Chapter 28

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

In the above figure, what is the price the firm receives if the output is 8?

$10

In the above figure, at the profit-maximizing rate of production for the perfectly competitive firm total revenue is

$100.

Refer to the above table. The table represents information on the costs for Ajax Corporation. Ajax operates in a perfectly competitive market and the price of the product is $7. What will be the value of total revenue when quantity sold equals 2?

$14

Refer to the above table. The table represents information on the costs for Ajax Corporation. Ajax operates in a perfectly competitive market and the price of the product is $9. What does profit equal when quantity equals 3?

$6

Refer to the above table. The table represents information on the costs for Ajax Corporation. Ajax operates in a perfectly competitive market and the price of the product is $9. What does profit equal when quantity equals 4?

$6

In the above figure, at the profit-maximizing rate of production for the perfectly competitive firm average total cost is

$7

Refer to the above table. The table represents information on the costs for Ajax Corporation. Ajax operates in a perfectly competitive market and the price of the product is $7. What does profit equal when quantity equals 2?

-$2

In the above figure, what is the profit-maximizing output and price?

10, $10

In the above figure, if the firm is facing demand curve d2, then to maximize profits it will produce at output level

B.

Using the above figure, the price facing the perfectly competitive firm in the long run will be

P3.

What is always true about the short-run equilibrium position for a firm in perfect competition?

MR = MC = P = AR

If a firm is earning short-run economic profits shown in the above figure, in the long run

firms enter the industry, the market supply curve shifts rightward, and the market price falls.

Under perfect competition, the firm must decide

the best rate of output it should produce.

Marginal revenue equals

the change in total revenue from selling one more unit

Perfectly competitive markets are efficient because

the cost to society for producing the goods is exactly equal to the value that society places on the good.

If an industry's long-run per-unit costs are constant as its output increases then

the firm is most likely a constant-cost industry

If an industry's long-run per-unit costs increase as its output increases then

the firm is most likely an increasing-cost industry.

If a perfectly competitive firm is producing at an output at which marginal cost exceeds marginal revenue,

the firm should reduce production.

A perfectly competitive industry's market or "going" price is established by

the forces of supply and demand

Under perfect competition, the demand curve facing the firm is determined by

the intersection of the industry demand and supply curves.

The short-run industry supply curve slopes up because

the law of diminishing marginal product applies in the short run.

When price equals marginal cost

the marginal benefits of consuming an extra unit of the good exactly equals the marginal cost to society of producing the good.

Which of the following is closest to a perfectly competitive market?

the market for broccoli

The perfectly competitive seller's short-run supply curve is

the part of its marginal cost curve above the average variable cost curve.

Which of the following is the best example of a decreasing-cost industry?

the personal computer industry

The rate of production at which marginal revenue equals marginal cost is

the point where profits are maximized

The short-run break-even price is

the price at which a firm's total revenues equal its total costs.

A firm earning economic losses should operate in the short run as long as

the price per unit sold is greater than the average variable cost per unit produced.

Competitive pricing is efficient because

the price that consumers pay reflects the opportunity cost to society of producing the good.

A firm in a perfectly competitive market maximizes profits when it finds

the quantity at which total revenue minus total cost is the greatest

In a perfectly competitive market, the average revenue curve of a firm is

the same as its demand curve.

In the short run, the price at which a firm's total revenues equal its total costs is

the short-run break-even point.

A perfectly competitive firm will not earn an economic profit in the long run, because

there are no barriers to entry into the industry.

Malfeasance at Enron, a Houston-based energy firm, led to overstatement of revenues by almost $92 billion. As Enron closed its operations, U.S. energy prices remained stable. This may have been evidence that

there is a competitive market in energy distribution in the United States.

A company finds that at its present level of production, MC = AVC at $15, MC = ATC at $20, and MC = MR at $17. Your advice to the firm regarding its short-run operations is

to continue production at a loss.

A situation in which the price charged is greater than society's opportunity cost would lead to

too little being produced

In a perfectly competitive market, if P > MC, then

too little output is being produced.

In a perfectly competitive market, if P < MC, then

too much output is being produced

A firm that shuts down in the short run experiences losses equal to

total fixed costs.

A firm that shuts down in the short run experiences losses equal to its

total fixed costs.

