Question 1

If a firm has at least some control over the price of its product, then the firm cannot be in which market model?

Accepted Answer

A)  oligopoly
B)  pure monopoly
C)  pure competition
D)  monopolistic competitionE) All of the above
F) A) and D)

Question 2

Refer to the accompanying diagram. This firm will earn only a normal profit if product price is

Accepted Answer

A)  P₁.
B)  P₂.
C)  P₃.
D)  P₄.E) A) and B)
F) A) and C)

Question 3

Average revenue is conceptually equivalent to the

Accepted Answer

A)  unit price of the product.
B)  average cost of the product.
C)  marginal cost of the product.
D)  total revenue of the product.E) B) and C)
F) A) and D)

Question 4

Refer to the accompanying graph for a purely competitive firm operating at a loss in the short run. Which of the following changes in its market would allow the firm to earn positive profits again?

Accepted Answer

A)  an increase in the market demand
B)  an increase in the wages of workers in the industry
C)  a decrease in the market demand
D)  a decrease in the price of the industry's productE) B) and C)
F) C) and D)

Question 5

The short-run supply curve for a competitive firm is the

Accepted Answer

A)  entire MC curve.
B)  segment of the MC curve lying below the AVC curve.
C)  segment of the MC curve lying above the AVC curve.
D)  segment of the AVC curve lying to the right of the MC curve.E) All of the above
F) A) and B)

Question 6

The accompanying table shows cost data for a firm that is selling in a purely competitive market. If the price of the product is $6, what output level will the firm produce?

Accepted Answer

A)  0
B)  12
C)  14
D)  16E) B) and C)
F) B) and D)

Question 7

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If there were 1,000 identical firms in this industry and total, or market, demand is as shown in the second table, equilibrium price will be

Accepted Answer

A)  $32.
B)  $42.
C)  $36.
D)  $20.E) A) and D)
F) C) and D)

Question 8

In which market model would there be a unique product for which there are no close substitutes?

Accepted Answer

A)  monopolistic competition
B)  pure competition
C)  pure monopoly
D)  oligopolyE) B) and D)
F) B) and C)

Question 9

The table gives data for a purely competitive firm. The marginal revenue from the third unit of output is

Accepted Answer

A)  120.
B)  24.
C)  40.
D)  3.E) B) and C)
F) A) and D)

Question 10

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If product price is $75, the firm will produce

Accepted Answer

A)  3 units of output.
B)  4 units of output.
C)  5 units of output.
D)  6 units of output.E) A) and B)
F) C) and D)

Question 11

The table gives data for a purely competitive firm. When the firm produces 3 units of output, it makes an economic

Accepted Answer

A)  profit of $45.
B)  profit of $21.
C)  profit of $18.
D)  loss of $24.E) B) and C)
F) B) and D)

Question 12

There would be some control over price within rather narrow limits in which market model?

Accepted Answer

A)  monopolistic competition
B)  pure competition
C)  pure monopoly
D)  oligopolyE) All of the above
F) C) and D)

Question 13

Let us suppose Harry's, a local supplier of chili and pizza, has the revenue and cost structure shown here.

Accepted Answer

A)  Harry's should shut down in the long run.
B)  Harry's should shut down in the short run.
C)  Harry's should stay open in the short run.
D)  Harry's should stay open in the short run but shut down in the long run.E) C) and D)
F) A) and D)

Question 14

Assume the price of a product sold by a purely competitive firm is $3. Given the data in the accompanying table, at what output level is total profit highest in the short run?

Accepted Answer

A)  35.
B)  30.
C)  25.
D)  40.E) B) and C)
F) A) and D)

Question 15

If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue

Accepted Answer

A)  may be either greater or less than $5.
B)  will also be $5.
C)  will be less than $5.
D)  will be greater than $5.E) B) and D)
F) C) and D)

Question 16

Mutual interdependence would tend to limit control over price in which market model?

