Question 1

A competitive firm sells 500 units of output and its marginal revenue at 500 units of output is $35.The firm's total revenue amounts to __________.

Accepted Answer

The answer of A competitive firm sells 500 units of...

Question 2

For a certain firm,the 100th unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $11.It follows that the

Accepted Answer

A)   production of the 100th unit of output increases the firm's profit by $1.
B)   production of the 100th unit of output increases the firm's average total cost by $1.
C)   firm's profit-maximizing level of output is less than 100 units.
D)   production of the 110th unit of output must increase the firm's profit but by less than $1.E) All of the above
F) A) and C)

Question 3

Table 14-1
 
-Refer to Table 14-1.The price and quantity relationship in the table is most likely a demand curve faced by a firm in a

Accepted Answer

A)   monopoly.
B)   concentrated market.
C)   competitive market.
D)   strategic market.E) A) and B)
F) C) and D)

Question 4

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) B) and D)
F) None of the above

Question 5

In making a short-run profit-maximizing production decision,the firm must consider both fixed and variable cost.

Accepted Answer

A) True 
 B)False

Question 6

List and describe the characteristics of a perfectly competitive market.

Accepted Answer

There are many buyers and sell...

Question 7

Consider a firm operating in a competitive market.The firm is producing 40 units of output,has an average total cost of production equal to $6,and is earning $240 economic profit in the short run.What is the current market price?

Accepted Answer

A)   $0
B)   $6
C)   $10
D)   $12E) B) and C)
F) A) and D)

Question 8

When profit-maximizing firms in competitive markets are earning profits,

Accepted Answer

A)   market demand must exceed market supply at the market equilibrium price.
B)   market supply must exceed market demand at the market equilibrium price.
C)   new firms will enter the market.
D)   the most inefficient firms will be encouraged to leave the market.E) C) and D)
F) A) and D)

Question 9

Figure 14-1 
-Refer to Figure 14-1.When the price of the good is $175,the firm's maximum profit is

Accepted Answer

A)   $16,500.
B)   $20,375.
C)   $25,750.
D)   $90,125.E) None of the above
F) B) and D)

Question 10

The Doris Dairy Farm sells milk to a dairy broker in Prairie du Chien,Wisconsin.Because the market for milk is generally considered to be competitive,the Doris Dairy Farm does not

Accepted Answer

A)   choose the quantity of milk to produce.
B)   choose the price at which it sells its milk.
C)   have any fixed costs of production.
D)   set marginal revenue equal to marginal cost to maximize profit.E) B) and D)
F) A) and C)

Question 11

Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-2.Which of the four prices corresponds to a firm earning positive economic profits in the short run?

Accepted Answer

A)   P1
B)   P2
C)   P3
D)   P4E) A) and B)
F) All of the above

Question 12

A firm operating in a perfectly competitive market may earn positive,negative,or zero economic profit in the short run.

Accepted Answer

A) True 
 B)False

Question 13

When a profit-maximizing firm in a competitive market experiences rising prices,it will respond with an increase in production.

Accepted Answer

A) True 
 B)False

Question 14

When managers of firms in a competitive market observe falling profits,they may infer that the market is experiencing

Accepted Answer

A)   a violation of conventional market forces.
B)   over-investment.
C)   the entry of new firms.
D)   too few firms in the market.E) None of the above
F) All of the above

Question 15

Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 14-9.The maximum profit available to the firm is

Accepted Answer

A)   $2.
B)   $3.
C)   $4.
D)   $5.E) None of the above
F) All of the above

Question 16

Which of the following statements best reflects the production decision of a profit-maximizing firm in a competitive market when price falls below the minimum of average variable cost?

Accepted Answer

A)   The firm will continue to produce to attempt to pay fixed costs.
B)   The firm will immediately stop production to minimize its losses.
C)   The firm will stop production as soon as it is able to pay its sunk costs.
D)   The firm will continue to produce in the short run but will likely exit the market in the long run.E) All of the above
F) A) and B)

Question 17

Which of these curves is the competitive firm's short-run supply curve?

Accepted Answer

A)   the average variable cost curve above marginal cost
B)   the average total cost curve above marginal cost
C)   the marginal cost curve above average variable cost
D)   the average fixed cost curveE) All of the above
F) None of the above

Question 18

If a competitive firm is selling 1,000 units of its product at a price of $9 per unit and earning a positive profit,then

Accepted Answer

A)   its total cost is less than $9,000.
B)   its marginal revenue is less than $9.
C)   its average revenue is greater than $9.
D)   the firm cannot be a competitive firm because competitive firms cannot earn positive profits.E) B) and C)
F) B) and D)

Question 19

A profit-maximizing competitive firm is earning a profit of $24,000.Its marginal cost is $17 and its average total cost is $13.How many units of output is the firm producing and selling?

Accepted Answer

Profit = (...

Question 20

Figure 14-1 
-Refer to Figure 14-1.Let Q represent the quantity of output and suppose the price of the good is $125.Then

Accepted Answer

A)   marginal revenue is $80 at Q = 270.
B)   marginal revenue is $100 at Q = 322.
C)   marginal revenue is $175 at Q = 515.
D)   None of the above are correct.E) B) and C)
F) B) and D)

Exam 14: Firms in Competitive Markets

In making a short-run profit-maximizing production decision,the firm must consider both fixed and variable cost.

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A firm operating in a perfectly competitive market may earn positive,negative,or zero economic profit in the short run.

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If a competitive firm is selling 1,000 units of its product at a price of $9 per unit and earning a positive profit,then

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A competitive firm sells 500 units of output and its marginal revenue at 500 units of output is $35.The firm's total revenue amounts to __________.

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Figure 14-1 -Refer to Figure 14-1.Let Q represent the quantity of output and suppose the price of the good is $125.Then

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Which of these curves is the competitive firm's short-run supply curve?

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Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-2.Which of the four prices corresponds to a firm earning positive economic profits in the short run?

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Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9.The maximum profit available to the firm is

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When profit-maximizing firms in competitive markets are earning profits,

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Which of the following statements best reflects the production decision of a profit-maximizing firm in a competitive market when price falls below the minimum of average variable cost?

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Figure 14-1 -Refer to Figure 14-1.When the price of the good is $175,the firm's maximum profit is

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Table 14-1 -Refer to Table 14-1.The price and quantity relationship in the table is most likely a demand curve faced by a firm in a

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Consider a firm operating in a competitive market.The firm is producing 40 units of output,has an average total cost of production equal to $6,and is earning $240 economic profit in the short run.What is the current market price?

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A profit-maximizing competitive firm is earning a profit of $24,000.Its marginal cost is $17 and its average total cost is $13.How many units of output is the firm producing and selling?

Correct AnswerverifiedProfit = (...View AnswerShow Answer

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

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When a profit-maximizing firm in a competitive market experiences rising prices,it will respond with an increase in production.

Correct AnswerverifiedShow Answer

When managers of firms in a competitive market observe falling profits,they may infer that the market is experiencing

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The Doris Dairy Farm sells milk to a dairy broker in Prairie du Chien,Wisconsin.Because the market for milk is generally considered to be competitive,the Doris Dairy Farm does not

Correct AnswerverifiedShow Answer

For a certain firm,the 100th unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $11.It follows that the

Correct AnswerverifiedShow Answer

List and describe the characteristics of a perfectly competitive market.

Correct AnswerverifiedThere are many buyers and sell...View AnswerShow Answer

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Profit = (...
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There are many buyers and sell...
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