Mod 4 (Lesson 12)
In the table to the right, the firm's total fixed cost of production is __________. MOD 4, LESSON 12, CGA Q 6 $3.00 $4.00 $7.00 $29.00
$4.00
In a perfectly competitive market that is in long-run equilibrium, a permanent leftward shift in the market demand curve will cause ________. profits to fall in the short run firms to leave the industry in the long run the price to fall in the short run All of the above are correct.
All of the above are correct.
Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure. To increase her profit, Carol should ________. increase output to increase profit decrease output to increase profit maintain the current level of output to maximize profit Not enough information is given to determine if Carol should increase, decrease, or not change her level of output. MOD 4, LESSON 12, PRE TEST Q 20
Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure. To increase her profit, Carol should ________. MOD 4, LESSON 12, PRE TEST Q 20 decrease output to increase profit
For a perfectly competitive firm, curve A in the figure is the firm's __________. MOD 4, LESSON 12, CGA Q 4 total fixed cost curve average fixed cost curve average variable cost curve total revenue curve
For a perfectly competitive firm, curve A in the figure is the firm's __________. MOD 4, LESSON 12, CGA Q 4 total revenue curve
In the figure, if the price is P1, the firm is __________. MOD 4, LESSON 12, CGA Q 13 making an economic profit incurring an economic loss earning a normal profit earning enough revenue to pay all of its opportunity costs
In the figure, if the price is P1, the firm is __________. MOD 4, LESSON 12, CGA Q 13 incurring an economic loss
In the picture, a perfectly competitive firm is definitely earning an economic profit when ________ MR < MC P > ATC P < ATC P > AVC MOD 4, LESSON 12, PRE TEST Q 17
In the picture, a perfectly competitive firm is definitely earning an economic profit when ________ MOD 4, LESSON 12, PRE TEST Q 17 P > ATC
A firm maximizes its profits by producing the level of output such that ________. P = ATC P = AVC MR = P MR = MC
MR = MC
The figure depicts the marginal revenue and costs of a perfectly competitive firm. The firm's profit is maximized when the firm produces ________. 130 units of output 170 units of output 90 units of output 210 units of output MOD 4, LESSON 12, PRE TEST Q 9
The figure depicts the marginal revenue and costs of a perfectly competitive firm. The firm's profit is maximized when the firm produces ________. MOD 4, LESSON 12, PRE TEST Q 9 170 units of output
The figure depicts the marginal revenue and costs of a perfectly competitive firm. The price the firm charges is ________. MOD 4, LESSON 12, PRE TEST Q 10 $16 per unit $8 per unit $4 per unit None of the above is correct.
The figure depicts the marginal revenue and costs of a perfectly competitive firm. The price the firm charges is ________. MOD 4, LESSON 12, PRE TEST Q 10 $16 per unit
The figure represents a firm in a perfectly competitive market. The firm will shut down if price falls below __________. MOD 4, LESSON 12, CGA Q 11 P1 P2 P3 P4
The figure represents a firm in a perfectly competitive market. The firm will shut down if price falls below __________. MOD 4, LESSON 12, CGA Q 11 P2
The figure shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8, in the short run the firm will __________. MOD 4, LESSON 12, CGA Q 10 exit from the industry break even make an economic profit incur an economic loss
The figure shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8, in the short run the firm will __________. MOD 4, LESSON 12, CGA Q 10 incur an economic loss
The figure to the right shows the cost curves for a perfectly competitive firm. If all firms in the industry have the same cost curves and the price equals $16 per unit, ________. the industry is in long-run equilibrium over time, firms will leave this industry over time, the price will fall as new firms enter the industry the firm is earning zero economic profit MOD 4, LESSON 12, PRE TEST Q 13
The figure to the right shows the cost curves for a perfectly competitive firm. If all firms in the industry have the same cost curves and the price equals $16 per unit, ________. MOD 4, LESSON 12, PRE TEST Q 13 over time, the price will fall as new firms enter the industry
In the long run, perfectly competitive firms earn zero economic profit (earn a normal profit) because ________ . any economic profit would attract newcomers to the industry there are many buyers and sellers any economic loss would cause an increase in the demand for the product, thereby raising its price the firms are incompetent
any economic profit would attract newcomers to the industry
The owners will shut down a perfectly competitive firm if the price of its product falls below its minimum . average total cost average marginal cost average variable cost wage rate
average variable cost
In a perfectly competitive market, the demand for a single firm's product is perfectly elastic ________. only in the long run because this firm's output is a perfect substitute for any other firm's output because this firm is a price maker because there are many buyers in this market
because this firm's output is a perfect substitute for any other firm's output
A perfectly competitive firm maximizes its profit by ________. manipulating demand cutting wages setting the right price choosing the right level of output
choosing the right level of output
In a perfectly competitive market, if a firm finds it is producing at a level of output such that its marginal cost exceeds its price, it will ________. be maximizing profits increase its output to increase its profit shut down for the short run decrease its output to increase its profit
decrease its output to increase its profit
If there are 1,000 rutabaga farms, all perfectly competitive, an increase in the price of fertilizer used for growing rutabagas will __________. have no effect on the total quantity of rutabagas supplied, because no farm has enough market power to raise the price have no effect on the total quantity of rutabagas supplied, because each farm's supply curve is a vertical line decrease the total quantity of rutabagas supplied, because each farm's supply curve shifts leftward reduce the total quantity of rutabagas supplied, because each farm's supply curve is a horizontal line and will shift upward
