macro economy
In the long run, a competitive market with 1,000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost. a. True b. False Hide Feedback Correct Solution Correct Response true
True
When a resource used in the production of a good sold in a competitive market is available in only limited quantities, the long-run supply curve is likely to be upward sloping. a. True b. False Hide Feedback Correct Solution Correct Response true
True
Consider a competitive market with a large number of identical firms. The firms in this market do not use any resources that are available only in limited quantities. In this market, an increase in demand will a. increase price in the short run but not in the long run. b. increase price in the long run but not in the short run. c. increase price both in the short and the long run. d. not affect price in either the short or the long run. Hide Feedback Correct Solution Correct Response a
a
Figure 9-11 Refer to Figure 9-11. Consumer surplus in this market before trade is a. A. b. B + C. c. A + B + D. d. C. Hide Feedback Correct Solution Correct Response a
a
In a perfectly competitive market, a. no one seller can influence the price of the product. b. price exceeds marginal revenue for each unit sold. c. average revenue exceeds marginal revenue for each unit sold. d. All of the above are correct. Hide Feedback Correct Solution Correct Response a
a
Refer to Table 14-8. The firm should not produce an output level beyond a. 4 units. b. 5 units. c. 6 units. d. 7 units. Hide Feedback Correct Solution Correct Response b
b
Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. Refer to Table 14-14. Suppose that due to a decrease in the market demand for bread the market price of bread drops to $2.75. At this new price, if Bob produces and sells the profit-maximizing quantity, how much profit will he earn? a. $0.25 b. $1.25 c. $2.25 d. The firm will lose $6.25. Hide Feedback Correct Solution Correct Response b
b
When a certain competitive firm produces and sells 100 units of output, marginal revenue is $80. When the same firm produces and sells 200 units of output, what is average revenue? a. $40 b. $80 c. $160 d. This cannot be determined from the given information. Hide Feedback Correct Solution Correct Response b
b
A major difference between tariffs and import quotas is that a. tariffs create deadweight losses, but import quotas do not. b. tariffs help domestic consumers, and import quotas help domestic producers. c. tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import. d. All of the above are correct. Hide Feedback Correct Solution Correct Response c
c
At the profit-maximizing level of output, a. marginal revenue equals average total cost. b. marginal revenue equals average variable cost. c. marginal revenue equals marginal cost. d. average revenue equals average total cost. Hide Feedback Correct Solution Correct Response c
c
For a firm operating in a competitive industry, which of the following statements is not correct? a. Price equals average revenue. b. Price equals marginal revenue. c. Total revenue is constant. d. Marginal revenue is constant. Hide Feedback Correct Solution Correct Response c
c
Scenario 14-2 Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit. Refer to Scenario 14-2. At Q = 1,000, the firm's profits equal a. -$5,000. b. $2,500. c. $5,000. d. $10,000. Hide Feedback Correct Solution Correct Response c
c
Tom produces commemorative t-shirts in a competitive market. If Tom decides to decrease his output, this will a. increase his revenue, since the output decrease leads to a higher market price. b. increase his revenue, since Tom's competitors will also decrease their output, so that price rises to offset the drop in Tom's output. c. decrease his revenue, since his output has decreased and the price remains the same. d. decrease his revenue, since the price does not rise sufficiently when output drops to offset the drop in Tom's output. Hide Feedback Correct Solution Correct Response c
c
When a nation first begins to trade with other countries and the nation becomes an importer of corn, a. this is an indication that the world price of corn exceeds the nation's domestic price of corn in the absence of trade. b. this is an indication that the nation has a comparative advantage in producing corn. c. the nation's consumers of corn become better off and the nation's producers of corn become worse off. d. All of the above are correct. Hide Feedback Correct Solution Correct Response c
c
When fixed costs are ignored because they are irrelevant to a business's production decision, they are called a. explicit costs. b. implicit costs. c. sunk costs. d. opportunity costs. Hide Feedback Correct Solution Correct Response c
c
When new entrants into a competitive market have higher costs than existing firms, a. accounting profits will be the primary determinant of entry into the market. b. sunk costs become an important determinant of the short-run entry strategy. c. market price will rise. d. long-run supply is constant. Hide Feedback Correct Solution Correct Response c
c
When price is greater than marginal cost for a firm in a competitive market, a. marginal cost must be falling. b. the firm must be minimizing its losses. c. there are opportunities to increase profit by increasing production. d. the firm should decrease output to maximize profit. Hide Feedback Correct Solution Correct Response c
c
Figure 9-11 Refer to Figure 9-11. The change in total surplus in this market because of trade is a. A, and this area represents a loss of total surplus. b. B, and this area represents a gain in total surplus. c. C, and this area represents a loss of total surplus. d. D, and this area represents a gain in total surplus. Hide Feedback Correct Solution Correct Response d
d
Profit-maximizing firms enter a competitive market when existing firms in that market have a. total revenues that exceed fixed costs. b. total revenues that exceed total variable costs. c. average total costs that exceed average revenue. d. average total costs less than market price. Hide Feedback Correct Solution Correct Response d
d
Which of the following is not an important question for economic policy raised by the experience of the textile industry? a. How does international trade affect consumer well-being? b. Who gains and who loses from free trade among countries? c. How do the gains from trade compare to the losses? d. Which argument for restricting free trade is politically feasible? Hide Feedback Correct Solution Correct Response d
d
For both parties to gain from trade, the price at which they trade must lie exactly in the middle of the two opportunity costs. a. True b. False Hide Feedback Correct Solution Correct Response false
false
In the long run, if we observe firms in a competitive market earning economic profits, we know that this market is in long-run equilibrium. a. True b. False Hide Feedback Correct Solution Correct Response false
false
