Chapter 8_ Perfect Competition (Multiple Choice).txt

    • author "Rosenauer"
    • tags ""
    • folders "Microeconomics"
    • description ""
    • fileName "Chapter 8: Perfect Competition (Multiple Choice)"

    • Market structure is defined as the:
    • A. Number of firms in each industry.
    • B. Similarity of the product sold.
    • C. Ease of entry into and exit from the market.
    • D. All of the above.
    • D. All of the above.
  1. Perfect competition is defined as market structure in which:



    D. All of the above.
  2. Which of the following best illustrates perfect competition?



    A. Wheat farming.
  3. Which of the following is not a characteristic of a perfectly competitive market?



    D. Firms are price makers, not price takers.
  4. Which of the following is true of a perfectly competitive firm?



    B. The firm will not earn an economic profit in the long run.
  5. If a firm has no abiliy to select the price of its product, it:



    C. Has a horixontal individual demand curve.
  6. Because a competitive firm is a price take, it faces a demand cuve that is:



    C. Perfectly elastic.
  7. A firm operating a perfectly competitive market is a price taker because:



    D. All of the above.
  8. Under perfect competition, which of the following are the same (equal) at all levels of output?



    B. Price and marginal revenue.
  9. If a perfectly competitive firm sells 50 units of output at a market price of $10 per unit, its marginal revenue is:



    D. $10
  10. Marginal revenue is the change in:



    A. Total revenue resulting from a one unit change in output.
  11. When the price of a good is a constant, the marginal revenue per unit of output is the same as:




    C. Price.
  12. A perfectly competitive firm in the shortrun maximizes its profit by producing the output where:



    D. All of the above.
  13. In the short run, a perfectly competitive firm's most profitable level of output is where:



    C. Both of the above.
  14. A perfectly competitive firm in the shortrun can earn:



    D. All of the above are possible.
  15. A perfectly competitive firm maximizes profits or minimizes losses in the shortrun by producing at the output level at which:



    A. Marginal revenue equals marginal cost.
  16. A perfectly competitive firm sells its output for $100 per unit and marginal cost is $100 per unit. To maximize shortrun profit, the firm should:



    B. Maintain its current output.
  17. In the short run, a perfectly competitive firm is producing at a price below average total cost, its economic profit is:



    C. Negative.
  18. In the short run, if a perfectly competitive firm is producing at a price above average total cost, its economic profit must be:



    D. Positive.
  19. A competitive firm maximizes its profits (or minimizes is losses) by producing the quantity where the market price equals the firm's:



    B. Marginal cost.
  20. A perfectly competitive firm's shortrun supply curve is the:



    D. Marginal cost curve above the average variable cost curve.
  21. Above the shutdown point, a competitive firm's supply curve coincides with its:



    B. Marginal cost curve.
  22. As shown in Exhibit 3, the firm's economic profit is maximum at an output of:



    C. 20 units per day.
  23. In Exhibit 3, if the price of firm's product is $2.00 per unit, the firm will produce:



    C. 15 units per day.
  24. As shown in Exhibit 3, the price at which the firm earns zero economic profit in the shortrun is:




    D. $2.00 per unit.
  25. If the price of the firm's product in Exhibit 3 is $1.50 per unit, which intersects AVC at point B, the firm should:



    B. Stay in operation for the time being even though it is making a pure economic loss.
  26. As shown in Exhibit 3, the firm will produce in the short run if the price is at least equal to:



    D. $1.50 per unit (point B).
  27. In Exhibit 4, this firm is currently producing 14 units of output. What would you advise this firm to do?




    A. Increase output to 16.
  28. If a firm decreases output when MR>MC, then:




    A. Profit will decrease.
  29. If a firm increases output when MR



    A. Profit will decrease.
  30. If a firm decreases output when MR



    B. Profit will increase.
  31. In Exhibit 8, product price in this market is fixed at $35. This firm is currently operating where MR=MC. Which of the following is true?



    A. Price>AVC, andthe firm should stay at its current output.
  32. If a firm shuts down in the short run, it will:




    A. Incur losses equal to its fixed costs.
  33. If a firm in a competitive industry is making zero economic profit but still producing, it must be the case that:




    D. MC = MR = ATC.
  34. The long run is a planning period:



    A. Durring which the firm can vary its plan size.
  35. In longrun equilibrium, the perfectly competitive firm sets its price equal to which of the following?



    D. All of the above.
  36. In longrun equilibrium, a competitve firm produces the level of output at which:



    D. Shortrun average total cost and lont-run average cost are at a minimum.
  37. Which of the following statements is true?



    D. In longrun equilibrium, a competitive firm produces at the point of minimum average total cost.
  38. If there is a permanent increase in demand for the product of a perfecly competitive industry, the process of transition to a new long-run equilibrium will include:



    C. Both a and b.
  39. In long-run equilibrium, the typical perfectly competitve firm will:



    A. Earn zero economic profit.
  40. The long-run equilibrium condiion for perfect competition is:



    B. P = ATC = MR = MC.
  41. Assume the short-run average total cost for a perfecly competitive industry remains constant as the output of the industry expands. In the long run, the industry supply curve will:



    A. Be perfectly horixontal.
  42. Assume the short-run average total cost for a perfecly competitive industry decreases as the output of the industry expand. In the long run, the industry supply curve will:



    C. Have a negative slope.
  43. Assume the short-run average total cost for a perfectly competitive industry increases as the outpur of the industry expands. In the long run, the industry supply curve will:



    D. Has a positive slope.
Author
Anonymous
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Card Set
Chapter 8_ Perfect Competition (Multiple Choice).txt
Description
Ch 8
Updated