Question 1

Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition.The most common reason for this is

Accepted Answer

A)   there are high barriers to entering these markets.
B)   firms in these markets sell identical products.
C)   firms in these markets make high profits.
D)   firms in these markets do not sell identical products.

Question 2

In a perfectly competitive industry,in the long-run equilibrium

Accepted Answer

A)   the typical firm is producing at the output where its long-run average total cost is not minimized.
B)   the typical firm is earning an accounting profit greater than its implicit costs.
C)   the typical firm earns zero profit.
D)   the typical firm is maximizing its revenue.

Question 3

Firms in perfectly competitive industries are unable to control the prices of the products they sell and earn a profit in the long run.Which of the following is one reason for this?

Accepted Answer

A)   Owners of perfectly competitive firms realize that their short-run profits are temporary. Therefore, they either sell their businesses or develop other products that will earn short-run profits.
B)   Firms in perfectly competitive industries can use advertising in the short run to persuade consumers that their products are better than those of other firms. But eventually consumers realize that all of the firms sell virtually identical products.
C)   Firms from other countries are able to produce similar products at lower costs.
D)   Firms in these industries sell identical products.

Question 4

Marginal revenue is

Accepted Answer

A)   total revenue divided by the total quantity of output.
B)   the change in profit divided by the change in the quantity of output.
C)   the change in total revenue divided by the change in total cost.
D)   the change in total revenue divided by the change in the quantity of output.

Question 5

Figure 12-4  Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.
-Refer to Figure 12-4.If the market price is $30,the firm's profit-maximizing output level is

Accepted Answer

A)   0.
B)   130.
C)   180.
D)   240.

Question 6

Both individual buyers and sellers in perfect competition

Accepted Answer

A)   can influence the market price by their own individual actions.
B)   can influence the market price by joining with a few of their competitors.
C)   have to take the market price as a given.
D)   have the market price dictated to them by government.

Question 7

The price a perfectly competitive firm receives for its output

Accepted Answer

A)   is determined by the interaction of the firm and all of the consumers who buy from the firm.
B)   is determined by the interaction of all sellers and all buyers in the firm's market.
C)   will not change in response to changes in market demand and supply because the firm is a price taker.
D)   will be lowered by the firm in order to sell more output.

Question 8

Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?

Accepted Answer

A)   The market demand curve is a horizontal line; the firm's demand curve is downward-sloping.
B)   The market demand curve is downward-sloping; the firm's demand curve is a vertical line.
C)   The market demand curve can not have a constant slope; the firm's demand curve has a slope equal to zero.
D)   The market demand curve is downward-sloping; the firm's demand curve is a horizontal line.

Question 9

Of the following industries,which are perfectly competitive? For those that are not perfectly competitive,explain why.
a.Restaurants
b.Corn
c.College education
d.Local radio and television

Accepted Answer

a.Restaurants are not perfectly competit...

Question 10

At the profit-maximizing level of output for a perfectly competitive firm,price equals marginal cost.Which of the following is also true?

Accepted Answer

A)   The difference between total revenue and total cost is the greatest.
B)   Total revenue equals total cost.
C)   Average revenue equals average total cost.
D)   Marginal profit equals marginal cost.

Question 11

A perfectly competitive wheat farmer in a constant-cost industry produces 3,000 bushels of wheat at a total cost of $36,000.The prevailing market price is $15.What will happen to the market price of wheat in the long run?

Accepted Answer

A)   The price remains constant at $15.
B)   The price falls to $12.
C)   The price rises above $15.
D)   There is insufficient information to answer the question.

Question 12

Figure 12-17  The graphs in Figure 12-17 represent the perfectly competitive market demand and supply curves for the apple industry and demand and cost curves for a typical firm in the industry.
-Refer to Figure 12-17. The graphs depicts a short run equilibrium.How will this differ from the long-run equilibrium? (Assume this is a constant-cost industry.)

Accepted Answer

A)   Fewer firms will be in the market in the long run than in the short run.
B)   The price will be higher in the long run than in the short run.
C)   The market supply curve will be further to the left in the long run than in the short run.
D)   The firm's profit will be lower in the long run than in the short run.

Question 13

Figure 12-5  Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
-Refer to Figure 12-5.What is the amount of the firm's fixed cost of production?

Accepted Answer

A)   $5,400
B)   $6,750
C)   $8,100
D)   It cannot be determined.

Question 14

If,for the last unit of a good produced by a perfectly competitive firm,MR > MC,then in producing it,the firm

Accepted Answer

A)   added more to total costs than it added to total revenue.
B)   added more to total revenue than it added to total cost.
C)   is maximizing marginal profit.
D)   has minimized its losses.

Question 15

Figure 12-11 
-Refer to Figure 12-11.If this is a constant-cost industry,what is the market price in the long-run equilibrium?

Accepted Answer

A)   $5
B)   $14
C)   $15
D)   $20

Question 16

A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000.The prevailing market price is $48.Assuming that this firm continues to produce in the long run,what happens to output level in the long run?

Accepted Answer

A)   The firm's output falls.
B)   The firm's output increases.
C)   The firm produces the same output level.
D)   There is insufficient information to answer the question.

Question 17

If,in a perfectly competitive industry,the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost,then

Accepted Answer

A)   firms are breaking even.
B)   new firms are attracted to the industry.
C)   existing firms will exit the industry.
D)   market supply will remain constant.

