Question 1

A firm has market power if it can

Accepted Answer

A)  maximize profits.
B)  minimize costs.
C)  influence the market price of the good it sells.
D)  hire as many workers as it needs at the prevailing wage rate.E) B) and C)
F) A) and B)

Question 2

Figure 14-9
In the figure below, panel (a)  depicts the linear marginal cost of a firm in a competitive market, and panel (b)  depicts the linear market supply curve for a market with a fixed number of identical firms.  
-Refer to Figure 14-9. If there are 300 identical firms in this market, what level of output will be supplied to the market when price is $1.00?

Accepted Answer

A)  300
B)  6,000
C)  30,000
D)  60,000E) A) and B)
F) A) and C)

Question 3

If a competitive firm is currently producing a level of output at which profit is not maximized, then it must be true that

Accepted Answer

A)  marginal revenue exceeds marginal cost.
B)  marginal cost exceeds marginal revenue.
C)  total cost exceeds total revenue.
D)  None of the above is correct.E) B) and C)
F) A) and C)

Question 4

Willie's Wading Adventures sells hip waders for fishing and duck hunting in a perfectly competitive market. If hip waders sell for $100 each and average total cost per unit is $95 at the profit-maximizing output level, then in the long run

Accepted Answer

A)  more firms will enter the market.
B)  some firms will exit from the market.
C)  the equilibrium price per unit will rise.
D)  average total costs will fall.E) A) and C)
F) B) and C)

Question 5

​Table 14-16
The table represents the demand information for a firm in a competitive market.  ​
-Refer to Table 14-16. For this firm, the price is

Accepted Answer

A)  ​$120
B)  ​$10
C)  ​$15
D)  ​$5E) B) and D)
F) C) and D)

Question 6

​All firms operating in a perfectly competitive market produce unique goods.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

When firms are neither entering nor exiting a perfectly competitive market,

Accepted Answer

A)  total revenue must equal total variable cost for each firm.
B)  economic profits must be zero.
C)  price must equal average variable cost for each firm.
D)  Both a and c are correct.E) B) and D)
F) All of the above

Question 9

Cold Duck Airlines flies between Tacoma and Portland. The company leases planes on a year-long contract at a cost that averages $600 per flight. Other costs (fuel, flight attendants, etc.)  amount to $550 per flight. Currently, Cold Duck's revenues are $1,000 per flight. All prices and costs are expected to continue at their present levels. If it wants to maximize profit, Cold Duck Airlines should

Accepted Answer

A)  drop the flight immediately.
B)  continue the flight.
C)  continue flying until the lease expires and then drop the run.
D)  drop the flight now but renew the lease if conditions improve.E) All of the above
F) A) and B)

Question 10

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? (i) 
Marginal revenue equals $5.
(ii) 
Average revenue equals $5.
(iii) 
Price equals $5.

Accepted Answer

A)  (i)  only
B)  (iii)  only
C)  (i)  and (ii)  only
D)  (i) , (ii) , and (iii) E) A) and B)
F) A) and C)

Question 11

When existing firms in a competitive market are profitable, an incentive exists for

Accepted Answer

A)  new firms to seek government subsidies that would allow them to enter the market.
B)  new firms to enter the market, even without government subsidies.
C)  existing firms to raise prices.
D)  existing firms to increase production.E) A) and D)
F) A) and B)

Question 12

Regardless of the cost structure of firms in a competitive market, in the long run

Accepted Answer

A)  firms will experience rising demand for their products.
B)  the marginal firm will earn zero economic profit.
C)  firms will experience a less competitive market environment.
D)  exit and entry is likely to lead to a horizontal long-run supply curve.E) A) and C)
F) B) and C)

Question 13

In the short run for a particular market, there are 5,000 firms. Each firm has a marginal cost of $7 when it produces 200 units of output. One point on the market supply curve is

Accepted Answer

A)  quantity = 5,000; price = $7.
B)  quantity = 35,000 price = $35,000.
C)  quantity = 1,000,000, price = $7.
D)  quantity = 1,000,000, price = $35,000.E) All of the above
F) None of the above

Question 14

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) All of the above
F) C) and D)

Question 15

In the short run, a market consists of 100 identical firms. The market price is $6, and the total cost to each firm of producing various levels of output is given in the table below. What will total quantity supplied be in the market?