Refer to the above figure. Line C in Panel B does not represent

total revenue

The total amount received from the sale of output is

total revenue.

Factors that cause the short-run supply curve to change are factors that affect

variable costs.

Refer to the above figure. Profits will be negative

when the price is below $2.

If markets are perfectly competitive, then the production of goods

will use the least costly combination of resources.

If price is below average variable costs at all rates of output, the quantity supplied by a perfectly competitive firm will equal

zero

A perfectly competitive firm faces a market clearing price of $150 per unit. Average total costs are at the minimum value of $200 per unit at an output rate of 100 units. Average variable costs are at the minimum value of $100 per unit at an output rate of 50 units. Marginal cost equals $150 per unit at an output rate of 75 units. It can be concluded that the short-run profit-maximizing output rate is

75 units, at which the firm earns negative economic profits per unit sold.

Which of the following could generate economic profits for perfectly competitive firms in the short run, if they initially earn zero economic profits?

A decrease in input prices

In the above figure, the firm will shut down if quantity falls below

A.

The break-even price for a perfectly competitive firm is the price that is equal to

ATC.

The short-run shutdown price occurs where price equals

AVC at the minimum point.

The perfectly competitive firm's total revenue curve

All of these

Which of the following is true in perfect competition at long-run equilibrium?

All of these

The firm in the above figure breaks even when quantity is

C.

Refer to the above figure. If the market price is equal to A, which statement can be made about economic profits?

Economic profits are positive and equal to ABCG.

Which of the following is NOT a characteristic of a perfectly competitive long-run equilibrium?

Firms are producing on the downward sloping portions of their short-run average cost curves.

In reference to the long-run firm competitive equilibrium diagram, which of the following statements is INCORRECT?

In the long run, this firm must be part of a constant-cost industry, because its marginal revenue curve is perfectly elastic

In reference to the long-run firm competitive equilibrium diagram, which of the following statements is INCORRECT?

In the long run, this firm must be part of a constant-cost industry, because its marginal revenue curve is perfectly elastic.

Which of the following is NOT a characteristic of a perfectly competitive market?

It is difficult for a firm to enter or leave the market

Firms in a perfectly competitive industry are producing goods efficiently in the long run if each is producing at the minimum point of the

LAC curve.

Which of the following is NOT correct for a perfectly competitive firm in long-run equilibrium?

MC = MR > LAC

The short-run supply curve for a perfectly competitive firm is the portion of its

MC curve above its AVC curve.

The short-run supply curve for the perfectly competitive firm is the portion of its

MC curve above the AVC curve.

Assuming fixed factor prices, the short-run industry supply curve for a perfectly competitive industry is equal to the sum of the

MC curves above minimum AVC

In the above figure, assuming Firm 1 and Firm 2 are the sole producers in the industry, the industry quantity supplied at price P2 is equal to

Q1 + Q3.

A firm is currently producing at the point where MC = MR. The situation for the firm at this point is P = $5, Q = 100, ATC = $6, AVC = $5.50. What do you recommend this firm do?

Shut down, because AVC > P.

Which of the following statements is not true for a perfectly competitive firm

The firm can influence its demand curve by advertising its product

Which of the following statements is not true for a perfectly competitive firm?

The firm can influence its demand curve by advertising its product

Suppose that at the current level of output, price = $10, MC = $14, AVC = $7, and ATC = $9. Which of the following is true?

The firm should decrease output.

Suppose that at the current level of output, price = $10, MC = $4, AVC = $7, and ATC = $11. Which of the following is true?

The firm should increase output.

Suppose that at the current level of output, price = $10, MC = $10, AVC = $7, and ATC = $9. Which of the following is true?

The firm should maintain the current level of output.

Which of the following statements is correct?

The market demand curve of the perfectly competitive industry is downward sloping while the demand curve of an individual firm is horizontal with a height equal to the product price

Which of the following is NOT true for a perfectly competitive firm in the long run?

The market demand curve of the perfectly competitive industry is downward sloping while the demand curve of an individual firm is horizontal with a height equal to the product price.

Which of the following is NOT correct concerning perfectly competitive firms in the long run?

The opportunity cost of capital is zero.

For a perfectly competitive firm, which of the following is NOT true?

The total revenue curve is horizontal.