decrease the total quantity of rutabagas supplied, because each farm's supply curve shifts leftward
Congestion of airports and airspace causes the airline industry to experience external __________. economies and have a long-run supply curve with negative slope economies and have a long-run supply curve with positive slope diseconomies and have a long-run supply curve with negative slope diseconomies and have a long-run supply curve with positive slope
diseconomies and have a long-run supply curve with positive slope
In perfect competition, restrictions on entry into an industry __________. apply to both capital and labor apply to labor but not to capital apply to capital but not to labor do not exist
do not exist
In the long run, a perfectly competitive firm can ________ . earn an economic profit earn a normal profit incur an economic loss earn an economic profit, earn a normal profit, or incur an economic loss
earn a normal profit
In the short run, a perfectly competitive firm can ________. earn an economic profit earn a normal profit incur an economic loss earn an economic profit, earn a normal profit, or incur an economic loss
earn an economic profit, earn a normal profit, or incur an economic loss
The firm's marginal revenue from selling a unit of output __________. MOD 4, LESSON 12, CGA Q 4 equals $0.50 equals $1.00 equals $2.00 cannot be determined
equals $2.00
New reports indicate that eating turnips helps people remain healthy. The news shifts the demand curve for turnips rightward. In response, new farms enter the turnip industry. During the period in which the new farms are entering, the price of a turnip and the profit of each existing firm __________. rises; rises rises; falls falls; rises falls; falls
falls; falls
In perfect competition, the product of a single firm __________. has many perfect substitutes produced by other firms has many perfect complements produced by other firms is sold under many differing brand names is sold to different customers at different prices
has many perfect substitutes produced by other firms
In perfect competition there are no fliers, coupons, brand names, or price wars because all firms produce ________. identical products and set their price equal to the slope of the demand curve differentiated products and are price takers differentiated products and set price equal to the slope of the demand curve identical products and are price takers
identical products and are price takers
Suppose the cost curves in the figure apply to all firms in the industry. If the initial price is P1, firms are __________. MOD 4, LESSON 12, CGA Q 14 making an economic profit and some firms will leave the industry making an economic profit and some firms will enter the industry incurring an economic loss and some firms will leave the industry incurring an economic loss and some firms will enter the industry
incurring an economic loss and some firms will leave the industry
For a perfectly competitive firm, price ALWAYS equals ________. average total cost minimum average total cost marginal product marginal revenue
marginal revenue
A firm will expand the amount of output it produces as long as its __________. average total revenue exceeds its average total cost average total revenue exceeds its average variable cost marginal cost exceeds its marginal revenue marginal revenue exceeds its marginal cost
marginal revenue exceeds its marginal cost
The firm's goal is to ________. maximize its total revenue maximize its industry's revenue maximize its normal profit maximize its economic profit
maximize its economic profit
No. The firm will sell at the market price. price equals the minimum average variable cost price is above the minimum average total cost but below the minimum average fixed cost price equals average total cost price equals average fixed costs
price equals the minimum average variable cost
Total economic profit is __________. total revenue minus total opportunity cost total revenue divided by total cost marginal revenue minus marginal cost marginal revenue divided by marginal cost
total revenue minus total opportunity cost
Which of the following is NOT an assumption of perfect competition? each firm sells an identical product many buyers many firms restricted entry into the industry
restricted entry into the industry
Assuming long-run external economies exist, when demand increases in a perfectly competitive market, in the long run the average total cost curve for a typical firm __________. shifts downward shifts upward stays the same is no longer U-shaped
shifts downward
The short-run market supply curve for a perfectly competitive industry is the ________. sum of the part of each firm's AVC curve that lies above its MC curve sum of each firm's MC curve that lies below the AVC curve sum of each firm's AVC curve that lies below the MC curve sum of the part of each firm's MC curve that lies above its AVC curve
sum of the part of each firm's MC curve that lies above its AVC curve
In a perfectly competitive market, ________. a firm can raise its profits by increasing its output beyond the point at which MR = MC a firm can raise its price to increase its profits the price of the good can exceed firms' average total cost but only in the short run the price of the good can exceed firms' marginal cost but only in the short run
the price of the good can exceed firms' average total cost but only in the short run
A firm that shuts down and produces no output incurs a loss equal to its __________. total fixed costs total variable costs marginal costs marginal revenue
total fixed costs
Paul runs a shop that sells printers. Paul is a perfect competitor and can sell each printer for a price of $300. The marginal cost of selling one printer a day is $200; the marginal cost of selling a second printer is $250; and the marginal cost of selling a third printer is $350. To maximize his profit, Paul should sell __________. one printer a day two printers a day three printers a day more than three printers a day
two printers a day
In the long run, the economic profits of a firm in a perfectly competitive industry __________. will be above zero will be below zero will equal zero can be above, below, or equal to zero
will equal zero
In the long run, fixed costs are __________. zero and variable costs are zero zero and variable costs are positive positive and variable costs are zero positive and variable costs are positive
zero and variable costs are positive
