Have an account?
Skip to Content
Build your own quiz
Suggestions for you
25 questions
Show Answers
See Preview
- 1. Multiple Choice
A market with a large number of sellers
can only be a perfectly competitive market.
might be an oligopoly or a perfectly competitive market.
might be a monopolistically competitive or a perfectly competitive market.
might be a perfectly competitive, monopolistically competitive, oligopoly, or monopoly market.
can only be a monopolistically competitive market.
- 2. Multiple Choice
A perfectly competitive firm
A) sells a product that has perfect substitutes.
B) has a perfectly inelastic demand.
C) has a perfectly elastic supply.
D) Answers A and B are correct.
E) Answers A and C are correct.
- 3. Multiple Choice
In part, perfect competition arises if
i. each firm's minimum efficient scale is large relative to demand.
ii. each firm produces a good or service identical to those produced by its many competitors.
iii. there are significant barriers to entry.
i only
ii only
i and ii
iii only
i and ii
- 4. Multiple Choice
During the winter, theme parks in Orlando close earlier than in the summer. The reason the theme parks close early during the winter is because during that season the marginal revenue from staying open later is ________ the marginal cost.
greater than
less than
equal to
zero compared to
- 5. Multiple Choice
A perfectly competitive firm is earning an economic profit when total fixed costs increase. Assuming the firm does not shut down, in the short run the firm will
charge a higher price.
produce more output so the extra revenue will cover the increased costs.
produce less output to decrease total costs.
continue producing the same quantity as before but will make less economic profit.
continue producing the same quantity as before and continue making the same economic profit as before.
- 6. Multiple Choice
The above figure shows a perfectly competitive firm. If the market price is $15, the firm
is incurring an economic loss.
is making an economic profit.
is making zero economic profit.
will immediately shut down.
might shut down but more information is needed about the AVC.
- 7. Multiple Choice
The above figure shows a perfectly competitive firm. If the market price is more than $20 per unit, the firm
will definitely shut down to minimize its losses.
will stay open to produce and will make zero economic profit.
will stay open to produce and will incur an economic loss.
will stay open to produce and will make an economic profit.
might shut down but more information is needed about the fixed cost.
- 8. Multiple Choice
The figure above shows a perfectly competitive firm. If the market price is $20 per unit, then the firm produces ________ units and makes an economic profit that is ________.
more than 30; more than $100
30; more than $100
20; less than $400
0; zero
30; zero
- 9. Multiple Choice
When all firms in a perfectly competitive market are earning ________, we can state that the market is in a ________ equilibrium.
A) a normal profit; long-run
B) an economic profit; long-run
C) a normal profit; short-run
D) an economic profit; short-run
E) A and D are correct.
- 10. Multiple Choice
What is the goal of a firm?
to make profits
to maximize profits
to maximize revenue
none of the above
- 11. Multiple Choice
Total Revenue (minus) Explicit and Implicit cost =
Accounting Profit
Economic Profit
Economic Cost
Total Profit
- 12. Multiple Choice
Fixed Costs are only fixed in the
Long run
Short run
Period where there is neither a profit or a loss
none of the above
- 13. Multiple Choice
A firm in the long run will make
Losses
Economic Profit
Profits greater than MC
none of the above
- 14. Multiple Choice
To find TC from ATC, you simply
Multiply by the cost
Divide by the quantity
Multiply by the quantity
Divide by the cost
- 15. Multiple Choice
The lowest possible ATC point is the
Efficiency scale
Efficient scale
Profit Maximization condition
none
- 16. Multiple Choice
The image above shows a firm making
Economic Profit
Economic loss
Breaking even
Shutting down
- 17. Multiple Choice
Should the following firm shutdown?
Yes
No
Not enough information present
- 18. Multiple Choice
Select all that apply: When should a firm decide to shutdown?
When their demand curve is below AVC
When their MR curve is below AVC
When the price is below the AVC
When the MC is below the AVC
- 19. Multiple Choice
The above figure shows three possible average total cost curves. If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC0, each produces 20 units, and the market price of the good is $16 per unit, then
the firms make an economic profit of $8 per unit.
firms will enter the industry and the number of firms increases.
the firms' ATC curves will eventually shift to become the same as ATC1.
firms will exit the industry and the number of firms decreases.
- 20. Multiple Choice
If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry, then
consumer surplus decreases.
the existing firms' economic profit decreases.
there must be external benefits to consumption of the good.
the new firms must incur an economic loss
- 21. Multiple Choice
Suppose that each of 8,000 firms in a perfectly competitive industry produces 1,000 units of a good and maximizes profits when the price of the good is $10. If there is a permanent increase in demand, in the short run each firm produces ________ 1,000 units and in the long run the number of firms is ________ 8,000.
more than; more than
less than; more than
less than; less than
more than; less than
exactly; more than
- 22. Multiple Choice
Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10. In the long run, definitely
each firm increases its production above 1,000 units.
the number of firms is more than 10,000.
consumer surplus decreases.
producer surplus increases.
the number of firms is less than 10,000.
- 23. Multiple Choice
In the long run, a firm's producer surplus is equal to the:
economic rent it enjoys from its scarce inputs.
revenue it earns in the long run.
positive economic profit it earns in the long run.
difference between total revenue and total variable costs.
- 24. Multiple Choice
At P = $80, the profit-maximizing output in the short run is:
22
24
39
50
- 25. Multiple Choice
Starting with the increase in demand, the cost and supply curves will shift, indicating that this is:
A constant-cost industry.
An increasing-cost industry
A decreasing-cost industry
A monopolistic industry
- Answer choicesTagsAnswer choicesTags