Which of the following is NOT a characteristic of perfect competition?

There are substantial barriers to entry into the industry.

In the short run, which of the following is FALSE about the shutdown point?

Total revenue is equal to total fixed cost.

A perfectly elastic long-run supply curve indicates

a constant-cost industry.

Consider an industry that is in long-run equilibrium. An increase in demand leads to a decrease in the price of the good. We know that this is

a decreasing cost industry.

If an industry's long-run supply curve slopes downward, then the industry is

a decreasing-cost industry.

If the long-run supply curve slopes downward, we know that this is

a decreasing-cost industry.

A decreasing-cost industry will have

a downward sloping supply curve in the long run.

Being a price taker essentially means

a firm cannot influence the market price.

A constant-cost industry will have

a perfectly elastic long-run supply curve

Firms in a perfectly competitive industry are earning economic losses. This is

a signal to entrepreneurs that some of the firms in the industry should exit and the resources of these firms should move into production of other goods

The perfectly competitive firm's demand curve has

a slope of 0.

Market signals

are ways of conveying information

Refer to the above figure. The firm's short-run shutdown price is

at $1.

Under what condition are profits maximized?

at the rate of output at which marginal revenue equals marginal cost

The equation TR/Q is used to compute

average revenue

The demand curve for a perfectly competitive industry is

downward sloping.

In a perfectly competitive market structure any firm can enter or leave the industry without serious impediments. This implies

firms will move labor and capital in pursuit of profit-making opportunities to whatever business venture gives them the highest return on their investment.

Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $8.00; AVC = $5.00; MC = $8.00; MR = $9.00. The firm should

increase output

A firm that has negative economic profits has accounting profits that are

indeterminate without more information.

Clothing retailers have faced greater competition in recent years as more firms have entered the clothing market. Some of the competition has come from foreign competitors, but much of it is domestic competition. As a result there is much competition in markets for many types of clothing and

individual buyers and sellers cannot affect the market price because it is determined by the market forces of demand and supply

In a perfectly competitive industry, the industry demand curve

is downward sloping

The owner of a perfectly competitive firm that is earning economic losses in the short run

is earning less than he would if he worked for someone else

Below the short-run shutdown price, the firm

is earning negative economic profits.

At the short-run break-even price, the firm

is making a normal rate of return on its capital investment

For a perfectly competitive firm facing the short-run break-even price

it has an economic profit of zero.

For a perfectly competitive firm facing the short-run break-even price,

it has an economic profit of zero.

The perfectly competitive firm maximizes profits when

it produces and sells the quantity at which marginal revenue and marginal cost are equal.

If a firm in a perfectly competitive market raises its price,

it will sell nothing.

The value of total output decreases when labor leaves one industry and goes to another and capital leaves the second industry and goes to the first. This indicates that

it would be efficient to return to the first situation

When a firm is operating at an output rate at which total revenue equal total costs, this is called

its breakeven point.

The demand curve for a perfectly competitive firm is horizontal because

its production decisions cannot influence the market price.

The perfectly competitive firm cannot influence the market price because

its production is too small to affect the market.

In a decreasing-cost industry, an increase in industry output will

lead to a lower market price

A perfectly competitive industry's market price is found by

locating the intersection of the market demand and market supply curves.

Under perfect competition, a firm that sets its price slightly above the market price would

lose all of its customers.

Perfect competition is characterized by

many buyers and sellers

A perfectly competitive firm will maximize profits when

marginal cost is equal to marginal revenue.

A situation in which the price charged is equal to society's opportunity cost is known as

marginal cost pricing.

The opportunity cost to society of producing one more unit of the good is

marginal cost.

For a perfectly competitive firm, profit maximization occurs when

marginal revenue equals marginal cost.

The change in total revenues resulting from a change in output of one unit is

marginal revenue.

Economic profits are maximized at the point at which

marginal revenues equal marginal costs

Suppose the perfectly competitive equilibrium occurs such that too many units of the good are produced. This is an example of

market failure.

The goal of the perfectly competitive firm is to

maximize total profits.

The short-run shutdown price for a perfectly competitive firm is where price equals

minimum AVC

The total revenue of a perfectly competitive firm is calculated by

multiplying price by quantity.

