Question 1

If a competitive firm is selling 500 units of its product at a price of $8 per unit and earning a positive profit, then

Accepted Answer

A)   its average revenue is greater than $8.
B)   its marginal revenue is less than $8.
C)   its total cost is less than $4,000.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 2

List and describe the characteristics of a perfectly competitive market.

Accepted Answer

There are many buyers and sell...

Question 3

Table 14-6
The following table presents cost and revenue information for a firm operating in a competitive industry.
 
-Refer to Table 14-6. What is the marginal revenue from selling the 3rd unit?

Accepted Answer

A)   $55
B)   $120
C)   $137
D)   $140E) None of the above
F) C) and D)

Question 4

In a perfectly competitive market, the process of entry and exit will end when i)  accounting profits are zero.
Ii)  economic profits are zero.
Iii)  price equals minimum marginal cost.
Iv)  price equals minimum average total cost.

Accepted Answer

A)   i)  and ii)  only
B)   ii)  and iii)  only
C)   ii)  and iv)  only
D)   i) , ii) , iii) , and iv) E) All of the above
F) C) and D)

Question 5

Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market where firms are experiencing economic losses. Identify costs, revenue, and the economic losses on your graph. Using your graph, determine whether an individual firm will shut down in the short run, or choose to remain in the market. Explain your answer.

Accepted Answer

The losses and revenues are identified o...

Question 6

A competitive market is in long-run equilibrium. If demand increases, we can be certain that price will

Accepted Answer

A)   rise in the short run. Some firms will enter the industry. Price will then rise to reach the new long-run equilibrium.
B)   rise in the short run. Some firms will enter the industry. Price will then fall to reach the new long-run equilibrium.
C)   fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium.
D)   not rise in the short run because firms will enter to maintain the price.E) A) and D)
F) B) and C)

Question 7

Figure 14-5
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-5. When market price is P2, a profit-maximizing firm's losses can be represented by the area

Accepted Answer

A)   P4 - P2)  × Q2.
B)   P2 - P1)  × Q2-Q1) .
C)   At a market price of P2, the firm earns profits, not losses.
D)   At a market price of P2 the firm has losses, but the reference points in the figure don't identify the losses.E) A) and B)
F) All of the above

Question 8

At its current level of production a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1,000 units. What is the firm's current profit? What is likely to occur in this market and why?

Accepted Answer

Profit can be calculated as P-...

Question 9

Figure 14-10
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 14-10. If there are 500 identical firms in this market, what is the value of Q2?

Accepted Answer

A)   12,000
B)   60,000
C)   240,000
D)   300,000E) A) and C)
F) B) and C)

Question 10

Scenario 14-4
The information below applies to a competitive firm that sells its output for $40 per unit.
• When the firm produces and sells 150 units of output, its average total cost is $24.50.
• When the firm produces and sells 151 units of output, its average total cost is $24.55.
-Refer to Scenario 14-4. When the firm increases its output from 150 units to 151 units, its profit

Accepted Answer

A)   decreases by $5.75.
B)   decreases by $7.20.
C)   increases by $4.15.
D)   increases by $7.95.E) B) and C)
F) All of the above

Question 11

Suppose that a firm operating in perfectly competitive market sells 200 units of output at a price of $3 each. Which of the following statements is correct? i)  Marginal revenue equals $3.
Ii)  Average revenue equals $600.
Iii)  Average revenue exceeds marginal revenue, but we don't know by how much.

Accepted Answer

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

Question 12

Figure 14-7 
-Refer to Figure 14-7. Suppose AVC = $113 when the firm produces 515 units of output. Then the firm's fixed cost amounts to

Accepted Answer

A)   $5,500, and its profit amounts to $20,375.
B)   $5,750, and its profit amounts to $20,375
C)   $5,980, and its profit amounts to $25,750.
D)   $6,180, and its profit amounts to $25,750.E) B) and C)
F) A) and D)

Question 13

Scenario 14-3
Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20.
-Refer to Scenario 14-3. At Q=500, the firm's profits equal

Accepted Answer

A)   $1,000.
B)   $4,000.
C)   $7,000.
D)   $10,000.E) A) and B)
F) A) and C)

Question 14

Scenario 14-3
Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20.
-Refer to Scenario 14-3. At Q=499, the firm's total costs equal

Accepted Answer

A)   $5,983.
B)   $5,988.
C)   $5,995.
D)   $5,999.E) A) and B)
F) B) and C)

Question 15

A competitive market will typically experience entry and exit until accounting profits are zero.

Accepted Answer

A) True 
 B)False

Question 16

Figure 14-6
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-6. Firms will be earn losses in the short run but will remain in business if the market price

Accepted Answer

A)   exceeds P3.
B)   is less than P1.
C)   is greater than P1 but less than P3.
D)   exceeds P2.E) A) and B)
F) A) and C)

Question 17

Table 14-8
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 14-8. The firm will produce a quantity greater than 3 because at 3 units of output, marginal cost

Accepted Answer

A)   is greater than marginal revenue.
B)   equals marginal revenue.
C)   is less than marginal revenue.
D)   is minimized.E) B) and D)
F) B) and C)

Question 18

Figure 14-5
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-5. In the short run,if the market price is higher than P4 but less than P6, individual firms in a competitive industry will earn

Accepted Answer

A)   positive profits.
B)   zero profits.
C)   losses but will remain in business.
D)   losses and will shut down.E) A) and B)
F) All of the above

Question 19

Table 14-1
 
-Refer to Table 14-1. Over what range of output is marginal revenue declining?

