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,total revenue will be

Accepted Answer

A)   $2,000.
B)   $2,400.
C)   $4,200.
D)   We do not have enough information to answer the question.

Question 7

Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market where firms are experiencing economic losses.Identify costs,revenue,and the economic losses on your graph.Using your graph,determine whether an individual firm will shut down in the short run,or choose to remain in the market.Explain your answer.

Accepted Answer

The losses and revenues are identified o...

Question 8

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

Accepted Answer

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

Question 9

For a firm operating in a competitive industry,which of the following statements is not correct?

Accepted Answer

A)   Price equals average revenue.
B)   Price equals marginal revenue.
C)   Total revenue is constant.
D)   Marginal revenue is constant.

Question 10

A profit-maximizing firm in a competitive market will decrease production when marginal cost exceeds average revenue.

Accepted Answer

A) True 
 B)False

Question 11

Firms in a competitive market are said to be price takers because there are many sellers in the market,and the goods offered by the firms are very similar if not identical.

Accepted Answer

A) True 
 B)False

Question 12

Table 13-11
Suppose that a firm in a competitive market faces the following prices and costs:
 
-Refer to Table 13-11.Marginal revenue equals marginal cost when the firm produces

Accepted Answer

A)   2 units.
B)   3 units.
C)   4 units.
D)   5 units.

Question 13

If there is an increase in market demand in a perfectly competitive market,then in the short run

Accepted Answer

A)   there will be no change in the demand curves faced by individual firms in the market.
B)   the demand curves for firms will shift downward.
C)   the demand curves for firms will become more elastic.
D)   profits will rise.

Question 14

Firms that operate in perfectly competitive markets try to

Accepted Answer

A)   maximize revenues.
B)   maximize profits.
C)   equate marginal revenue with average total cost.
D)   All of the above are correct.

Question 15

If marginal cost exceeds marginal revenue,the firm

Accepted Answer

A)   is most likely to be at a profit-maximizing level of output.
B)   should increase the level of production to maximize its profit.
C)   should reduce its average fixed cost in order to lower its marginal cost.
D)   may still be earning a positive accounting profit.

Question 16

For a firm in a perfectly competitive market,the price of the good is always

Accepted Answer

A)   equal to marginal revenue.
B)   equal to total revenue.
C)   greater than average revenue.
D)   equal to the firm's efficient scale of output.

Question 17

In the long run,a profit-maximizing firm will choose to exit a market when

Accepted Answer

A)   average fixed cost is falling.
B)   variable costs exceed sunk costs.
C)   marginal cost exceeds marginal revenue at the current level of production.
D)   total revenue is less than total cost.

Question 18

In a long-run equilibrium,the marginal firm has

Accepted Answer

A)   price equal to minimum marginal cost.
B)   total revenue equal to total cost.
C)   accounting profit equal to zero.
D)   All of the above are correct.

Question 19

Which of the following statements best reflects a price-taking firm?

Accepted Answer

A)   If the firm were to charge more than the going price,it would sell none of its goods.
B)   The firm has an incentive to charge less than the market price to earn higher revenue.
C)   The firm can sell only a limited amount of output at the market price before the market price will fall.
D)   Price-taking firms maximize profits by charging a price above marginal cost.

Question 20

If all existing firms and all potential firms have the same cost curves,there are no inputs in limited quantities,and the market is characterized by free entry and exit,then the long-run market supply curve

Accepted Answer

A)   is horizontal and equal to the minimum of long-run marginal cost for each firm.
B)   must slope downward.
C)   must slope upward.
D)   is horizontal and equal to the minimum of long-run average cost for each firm.

Exam 13: Firms in Competitive Markets

Figure 13-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-5.When market price is P2,a profit-maximizing firm's losses can be represented by the area

Correct Answer
verified

In a long-run equilibrium,the marginal firm has

Correct Answer
verified

A profit-maximizing firm in a competitive market will decrease production when marginal cost exceeds average revenue.