A firm's total explicit costs are $1,000. Its total implicit costs are $500, and it has a total revenue of $900. This firm receives

neither an economic profit nor an accounting profit.

When economic profits in a perfectly competitive industry are positive

new firms will be attracted to the industry, and economic profits will decline to zero.

In a perfectly competitive industry

no buyer or seller can influence the market price.

When there are large numbers of buyers and sellers, then

no one buyer or seller has any influence on price.

Refer to the above figure. Profits for this firm are equal to zero

only at points B and C.

If a constant-cost, perfectly competitive industry experiences an increase in the demand for its product, we would expect

only the quantity supplied of the product to increase.

The exiting of firms from a perfectly competitive industry occurs when

opportunity costs cannot be covered.

A market structure in which the decisions of individual buyers and sellers have no effect on market price is

perfect competition.

The demand curve for a perfectly competitive firm is

perfectly elastic

The demand curve for the product of a perfectly competitive firm is

perfectly elastic.

A firm that has positive economic profits has accounting profits that are

positive.

If a perfectly competitive industry is in long-run equilibrium, then

price equals average cost

The firm in a perfectly competitive industry is a

price taker.

All firms in a perfect competition industry

produce identical products

In the above figure, if the market price is less than $7, the firm

produces 0 units.

In the above figure, if the market price is $10, the firm

produces 10 units

All of the following are characteristics of perfect competition EXCEPT

product differentiation

The vertical distance between the horizontal axis and any point on a perfect competitor's demand curve measures

product price, marginal revenue, and average revenue.

The rate of production that maximizes the positive difference between total revenues and total costs is the

profit-maximizing rate of production

When MR < MC for a firm, the firm should

reduce its level of output.

If a perfect competitor faces P = ATC in the long run, the firm will

remain in the industry.

For a firm in a perfectly competitive industry,

short-run economic profits may be positive, but long-run economic profits must be zero

For a firm in a perfectly competitive industry

short-run economic profits may be positive, but long-run economic profits must be zero.

When price is greater than both marginal cost and average variable cost, the perfectly competitive firm

should increase its level of output.

If a firm is producing an output rate at which marginal cost is greater than price, the firm

should reduce its output level.

If AVC is $6 when P = MC, a firm

should shut down if price is less than $6

A firm is currently producing at the rate of output at which total revenues just cover its total variable costs. If demand falls, the firm should

shut down

Suppose a perfectly competitive firm can produce 20,000 bushels of corn a year at an output at which marginal cost equals marginal revenue. The market price of corn per bushel is $1.00. The firm's total costs per year are $50,000 and fixed costs per year are $25,000. In the short run, this firm should

shut down

Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $6.00; AVC = $4.00; MC = $3.50; MR = $3.50. The firm should

shut down

A firm is currently producing an output at which price equals the minimum point on the average variable cost curve. If wage rates increase, the firm will

shut down since it would no longer be covering its variable costs.

In the above figure, when price is below E, this firm should

shut down.

The demand curve faced by a perfectly competitive industry

slopes downward.

Perfect competition is a market structure

in which individual buyers and sellers have no effect on the market price.

Refer to the above figure. Which panel represents the long-run supply curve for a constant cost industry?

Panel A.

Refer to the above figure. Which panel represents the long-run supply curve for an increasing cost industry?

Panel C.

Refer to the above figure. If the market price is equal to A, which statement can be made about profits?

Profits are negative and equal to BCEA.

According to the above figure, if the firm is earning zero economic profits, what quantity is the firm selling and at what price?

Q = 1,000; P = $5

In an increasing-cost industry, an increase in output will lead to

an increase in long-run per-unit costs.

In a perfectly competitive industry, which of the following is a market signal to resource owners?

Economic profits

Refer to the above table. If the price is $3, the perfectly competitive firm should produce

102 units

Refer to the above figure. If the market price is equal to A, which statement can be made about economic profits?

104 units

Refer to the above table. If the price is $5, the perfectly competitive firm should produce

104 units.

Refer to the above table. This firm operates in a perfectly competitive market in which the market price is $10 per unit. What is its profit-maximizing rate of production?

106 units

In the above figure, at which output level is this firm earning negative economic profits?

2

What is the shape of the long-run supply curve in a decreasing-cost industry?

Downward sloping

Referring to the diagram, which of the following statements is INCORRECT?