Accepted Answer

A)   1 to 6 units
B)   3 to 7 units
C)   7 to 9 units
D)   Marginal revenue is constant over the entire range of output.E) C) and D)
F) None of the above

Question 20

Figure 14-7 
-Refer to Figure 14-7. In the long run, the firm will exit the market if the price of the good is

Accepted Answer

A)   $75.
B)   $85.
C)   $95.
D)   All of the above are correct.E) A) and C)
F) B) and C)

Exam 13: Firms in Competitive Markets

Scenario 14-3 Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. -Refer to Scenario 14-3. At Q=500, the firm's profits equal

Correct Answer
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A competitive market is in long-run equilibrium. If demand increases, we can be certain that price will

Correct Answer
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Figure 14-7 -Refer to Figure 14-7. Suppose AVC = $113 when the firm produces 515 units of output. Then the firm's fixed cost amounts to

Correct Answer
verified

Correct Answer
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The losses and revenues are identified o...
View Answer

A competitive market will typically experience entry and exit until accounting profits are zero.

Correct Answer
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If a competitive firm is selling 500 units of its product at a price of $8 per unit and earning a positive profit, then

Correct Answer
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In a perfectly competitive market, the process of entry and exit will end when i) accounting profits are zero. Ii) economic profits are zero. Iii) price equals minimum marginal cost. Iv) price equals minimum average total cost.

Correct Answer
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Figure 14-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-5. When market price is P2, a profit-maximizing firm's losses can be represented by the area

Correct Answer
verified

Correct Answer
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Suppose that a firm operating in perfectly competitive market sells 200 units of output at a price of $3 each. Which of the following statements is correct? i) Marginal revenue equals $3. Ii) Average revenue equals $600. Iii) Average revenue exceeds marginal revenue, but we don't know by how much.

Correct Answer
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Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 14-6. What is the marginal revenue from selling the 3rd unit?

Correct Answer
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Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6. Firms will be earn losses in the short run but will remain in business if the market price

Correct Answer
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Correct Answer
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Profit can be calculated as P-...
View Answer

Figure 14-7 -Refer to Figure 14-7. In the long run, the firm will exit the market if the price of the good is

Correct Answer
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Correct Answer
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List and describe the characteristics of a perfectly competitive market.

Correct Answer
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There are many buyers and sell...
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Table 14-8 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-8. The firm will produce a quantity greater than 3 because at 3 units of output, marginal cost

Correct Answer
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Figure 14-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-5. In the short run,if the market price is higher than P4 but less than P6, individual firms in a competitive industry will earn

Correct Answer
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Scenario 14-3 Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. -Refer to Scenario 14-3. At Q=499, the firm's total costs equal

Correct Answer
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Table 14-1 -Refer to Table 14-1. Over what range of output is marginal revenue declining?

Correct Answer
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Exam 13: Firms in Competitive Markets

Scenario 14-3 Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. -Refer to Scenario 14-3. At Q=500, the firm's profits equal

Correct AnswerverifiedShow Answer

A competitive market is in long-run equilibrium. If demand increases, we can be certain that price will

Correct AnswerverifiedShow Answer

Figure 14-7 -Refer to Figure 14-7. Suppose AVC = $113 when the firm produces 515 units of output. Then the firm's fixed cost amounts to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe losses and revenues are identified o...View AnswerShow Answer

A competitive market will typically experience entry and exit until accounting profits are zero.

Correct AnswerverifiedShow Answer

If a competitive firm is selling 500 units of its product at a price of $8 per unit and earning a positive profit, then

Correct AnswerverifiedShow Answer

In a perfectly competitive market, the process of entry and exit will end when i) accounting profits are zero. Ii) economic profits are zero. Iii) price equals minimum marginal cost. Iv) price equals minimum average total cost.

Correct AnswerverifiedShow Answer

Figure 14-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-5. When market price is P2, a profit-maximizing firm's losses can be represented by the area

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that a firm operating in perfectly competitive market sells 200 units of output at a price of $3 each. Which of the following statements is correct? i) Marginal revenue equals $3. Ii) Average revenue equals $600. Iii) Average revenue exceeds marginal revenue, but we don't know by how much.

Correct AnswerverifiedShow Answer

Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 14-6. What is the marginal revenue from selling the 3rd unit?

Correct AnswerverifiedShow Answer

Figure 14-6 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-6. Firms will be earn losses in the short run but will remain in business if the market price

Correct AnswerverifiedShow Answer

Correct AnswerverifiedProfit can be calculated as P-...View AnswerShow Answer

Figure 14-7 -Refer to Figure 14-7. In the long run, the firm will exit the market if the price of the good is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

List and describe the characteristics of a perfectly competitive market.

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

Table 14-8 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-8. The firm will produce a quantity greater than 3 because at 3 units of output, marginal cost

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Figure 14-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-5. In the short run,if the market price is higher than P4 but less than P6, individual firms in a competitive industry will earn

Correct AnswerverifiedShow Answer

Scenario 14-3 Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. -Refer to Scenario 14-3. At Q=499, the firm's total costs equal

Correct AnswerverifiedShow Answer

Table 14-1 -Refer to Table 14-1. Over what range of output is marginal revenue declining?

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The losses and revenues are identified o...
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Profit can be calculated as P-...
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There are many buyers and sell...
View Answer

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