Question 1

Refer to Figure 23.4 for a perfectly competitive market and firm.Which of the following is likely to occur in the market in the long run, ceteris paribus?

Accepted Answer

A)   An increase in demand.
B)   A decrease in demand.
C)   An increase in supply.
D)   A decrease in supply.

Question 2

Economic losses are a signal to producers

Accepted Answer

A)   That they are using resources in the most efficient way.
B)   That they are not using resources in the best way.
C)   That consumer demand is being satisfied.
D)   That consumers are content with the allocation of resources.

Question 3

Explain how the market supply curve is derived in a perfectly competitive market.Identify five factors that would cause the market supply curve to shift.

Accepted Answer

The market supply curve is the sum of th...

Question 4

Diagram a model of a perfectly competitive market and a separate model of a firm experiencing economic profits.Explain and illustrate on your models the changes that take place in the long run.Be sure to explain why any changes take place.

Accepted Answer

Additional firms, in pursuit of higher p...

Question 5

Which of the following is true about a competitive market supply curve?

Accepted Answer

A)   It is horizontal.
B)   It is downward-sloping to the right.
C)   It is the sum of the marginal cost curves of all firms.
D)   It is vertical.

Question 6

In long-run perfectly competitive equilibrium, marginal cost

Accepted Answer

A)   Is greater than ATC.
B)   Is less than ATC.
C)   Equals the minimum of the ATC.
D)   Equals the minimum of the AVC.

Question 7

Refer to Figure 23.6 for a perfectly competitive firm.Given the current market price, we expect to see

Accepted Answer

A)   Firms exit from the industry, driving up the market price.
B)   Firms exit from the industry, driving down the market price.
C)   No change in the number of firms in the industry and no change in the market price.
D)   Firms enter the industry, driving down the market price.

Question 8

If catfish farmers expect catfish prices to fall in the future, then right now

Accepted Answer

A)   There will be a movement down along the market supply curve for catfish.
B)   There will be a movement up along the market supply curve for catfish.
C)   The market supply curve for catfish will shift to the left.
D)   The market supply curve for catfish will shift to the right.

Question 9

Examples of barriers to entry include

Accepted Answer

A)   Price taking.
B)   Patents.
C)   Standardized products.
D)   Economic profits.

Question 10

High profits in a particular industry indicate that

Accepted Answer

A)   Consumers want less of that industry's goods.
B)   Consumers are satisfied with the level of production of that industry's goods.
C)   Consumers want more of that industry's goods.
D)   Producers are satisfied with the level of production of that industry's goods.

Question 11

Which of the following characterizes a firm that is in long-run perfectly competitive equilibrium where profits are maximized?

Accepted Answer

A)   Price equals minimum ATC.
B)   Positive economic profit.
C)   Price equals marginal cost.
D)   Price exceeds marginal cost.

Question 12

When economic losses exist in the cereal market, for example, this is an indication that

Accepted Answer

A)   The goods and services that society is giving up (the opportunity cost)  are more valuable than the cereal being produced.
B)   Society's scarce resources are being used in the best way.
C)   Not enough firms are producing cereal (assuming that the market is perfectly competitive) .
D)   The WHAT to produce question is being answered efficiently.

Question 13

Which of the following is an investment decision in a competitive market?

Accepted Answer

A)   The shutdown decision.
B)   The rate of output to produce.
C)   Entry or exit.
D)   The price to charge.

Question 14

If economic profits are earned in a competitive market, then over time

Accepted Answer

A)   Additional firms will enter the market.
B)   The market supply curve will shift to the left.
C)   Equilibrium price will rise as more firms enter.
D)   Normal profit will fall to zero as more firms enter.

Question 15

Exit and shutdown mean the same thing.

Accepted Answer

A) True 
 B)False

Question 16

Refer to Figure 23.4 for a perfectly competitive market and firm.Which of the following is most likely to occur, ceteris paribus?

Accepted Answer

A)   The firm will exit in the long run.
B)   The firm will increase output.
C)   The firm will shut down in the short run.
D)   The firm will raise its price.

Question 17

The marginal cost pricing characteristic of competitive markets permits society to efficiently answer the WHAT to produce question.

Accepted Answer

A) True 
 B)False

Question 18

The price signal the consumer gets in a competitive market

Accepted Answer

A)   In no way reflects opportunity cost.
B)   Is an accurate reflection of opportunity cost.
C)   Is not reliable for making choices about the allocation of resources.
D)   Is the result of the selfishness of individuals.

Question 19

To determine the market supply, the quantities

Accepted Answer

A)   Demanded at each price by each demander are added together.
B)   Supplied at each price by each supplier are added together.
C)   Demanded at each price by each demander and supplied at each price by each supplier are added together.
D)   Demanded at each price by each demander are subtracted from the quantities supplied at each price by each supplier.

Question 20

Other things being equal, as more firms enter a market, the market supply curve

Accepted Answer

A)   Becomes more inelastic.
B)   Shifts to the left.
C)   Shifts to the right.
D)   Intersects the demand curve at a higher price.

Exam 9: Competitive Markets

High profits in a particular industry indicate that

Correct AnswerverifiedShow Answer

The price signal the consumer gets in a competitive market

Correct AnswerverifiedShow Answer

Other things being equal, as more firms enter a market, the market supply curve

Correct AnswerverifiedShow Answer

To determine the market supply, the quantities

Correct AnswerverifiedShow Answer

Refer to Figure 23.4 for a perfectly competitive market and firm.Which of the following is most likely to occur, ceteris paribus?

Correct AnswerverifiedShow Answer

Refer to Figure 23.4 for a perfectly competitive market and firm.Which of the following is likely to occur in the market in the long run, ceteris paribus?

Correct AnswerverifiedShow Answer

Economic losses are a signal to producers

Correct AnswerverifiedShow Answer

If catfish farmers expect catfish prices to fall in the future, then right now

Correct AnswerverifiedShow Answer

Which of the following is true about a competitive market supply curve?

Correct AnswerverifiedShow Answer

Exit and shutdown mean the same thing.

Correct AnswerverifiedShow Answer

Which of the following characterizes a firm that is in long-run perfectly competitive equilibrium where profits are maximized?

Correct AnswerverifiedShow Answer

When economic losses exist in the cereal market, for example, this is an indication that

Correct AnswerverifiedShow Answer

In long-run perfectly competitive equilibrium, marginal cost

Correct AnswerverifiedShow Answer

Examples of barriers to entry include

Correct AnswerverifiedShow Answer

Refer to Figure 23.6 for a perfectly competitive firm.Given the current market price, we expect to see

Correct AnswerverifiedShow Answer

The marginal cost pricing characteristic of competitive markets permits society to efficiently answer the WHAT to produce question.

Correct AnswerverifiedShow Answer

Which of the following is an investment decision in a competitive market?

Correct AnswerverifiedShow Answer

Explain how the market supply curve is derived in a perfectly competitive market.Identify five factors that would cause the market supply curve to shift.

Correct AnswerverifiedThe market supply curve is the sum of th...View AnswerShow Answer

If economic profits are earned in a competitive market, then over time

Correct AnswerverifiedShow Answer

Diagram a model of a perfectly competitive market and a separate model of a firm experiencing economic profits.Explain and illustrate on your models the changes that take place in the long run.Be sure to explain why any changes take place.

Correct AnswerverifiedAdditional firms, in pursuit of higher p...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The market supply curve is the sum of th...
View Answer

Correct Answer
verified

Correct Answer
verified
Additional firms, in pursuit of higher p...
View Answer