Question 1

Figure 14-6
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-6. When market price is P3, a profit-maximizing firm's total revenue

Accepted Answer

A)   can be represented by the area P3 × Q3.
B)   can be represented by the area P3 × Q2.
C)   can be represented by the area P3-P2)  × Q3.
D)   is zero.

Question 2

A firm in a competitive market has the following cost structure:  If the market price is $8, how many units of output should the firm produce to maximize profit?

Accepted Answer

A)   5 units
B)   6 units
C)   7 units
D)   8 units

Question 3

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

Accepted Answer

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

Question 4

Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-2. If the market price is Pd, in the short run the firm will earn

Accepted Answer

A)   positive economic profits.
B)   negative economic profits but will try to remain open.
C)   negative economic profits and will shut down.
D)   zero economic profits.

Question 5

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.

Question 6

Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-2. If the market price is Pb, in the short run the firm will earn

Accepted Answer

A)   positive economic profits.
B)   negative economic profits but will try to remain open.
C)   negative economic profits and will shut down.
D)   zero economic profits.

Question 7

When a perfectly competitive firm decides to shut down, it is most likely that

Accepted Answer

A)   marginal cost is above average variable cost.
B)   marginal cost is above average total cost.
C)   price is below the firm's average variable cost.
D)   fixed costs exceed variable costs.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Figure 14-7 
-Refer to Figure 14-7. Suppose the price of the good is $175. If the firm produces and sells 514 units of output, its profit is approximately

Accepted Answer

A)   $24,995.
B)   $25,550.
C)   $25,750.
D)   $26,025.

Question 10

Suppose a firm is considering producing zero units of output. We call this exiting an industry in the short run and shutting down in the long run.

Accepted Answer

A) True 
 B)False

Question 11

Table 14-13
Diana's Dress Emporium
 
-Refer to Table 14-13. In order to maximize profits, how many units should Diana's Dress Emporium produce?

Accepted Answer

A)   5
B)   6
C)   7
D)   8

Question 12

Table 14-12

-Refer to Table 14-12. At what quantity does Bill maximize profits?

Accepted Answer

A)   3
B)   6
C)   7
D)   8

Question 13

The marginal firm in a competitive market will earn zero economic profit in the long run.

Accepted Answer

A) True 
 B)False

Question 14

A firm operating in a competitive market will stay in business in the short run so long as the market price exceeds the firm's average total cost; otherwise, the firm will shut down.

Accepted Answer

A) True 
 B)False

Question 15

The term shutdown

Accepted Answer

A)   and the term exit both refer to short-run decisions that a firm might make.
B)   and the term exit both refer to long-run decisions that a firm might make.
C)   refers to a short-run decision that a firm might make, whereas the term exit refers to a long-run decision that a firm might make.
D)   refers to a long-run decision that a firm might make, whereas the term exit refers to a short-run decision that a firm might make.

Question 16

Scenario 14-5
A study sponsored by the Food Consumer Safety Board found that consumption of irradiated tomatoes increased the health of laboratory rats. As a result of national press coverage of the report, the demand for irradiated tomatoes increased dramatically. Organic farmers were able to switch from organic production of tomatoes to irradiated production with no additional cost. Assume that the tomato market satisfies all of the assumptions of perfect competition.
-Refer to Scenario 14-5. If the increased production of irradiated tomatoes caused a rise in the marginal transportation costs of moving irradiated tomatoes to market, the

Accepted Answer

A)   short-run market supply curve for irradiated tomatoes would be affected but not the long-run market supply.
B)   long-run market supply curve for irradiated tomatoes would be perfectly elastic.
C)   long-run market supply of irradiated tomatoes would be downward sloping.
D)   long-run market supply of irradiated tomatoes would be upward sloping.

Question 17

A firm operating in a perfectly competitive industry will continue to operate if it earns zero economic profits because it is likely to be earning positive accounting profits.

Accepted Answer

A) True 
 B)False

Question 18

Figure 14-6
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-6. Firms will be encouraged to enter this market for all prices that exceed

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   None of the above is correct.

Question 19

Figure 14-6
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-6. When market price is P3, a profit-maximizing firm's total costs

Accepted Answer

A)   can be represented by the area P2 × Q2.
B)   can be represented by the area P3 × Q2.
C)   can be represented by the area P3-P2)  × Q3.
D)   are zero.