Accepted Answer

A)  100 units
B)  200 units
C)  300 units
D)  400 unitsE) A) and B)
F) All of the above

Question 16

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A)  ​Firms are price takers.
B)  ​Individual firms are price setters.
C)  ​Firms are able to sell all of the output that they choose to produce.
D)  ​Firms produce identical goods.E) None of the above
F) All of the above

Question 17

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 unitsE) B) and C)
F) C) and D)

Question 18

Table 14-11
Suppose that a firm in a competitive market faces the following prices and costs: 
-Refer to Table 14-11. If the firm is producing 3 units of output, it should produce

Accepted Answer

A)  more units of output because its marginal revenue is greater than its marginal cost.
B)  fewer units of output because its marginal revenue is less than its marginal cost.
C)  more units of output because its marginal revenue is less than its marginal cost.
D)  fewer units of output because its marginal revenue is greater than its marginal cost.E) B) and C)
F) A) and B)

Question 19

A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Accepted Answer

A)  opportunity costs.
B)  fixed costs.
C)  variable costs.
D)  total costs.E) A) and B)
F) A) and C)

Question 20

When marginal revenue equals marginal cost, the firm

Accepted Answer

A)  should increase the level of production to maximize its profit.
B)  may be minimizing its losses rather than maximizing its profit.
C)  must be generating positive economic profits.
D)  must be generating positive accounting profits.E) All of the above
F) A) and B)

Exam 14: Firms in Competitive Markets

When existing firms in a competitive market are profitable, an incentive exists for

Correct Answer
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Which of the following is not a characteristic of a perfectly competitive market?

Correct Answer
verified

Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: -Refer to Table 14-11. If the firm is producing 3 units of output, it should produce

Correct Answer
verified

In the short run, a market consists of 100 identical firms. The market price is $6, and the total cost to each firm of producing various levels of output is given in the table below. What will total quantity supplied be in the market?

Correct Answer
verified

Regardless of the cost structure of firms in a competitive market, in the long run

Correct Answer
verified

When marginal revenue equals marginal cost, the firm

Correct Answer
verified

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

Correct Answer
verified

A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Willie's Wading Adventures sells hip waders for fishing and duck hunting in a perfectly competitive market. If hip waders sell for $100 each and average total cost per unit is $95 at the profit-maximizing output level, then in the long run

Correct Answer
verified

A firm has market power if it can

Correct Answer
verified

If a competitive firm is currently producing a level of output at which profit is not maximized, then it must be true that

Correct Answer
verified

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
verified

Correct Answer
verified

Table 14-16 The table represents the demand information for a firm in a competitive market. -Refer to Table 14-16. For this firm, the price is

Correct Answer
verified

In the short run for a particular market, there are 5,000 firms. Each firm has a marginal cost of $7 when it produces 200 units of output. One point on the market supply curve is

Correct Answer
verified

All firms operating in a perfectly competitive market produce unique goods.

Correct Answer
verified

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5.

Correct Answer
verified

When firms are neither entering nor exiting a perfectly competitive market,

Correct Answer
verified

Exam 14: Firms in Competitive Markets

When existing firms in a competitive market are profitable, an incentive exists for

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of a perfectly competitive market?

Correct AnswerverifiedShow Answer

Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: -Refer to Table 14-11. If the firm is producing 3 units of output, it should produce

Correct AnswerverifiedShow Answer

In the short run, a market consists of 100 identical firms. The market price is $6, and the total cost to each firm of producing various levels of output is given in the table below. What will total quantity supplied be in the market?

Correct AnswerverifiedShow Answer

Regardless of the cost structure of firms in a competitive market, in the long run

Correct AnswerverifiedShow Answer

When marginal revenue equals marginal cost, the firm

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Willie's Wading Adventures sells hip waders for fishing and duck hunting in a perfectly competitive market. If hip waders sell for $100 each and average total cost per unit is $95 at the profit-maximizing output level, then in the long run

Correct AnswerverifiedShow Answer

A firm has market power if it can

Correct AnswerverifiedShow Answer

If a competitive firm is currently producing a level of output at which profit is not maximized, then it must be true that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

​Table 14-16 The table represents the demand information for a firm in a competitive market. ​ -Refer to Table 14-16. For this firm, the price is

Correct AnswerverifiedShow Answer

In the short run for a particular market, there are 5,000 firms. Each firm has a marginal cost of $7 when it produces 200 units of output. One point on the market supply curve is

Correct AnswerverifiedShow Answer

​All firms operating in a perfectly competitive market produce unique goods.

Correct AnswerverifiedShow Answer

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5.

Correct AnswerverifiedShow Answer

When firms are neither entering nor exiting a perfectly competitive market,

Correct AnswerverifiedShow Answer

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Table 14-16 The table represents the demand information for a firm in a competitive market. -Refer to Table 14-16. For this firm, the price is

Correct Answer
verified

Correct Answer
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All firms operating in a perfectly competitive market produce unique goods.

Correct Answer
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Correct Answer
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Correct Answer
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