Correct Answer
verified

Table 13-10 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-10.The marginal cost of producing the 4th unit is

Correct Answer
verified

If there is an increase in market demand in a perfectly competitive market,then in the short run

Correct Answer
verified

Correct Answer
verified
The losses and revenues are identified o...
View Answer

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,total revenue will be

Correct Answer
verified

Which of the following statements best reflects a price-taking firm?

Correct Answer
verified

Firms that operate in perfectly competitive markets try to

Correct Answer
verified

For a firm operating in a perfectly competitive industry,marginal revenue and average revenue are equal.

Correct Answer
verified

If marginal cost exceeds marginal revenue,the firm

Correct Answer
verified

Because nothing can be done about sunk costs,they are irrelevant to decisions about business strategy.

Correct Answer
verified

For a firm operating in a competitive industry,which of the following statements is not correct?

Correct Answer
verified

If all existing firms and all potential firms have the same cost curves,there are no inputs in limited quantities,and the market is characterized by free entry and exit,then the long-run market supply curve

Correct Answer
verified

For a firm in a perfectly competitive market,the price of the good is always

Correct Answer
verified

Table 13-11 Suppose that a firm in a competitive market faces the following prices and costs: -Refer to Table 13-11.Marginal revenue equals marginal cost when the firm produces

Correct Answer
verified

Suppose that a firm in a competitive market is currently maximizing its short-run profit at an output of 50 units.If the current price is $9,the marginal cost of the 50th unit is $9,and the average total cost of producing 50 units is $4,what is the firm's profit?

Correct Answer
verified

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

Correct Answer
verified

In the long run,a profit-maximizing firm will choose to exit a market when

Correct Answer
verified

Firms in a competitive market are said to be price takers because there are many sellers in the market,and the goods offered by the firms are very similar if not identical.

Correct Answer
verified

Exam 13: Firms in Competitive Markets

Figure 13-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 13-5.When market price is P2,a profit-maximizing firm's losses can be represented by the area

Correct AnswerverifiedShow Answer

In a long-run equilibrium,the marginal firm has

Correct AnswerverifiedShow Answer

A profit-maximizing firm in a competitive market will decrease production when marginal cost exceeds average revenue.

Correct AnswerverifiedShow Answer

Table 13-10 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 13-10.The marginal cost of producing the 4th unit is

Correct AnswerverifiedShow Answer

If there is an increase in market demand in a perfectly competitive market,then in the short run

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe losses and revenues are identified o...View AnswerShow Answer

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,total revenue will be

Correct AnswerverifiedShow Answer

Which of the following statements best reflects a price-taking firm?

Correct AnswerverifiedShow Answer

Firms that operate in perfectly competitive markets try to

Correct AnswerverifiedShow Answer

For a firm operating in a perfectly competitive industry,marginal revenue and average revenue are equal.

Correct AnswerverifiedShow Answer

If marginal cost exceeds marginal revenue,the firm

Correct AnswerverifiedShow Answer

Because nothing can be done about sunk costs,they are irrelevant to decisions about business strategy.

Correct AnswerverifiedShow Answer

For a firm operating in a competitive industry,which of the following statements is not correct?

Correct AnswerverifiedShow Answer

If all existing firms and all potential firms have the same cost curves,there are no inputs in limited quantities,and the market is characterized by free entry and exit,then the long-run market supply curve

Correct AnswerverifiedShow Answer

For a firm in a perfectly competitive market,the price of the good is always

Correct AnswerverifiedShow Answer

Table 13-11 Suppose that a firm in a competitive market faces the following prices and costs: -Refer to Table 13-11.Marginal revenue equals marginal cost when the firm produces

Correct AnswerverifiedShow Answer

Suppose that a firm in a competitive market is currently maximizing its short-run profit at an output of 50 units.If the current price is $9,the marginal cost of the 50th unit is $9,and the average total cost of producing 50 units is $4,what is the firm's profit?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the long run,a profit-maximizing firm will choose to exit a market when

Correct AnswerverifiedShow Answer

Firms in a competitive market are said to be price takers because there are many sellers in the market,and the goods offered by the firms are very similar if not identical.

Correct AnswerverifiedShow Answer

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The losses and revenues are identified o...
View Answer

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