Accepted Answer

A)  monopolistic competition
B)  pure competition
C)  pure monopoly
D)  oligopolyE) B) and D)
F) A) and D)

Question 17

The accompanying table gives cost data for a firm that is selling in a purely competitive market. The marginal cost column reflects

Accepted Answer

A)  the law of diminishing returns.
B)  the law of diminishing marginal utility.
C)  diseconomies of scale.
D)  economies of scale.E) A) and B)
F) None of the above

Question 18

Which of the following is a feature of a purely competitive market?

Accepted Answer

A)  Price differences exist between firms producing the same product.
B)  There are significant barriers to entry into the industry.
C)  The industry's demand curve is perfectly elastic.
D)  Products are standardized or homogeneous.E) A) and B)
F) A) and C)

Question 19

Let us suppose Harry's, a local supplier of chili and pizza, has the revenue and cost structure shown here.

Accepted Answer

A)  Harry's should stay open in the long run.
B)  Harry's should shut down in the short run.
C)  Harry's should stay open in the short run.
D)  Harry's should shut down in the short run but reopen in the long run.E) A) and C)
F) C) and D)

Question 20

Refer to the diagram for a purely competitive producer. If product price is P ₃,

Accepted Answer

A)  the firm will maximize profit at point d.
B)  the firm will earn an economic profit.
C)  economic profits will be zero.
D)  new firms will enter this industry.E) C) and D)
F) A) and B)

Exam 10: Pure Competition in the Short Run

The accompanying table shows cost data for a firm that is selling in a purely competitive market. If the price of the product is $6, what output level will the firm produce?

Correct AnswerverifiedShow Answer

Assume the price of a product sold by a purely competitive firm is $3. Given the data in the accompanying table, at what output level is total profit highest in the short run?

Correct AnswerverifiedShow Answer

Let us suppose Harry's, a local supplier of chili and pizza, has the revenue and cost structure shown here.

Correct AnswerverifiedShow Answer

In which market model would there be a unique product for which there are no close substitutes?

Correct AnswerverifiedShow Answer

The short-run supply curve for a competitive firm is the

Correct AnswerverifiedShow Answer

The table gives data for a purely competitive firm. When the firm produces 3 units of output, it makes an economic

Correct AnswerverifiedShow Answer

Refer to the diagram for a purely competitive producer. If product price is P ₃,

Correct AnswerverifiedShow Answer

If a firm has at least some control over the price of its product, then the firm cannot be in which market model?

Correct AnswerverifiedShow Answer

Let us suppose Harry's, a local supplier of chili and pizza, has the revenue and cost structure shown here.

Correct AnswerverifiedShow Answer

The table gives data for a purely competitive firm. The marginal revenue from the third unit of output is

Correct AnswerverifiedShow Answer

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If product price is $75, the firm will produce

Correct AnswerverifiedShow Answer

There would be some control over price within rather narrow limits in which market model?

Correct AnswerverifiedShow Answer

Mutual interdependence would tend to limit control over price in which market model?

Correct AnswerverifiedShow Answer

Refer to the accompanying diagram. This firm will earn only a normal profit if product price is

Correct AnswerverifiedShow Answer

Average revenue is conceptually equivalent to the

Correct AnswerverifiedShow Answer

The accompanying table gives cost data for a firm that is selling in a purely competitive market. The marginal cost column reflects

Correct AnswerverifiedShow Answer

If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue

Correct AnswerverifiedShow Answer

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If there were 1,000 identical firms in this industry and total, or market, demand is as shown in the second table, equilibrium price will be

Correct AnswerverifiedShow Answer

Which of the following is a feature of a purely competitive market?

Correct AnswerverifiedShow Answer

Refer to the accompanying graph for a purely competitive firm operating at a loss in the short run. Which of the following changes in its market would allow the firm to earn positive profits again?

Correct AnswerverifiedShow Answer

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