Question 20

Which of the following firms is the closest to being a perfectly competitive firm?

Accepted Answer

A)   the New York Yankees
B)   Apple, Inc.
C)   DeBeers diamond wholesalers
D)   a wheat farmer in Kansas

Exam 13: Firms in Competitive Markets

A firm in a competitive market has the following cost structure: If the market price is $8, how many units of output should the firm produce to maximize profit?

Correct Answer
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Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6. Firms will be encouraged to enter this market for all prices that exceed

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

Correct Answer
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The term shutdown

Correct Answer
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The marginal firm in a competitive market will earn zero economic profit in the long run.

Correct Answer
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Table 14-12 -Refer to Table 14-12. At what quantity does Bill maximize profits?

Correct Answer
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Which of the following firms is the closest to being a perfectly competitive firm?

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

Correct Answer
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Table 14-13 Diana's Dress Emporium -Refer to Table 14-13. In order to maximize profits, how many units should Diana's Dress Emporium produce?

Correct Answer
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A firm operating in a competitive market will stay in business in the short run so long as the market price exceeds the firm's average total cost; otherwise, the firm will shut down.

Correct Answer
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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. What would be the firm's total revenue if it instead produced and sold 4 units of output?

Correct Answer
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Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-2. If the market price is Pb, in the short run the firm will earn

Correct Answer
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Figure 14-7 -Refer to Figure 14-7. Suppose the price of the good is $175. If the firm produces and sells 514 units of output, its profit is approximately

Correct Answer
verified

Suppose a firm is considering producing zero units of output. We call this exiting an industry in the short run and shutting down in the long run.

Correct Answer
verified

Correct Answer
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Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-2. If the market price is Pd, in the short run the firm will earn

Correct Answer
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A firm operating in a perfectly competitive industry will continue to operate if it earns zero economic profits because it is likely to be earning positive accounting profits.

Correct Answer
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Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6. When market price is P3, a profit-maximizing firm's total revenue

Correct Answer
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Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6. When market price is P3, a profit-maximizing firm's total costs

Correct Answer
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When a perfectly competitive firm decides to shut down, it is most likely that

Correct Answer
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Exam 13: Firms in Competitive Markets

A firm in a competitive market has the following cost structure: If the market price is $8, how many units of output should the firm produce to maximize profit?

Correct AnswerverifiedShow Answer

Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6. Firms will be encouraged to enter this market for all prices that exceed

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The term shutdown

Correct AnswerverifiedShow Answer

The marginal firm in a competitive market will earn zero economic profit in the long run.

Correct AnswerverifiedShow Answer

Table 14-12 -Refer to Table 14-12. At what quantity does Bill maximize profits?

Correct AnswerverifiedShow Answer

Which of the following firms is the closest to being a perfectly competitive firm?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 14-13 Diana's Dress Emporium -Refer to Table 14-13. In order to maximize profits, how many units should Diana's Dress Emporium produce?

Correct AnswerverifiedShow Answer

A firm operating in a competitive market will stay in business in the short run so long as the market price exceeds the firm's average total cost; otherwise, the firm will shut down.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-2. If the market price is Pb, in the short run the firm will earn

Correct AnswerverifiedShow Answer

Figure 14-7 -Refer to Figure 14-7. Suppose the price of the good is $175. If the firm produces and sells 514 units of output, its profit is approximately

Correct AnswerverifiedShow Answer

Suppose a firm is considering producing zero units of output. We call this exiting an industry in the short run and shutting down in the long run.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-2. If the market price is Pd, in the short run the firm will earn

Correct AnswerverifiedShow Answer

A firm operating in a perfectly competitive industry will continue to operate if it earns zero economic profits because it is likely to be earning positive accounting profits.

Correct AnswerverifiedShow Answer

Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6. When market price is P3, a profit-maximizing firm's total revenue

Correct AnswerverifiedShow Answer

Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6. When market price is P3, a profit-maximizing firm's total costs

Correct AnswerverifiedShow Answer

When a perfectly competitive firm decides to shut down, it is most likely that

Correct AnswerverifiedShow Answer

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