LearningCurve - Chapter 12: Perfect Competition and the Supply Curve

The graph shows Dan's costs for truckloads of firewood. Dan sells his firewood in a competitive market. If there are 200 other identical producers, at a price of $140 per load, the quantity supplied on the short-run industry supply curve is _____ thousand loads.

1

The table shows Sam's cost of producing and selling baskets of apples in a perfectly competitive market at the local farmers' market. If the apples sell for $9 per basket, the quantity that maximizes profit is _____ baskets.

10

The table shows Sam's cost of producing and selling baskets of apples in a perfectly competitive market at the local farmers' market. If the apples sell for $5 per basket, Sam's profit per basket is $0.62 and his total profit is, using numerals, $_____.

4.96

The table shows cost and revenue information for Noelle's trees. The marginal cost of the third tree is _____ dollars.

8

The table shows Sam's cost of producing and selling baskets of apples in a perfectly competitive market at the local farmers' market. If the price is $8 per basket, firms will _____ in the long run. exit the industry enter the industry close down necessarily face higher costs

enter the industry

Suppose the perfectly competitive cotton-growing industry is in long-run equilibrium and no economic profits are being earned. If demand increases, firms will: monopolize the industry. enter the industry. exit the industry. seek government protection for the industry.

enter the industry.

The table shows Sam's cost of producing and selling baskets of apples in a perfectly competitive market at the local farmers' market. In the long run, if the price is $4 per basket, firms will: enter the industry. necessarily face lower costs. exit the industry. find barriers to entry.

exit the industry.

Suppose that Prince Puckler's Ice Cream sells 100 cones each day. It sells each cone for $3, its average variable cost is $2.50, marginal cost is $3, and the average total cost is $3.10. From this one knows the firm: is making a loss. is not producing according to the optimal output rule. should shut down. [[The firm should shut down only when price falls below average variable cost. is making positive economic profits.

is making a loss.

The optimal output rule says that firms maximize profits by choosing output such that: total revenue = total cost. marginal revenue = marginal cost. marginal revenue = average cost. price = minimum of the average cost.

marginal revenue = marginal cost.

In perfect competition, firms will always (both in the short-run and the long-run) produce at the point where: marginal cost is minimized. marginal revenue equals marginal cost. average variable cost is minimized. average total cost is minimized.

marginal revenue equals marginal cost.

The table shows cost and revenue information for Noelle's trees. At the second tree: marginal cost exceeds marginal revenue. marginal revenue starts to decline. marginal revenue exceeds marginal cost. marginal revenue is equal to marginal cost.

marginal revenue exceeds marginal cost.

The table shows cost and revenue information for Noelle's trees. At thirty trees: marginal cost exceeds marginal revenue. marginal revenue exceeds marginal cost. marginal revenue is equal to marginal cost. marginal revenue starts to decline.

marginal revenue exceeds marginal cost.

The table shows cost and revenue information for Noelle's trees. At thirty trees: marginal cost exceeds marginal revenue. marginal revenue exceeds marginal cost. marginal revenue is equal to marginal cost. marginal revenue starts to decline..

marginal revenue exceeds marginal cost.

The graph shows Dan's costs for truckloads of firewood. Dan sells his firewood in a competitive market. At a price of $140 per load, the total cost at Dan's profit-maximizing output is: $300. $80. $400. $700.

$400.

The table shows Sam's cost of producing and selling baskets of apples in a perfectly competitive market at the local farmers' market. If the market is comprised of 100 apple farmers, which of the following points is on the industry short-run supply curve? $7 and 900 baskets $1 and 400 baskets $2 and 500 baskets $5 and 100 baskets

$7 and 900 baskets

The graph shows Dan's costs for truckloads of firewood. Dan sells his firewood in a competitive market. At a price of $140 per load, the total revenue at Dan's profit-maximizing output is: $400. $140. $300. $700.

$700.

The graph shows Dan's costs for truckloads of firewood. Dan sells his firewood in a competitive market. At a price of $140 per load, the average total cost at Dan's profit-maximizing output is: $55. $75. $80. $45.

$80.

The table shows Sam's cost of producing and selling baskets of apples in a perfectly competitive market at the local farmers' market. If the apples sell for $7 per basket, Sam's profit per basket is $_____ and his total profit is $_____. 2.55; 25.45 4.67; 42.03 2.33; 20.97 7.00; 63.00

2.33; 20.97

The table shows Sam's cost of producing and selling baskets of apples in a perfectly competitive market at the local farmers' market. In long-run equilibrium, Sam will sell seven baskets at a price of $_____ per basket. 4.60 5.10 4.29 5.25

4.29

True or False: A firm in a perfectly competitive industry can earn economic profits in the long run as well as in the short run. This is _____.

False

True or False: Perfect competition is more efficient in the short run than in the long run because positive economic profits are possible in the short run. This is _____.

False

True or False: The automobile industry is classified as a perfectly competitive industry because it produces a standardized product. This is _____.

False

The graph shows Dan's costs for truckloads of firewood. Dan sells his firewood in a competitive market. True or False: At a price of $140 per load, firms will enter the industry in the long run. This is _____.

True

Which of the following is an example of a standardized product? textbooks corn soft drinks cell phones

corn

The long-run industry supply curve slopes upward if: the marginal cost curves of individual firms slope downward. costs increase as more firms enter the industry. costs decrease as more firms enter the industry. costs are unchanged as more firms enter the industry.

costs increase as more firms enter the industry.

A firm breaks even when: marginal cost = average variable cost. market price = marginal revenue. market price = minimum average total cost. market price = marginal cost.

market price = minimum average total cost.

The fraction of total potato production accounted for by one potato farmer's output is that farm's: quota. marginal share. competitive advantage. market share.

market share.

Which of the following is a necessary condition for perfect competition? small market shares large market shares differentiated product limited entry

small market shares

In order for the peach industry to be a perfectly competitive industry, each peach grower must have a _____ market share and produce a _____ product. large; standardized large; differentiated small; standardized small; d

small; standardized

Which of the following would be considered a perfectly competitive industry? the ready-to-eat-cereal industry, in which there are many variations in the types of cereal sold the automobile industry, in which a handful of companies produce different types of cars the diamond industry, in which one firm dominates the extraction and distribution of diamonds the soybean industry, in which the product is uniform and there are many buyers and sellers

the soybean industry, in which the product is uniform and there are many buyers and sellers

A firm's profit is equal to: price minus variable cost. total revenue minus total cost. marginal revenue minus marginal cost. price minus marginal cost.

total revenue minus total cost.