If the individual firm raises its price, it will capture all sales in the market

In the above figure, what happens to the firm's optimal level of output if the price it receives for its product decreases from P4 to P3?

Output decreases.

In the short run, in a perfectly competitive market, a firm will shut down if

P < AVC for all levels of output.

The shutdown rule for a firm in a perfectly competitive industry is that the firm should cease production if

P < AVC.

For a perfectly competitive firm at its long-run competitive equilibrium point,

P = AR = MR = LATC = SATC = MC

When a firm is earning zero economic profits

P = ATC.

In a long-run perfectly competitive equilibrium

P = MR = MC = ATC.

In a long-run perfectly competitive equilibrium,

P = MR = MC = ATC.

Which of the following is always true for a perfectly competitive firm?

P = d = MR

Which of the following is always true in the short run for a perfectly competitive firm that is maximizing economic profits?

P = d = MR = MC

Using the above figure, the short-run break-even price for the perfectly competitive firm will be

P3.

Using the above figure, the perfectly competitive firm in the diagram will earn an economic profit if the market price is

P4.

Consider an industry that is in long-run equilibrium. An increase in demand leads to an increase in the price of the good. We know that this is

an increasing cost industry.

An increasing-cost industry will have

an upward sloping supply curve in the long run

A firm's total explicit costs are $1,000. Its total implicit costs are $500, and it has a total revenue of $2000. This firm receives

both an economic profit and an accounting profit.

In the long run, all firms in a perfectly competitive industry

break even.

A perfectly competitive firm is maximizing profits in the short run. This implies that the firm is earning the most economic profits possible, which

can be positive, negative, or zero

A price taker is a firm that

cannot influence the market price.

Refer to the above figure. If an individual firm wants to maximize economic profits, it should

charge $5 for its product

Signals are

compact ways of conveying to economic decision makers information needed to identify industries where more resources are needed

A company finds that at the output level at which marginal cost equals marginal revenue, TC = $500, TVC = $400, and TR = $450. Your advice to the firm is

continue to produce because loss is less than TFC.

If marginal revenue is less than marginal cost, the firm should

decrease its rate of outpu

Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $12.00; AVC = $8.00; MC = $12.00; MR = $10.00. The firm should

decrease output.

An industry in which an increase in output leads to a reduction in long-run per-unit costs is a(n)

decreasing-cost industry.

In the above figure, if price is equal to P4, the firm will

earn positive economic profits.

In the long run, the perfectly competitive firm

earns only a normal profit

When a perfectly competitive firm experiences zero economic profits,

firms have no incentive to exit or enter the industry.

Along an industry's long-run supply curve,

economic profits are zero.

When a firm is at its short-run break-even point

economic profits equal zero and the firm is earning a nominal rate of return on investment.

When a firm is at its short-run break-even point,

economic profits equal zero and the firm is earning a nominal rate of return on investment.

In the long run in a perfectly competitive industry

economic profits will be zero.

In a perfectly competitive market, if P > ATC in the short run, there is apt to be

entry of new firms into the market

When demand is perfectly elastic, marginal revenue is

equal to price.

For the perfectly competitive firm, price

equals average revenue and marginal revenue.

In the long run when a perfectly competitive firm experiences negative economic profits,

existing firms exit the industry.

When considering perfect competition the absence of entry barriers implies that

firms can enter and leave the industry without serious impediments.

In the long run when a perfectly competitive firm experiences positive economic profits,

firms enter the industry, the market supply curve shifts rightward, and the market price falls

A constant-cost industry

has a horizontal long-run supply curve.

In a perfectly competitive industry, any restrictions that prevent new firms from entering

hinder economic efficiency

A perfectly competitive market has

homogeneous products

A perfectly competitive producer faces a demand curve for its own product that is

horizontal.

The market demand curve in perfect competition is found by

horizontally summing the demand curves of the individual consumers.


Kaugnay na mga set ng pag-aaral

Chapter 7: Business Strategy- Innovation and Strategic Entrepreneurship

View Set

El día de acción de gracias - preguntas

View Set

Chapter 8: Erikson: Post-Freudian Theory

View Set

EXAM 2 (chapters 10,12,13, 18,27,29)

View Set

Reglas Para El Uso De La C, S, Z, X.

View Set