Pure Competition Homework

In economics, labor demand is synonymous with a) derived demand. b) average demand. c) marginal demand. d) market demand.

a) derived demand.

In the _______, the perfectly competitive firm will react to losses by _______ . a) long run; reducing production or shutting down b) short run; increasing physical inputs long run; increasing capital inputs c) short run; reducing production or d) shutting down

a) long run; reducing production or shutting down

In economics, the term "shutdown point" refers to the point where the a) marginal cost curve crosses the average variable cost curve. b) average variable cost curve crosses the marginal cost curve. c) average variable cost curve crosses the total revenue curve. d) marginal cost curve crosses the total revenue curve.

a) marginal cost curve crosses the average variable cost curve.

In order to produce 100 pairs of oven gloves, Marcia incurs an average total cost of $2.50 per pair. Marcia’s marginal cost is constant at $10.00 for every pair of oven gloves produced. The total cost to produce 50 pairs of oven gloves is a) $250.00 b) $300.00 c) $200.00 d) $500.00

c) $200.00

Given the data provided in the table below, what will the marginal revenue equal for production at quantity (Q) level 4? a) $15.00 b) $20.00 c) $5.00 d) $1.00

c) $5.00

Firms operating in a market situation that creates _______, sell their product in a market with other firms who produce identical or extremely similar products. a) a perfect monopoly b) an oligopoly c) perfect competition d) a free-market

c) perfect competition

In a perfectly competitive market setting, which of the following would be a true statement? a) Wage rates trend toward marginal revenue product levels. b) Market price rarely trends toward the equilibrium value. c) Market price automatically sets itself exactly at equilibrium. d) Wage rates mirror marginal revenue product levels exactly.

a) Wage rates trend toward marginal revenue product levels.

If the price that a firm charges is lower than its _________________ of production, the firm will suffer losses. a) average cost b) variable cost c) fixed cost d) marginal cost

a) average cost

In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice? a) what quantity to produce b) what quality to produce c) what quantity of labor is needed d) what price to charge

a) what quantity to produce

Given the data provided in the table below, what will the fixed costs equal for production at quantity (Q) level 4? a) $4.00 b) $9.00 c) $36.00 d) $35.00

b) $9.00

Given the data provided in the table below, what will the amount of profit be for production at quantity (Q) level 7? a) zero b) -$10.00 c) $1.00 d) -$5.00

b) -$10.00

When a firm uses retained profits to invest in more energy efficient equipment, an economist would calculate the ________________ of investing in physical capital. a) hurdle rate premium b) opportunity cost c) typical hurdle rate d) degree of risk

b) opportunity cost

For a perfectly competitive firm, the marginal cost curve is identical to the firm'€™s ____________. a) demand curve b) supply curve c) average total cost curve d) average variable cost curve

b) supply curve

In order to produce 100 oatmeal cookies, GoodieCookieCo incurs an average total cost of$0.25 per cookie. The company’s marginal cost is constant at $0.10 for all oatmeal cookies produced. The total cost to produce 50 oatmeal cookies is a) $50 b) $60 c) $25 d) $20

d) $20

Given the data provided in the table below, the total revenue (TR) for production at quantity(Q) level 4 equals a) $1.00 b) $15.00 c) zero d) $20.00

d) $20.00

The table below sets out the amount of capital needed for certain investment projects and the rate of return for each project. What is this firm’s demand for physical capital if their hurdle rate is 8%? a) $250,000 b) $2 million c) $1.5 million d) $500,000

d) $500,000

A perfectly competitive industry is a a) hypothetical assumption. b) realistic extreme. c) realistic assumption. d) hypothetical extreme.

d) hypothetical extreme.

In the _______, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where _______ . a) short run; fixed costs can be reduced b) long run; increasing production c) long run; fixed costs can be eliminated d) short run; losses are smallest

d) short run; losses are smallest

If a firm's revenues do not cover its average variable costs, then that firm has reached its _______ . a) opportunity margin b) marginal point c) price taking point d) shutdown point

d) shutdown point

In Sam's greenhouse operation, labor is the only short term variable input. After completing a cost analysis, if the marginal product of labor is the same for each unit of labor, this will imply that a) the average product of labor is always greater that the marginal product of labor. b) as more labor inputs are used, the average product of labor inputs will fall. c) the average product of labor is always less than the marginal product of labor. d) the average product of labor is always equal to the marginal product of labor.

d) the average product of labor is always equal to the marginal product of labor.