Question 18

Which of the following is the best example of a perfectly competitive industry?

Accepted Answer

A)   wheat production
B)   steel production
C)   electricity production
D)   airplane production

Question 19

What is always true at the quantity where a firm's average total cost equals average revenue?

Accepted Answer

A)   The firm's revenue is maximized.
B)   The firm's profit is maximized.
C)   The firm breaks even.
D)   Marginal cost equals marginal revenue.

Question 20

The demand curve for an individual seller's product in perfect competition is

Accepted Answer

A)   the same as market demand.
B)   downward sloping.
C)   vertical.
D)   horizontal.

Exam 12: Firms in Perfectly Competitive Markets

The price a perfectly competitive firm receives for its output

Correct Answer
verified

A perfectly competitive wheat farmer in a constant-cost industry produces 3,000 bushels of wheat at a total cost of $36,000.The prevailing market price is $15.What will happen to the market price of wheat in the long run?

Correct Answer
verified

Both individual buyers and sellers in perfect competition

Correct Answer
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At the profit-maximizing level of output for a perfectly competitive firm,price equals marginal cost.Which of the following is also true?

Correct Answer
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Figure 12-5 Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 12-5.What is the amount of the firm's fixed cost of production?

Correct Answer
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Which of the following is the best example of a perfectly competitive industry?

Correct Answer
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The demand curve for an individual seller's product in perfect competition is

Correct Answer
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Figure 12-11 -Refer to Figure 12-11.If this is a constant-cost industry,what is the market price in the long-run equilibrium?

Correct Answer
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Marginal revenue is

Correct Answer
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Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?

Correct Answer
verified

A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000.The prevailing market price is $48.Assuming that this firm continues to produce in the long run,what happens to output level in the long run?

Correct Answer
verified

Figure 12-4 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 12-4.If the market price is $30,the firm's profit-maximizing output level is

Correct Answer
verified

In a perfectly competitive industry,in the long-run equilibrium

Correct Answer
verified

Correct Answer
verified

If,for the last unit of a good produced by a perfectly competitive firm,MR > MC,then in producing it,the firm

Correct Answer
verified

What is always true at the quantity where a firm's average total cost equals average revenue?

Correct Answer
verified

If,in a perfectly competitive industry,the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost,then

Correct Answer
verified

Of the following industries,which are perfectly competitive? For those that are not perfectly competitive,explain why. a.Restaurants b.Corn c.College education d.Local radio and television

Correct Answer
verified
a.Restaurants are not perfectly competit...
View Answer

Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition.The most common reason for this is

Correct Answer
verified

Firms in perfectly competitive industries are unable to control the prices of the products they sell and earn a profit in the long run.Which of the following is one reason for this?

Correct Answer
verified

Exam 12: Firms in Perfectly Competitive Markets

The price a perfectly competitive firm receives for its output

Correct AnswerverifiedShow Answer

A perfectly competitive wheat farmer in a constant-cost industry produces 3,000 bushels of wheat at a total cost of $36,000.The prevailing market price is $15.What will happen to the market price of wheat in the long run?

Correct AnswerverifiedShow Answer

Both individual buyers and sellers in perfect competition

Correct AnswerverifiedShow Answer

At the profit-maximizing level of output for a perfectly competitive firm,price equals marginal cost.Which of the following is also true?

Correct AnswerverifiedShow Answer

Figure 12-5 Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 12-5.What is the amount of the firm's fixed cost of production?

Correct AnswerverifiedShow Answer

Which of the following is the best example of a perfectly competitive industry?

Correct AnswerverifiedShow Answer

The demand curve for an individual seller's product in perfect competition is

Correct AnswerverifiedShow Answer

Figure 12-11 -Refer to Figure 12-11.If this is a constant-cost industry,what is the market price in the long-run equilibrium?

Correct AnswerverifiedShow Answer

Marginal revenue is

Correct AnswerverifiedShow Answer

Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?

Correct AnswerverifiedShow Answer

A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000.The prevailing market price is $48.Assuming that this firm continues to produce in the long run,what happens to output level in the long run?

Correct AnswerverifiedShow Answer

Figure 12-4 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 12-4.If the market price is $30,the firm's profit-maximizing output level is

Correct AnswerverifiedShow Answer

In a perfectly competitive industry,in the long-run equilibrium

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If,for the last unit of a good produced by a perfectly competitive firm,MR > MC,then in producing it,the firm

Correct AnswerverifiedShow Answer

What is always true at the quantity where a firm's average total cost equals average revenue?

Correct AnswerverifiedShow Answer

If,in a perfectly competitive industry,the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost,then

Correct AnswerverifiedShow Answer

Of the following industries,which are perfectly competitive? For those that are not perfectly competitive,explain why. a.Restaurants b.Corn c.College education d.Local radio and television

Correct Answerverifieda.Restaurants are not perfectly competit...View AnswerShow Answer

Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition.The most common reason for this is

Correct AnswerverifiedShow Answer

Firms in perfectly competitive industries are unable to control the prices of the products they sell and earn a profit in the long run.Which of the following is one reason for this?

Correct AnswerverifiedShow Answer

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a.Restaurants are not perfectly competit...
View Answer

Correct Answer
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Correct Answer
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