Econ Chapter 14

If a competitive firm is production a level of output where marginal revenue exceeds marginal cost, the firm could increase profits if it A.)increased production B.)decreased production C.)maintained production at the current level D.)temporarily shut down

increased production

In the long run, if the price firms receive for their output is below their average total costs of production, some firms will exit the market

T

In the short run, the market supply curve for a good is the sum of the quantities supplied by each firm at each point

T

Average revenue

total revenue divided by the quantity sold

Exit

A long-run decision to permanently cease production and leave the market

Shut down

A short-run decision to temporarily cease production during a specific period of time due to current market conditions

Which of the following markets would most closely satisfy the requirements for a competitive market? A.)gold billion B.)electricity C.)cable television D.)soda E.)All of the above represent competitive markets

A.)gold bullion

Price takers

Buyers and sellers in a competitive market that must accept the price hat the market determines

Which of the following is not a characteristic of a competitive market? A.)There are many buyers and sellers in the market B.)The goods offered for sale are largely the same C.)Firms can freely enter or exit the market D.)Firms generate small but positive economic profits in the long run E.)All of the above are characteristics of a competitive market

D.)Firms generate small but positive economic profits in the long run

A competitive firm's long-run supply curve is the portion of its marginal-cost curve that lies above its average-variable-cost curve

F; it is the portion of the MC curve that lies about its average-total-cost curve

A competitive firm's short-run supply curve is the portion of its marginal-cost curve that lies above its average-total-cost curve

F; it is the portion of the MC curve that lies above its average-total-cost-curve

If marginal cost exceeds marginal revenue at a firm's current level of output, the firm can increase profits if it increases its level of output

F; the firm increases profits if it reduces output

In the short run, if the price a firm receives for a good is above its average variable costs but below its average total costs of production, the firm will temporarily shut down

F; the firm will continue to operate in the short run as long as price exceeds average variable costs

The only requirement for a market to be perfectly competitive is for the market to have many buyers and sellers

F; the goods offered for sale are largely the same and (possibly) firms can freely enter or exit the market

The short-run market supply curve is more elastic than the long-run market supply curve

F; the long-run market supply curve is more elastic than the short-run market supply curve

In the long run, perfectly competitive firms earn small but positive economic profits

F; they earn zero economic profits in the long run

A firm maximizes profit when it produces output up to there point where marginal cost equals marginal revenue

T

For a competitive firm, marginal revenue equals the price of the good it sells

T

If a competitive firm sells three times the amount of output, its total revenue also increases by a factor of three

T

If the price of a good rises above the minimum average total cost of production, positive economic profits will cause new firms to enter the market, which drives the price back down to the minimum average total cost of production

T

In a competitive market, both buyers and sellers are price takers

T

In the long run, if firms are identical and there is free entry and exit in the market, all firms in the market operate at their efficient scale

T

Sunk cost

a cost that has already been committed and cannot be recovered

Competitive market

a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker

In the long-run equilibrium in a competitive market, firms are operating at A.)the minimum of their average-total-cost curves B.)the intersection marginal cost and marginal revenue C.)their efficient scale D.)zero economic profit E.)all of the above

all the above

if the long-run market supply curve for a good is perfectly elastic, an increase in the demand for that good will, in the long run, cause A.) an increase in the price of a good in an increase in the number of firms in the market B.) an increase in the price of the good but no increase in the number of firms in the market C.)An increase in the number of firms in the market but no increase in the price of the good D.) no impact on either the price of the good or the number of firms in the market

an increase in the number of firms in the market but no increase in the price of the good

In the long run, some firms will exit the market if the price of the good offered for sale is less than A.)Marginal revenue B.) marginal cost C.) average revenue D.) average total cost

average total cost

If a competitive firm doubles its output, its total revenue A.) more than doubles B.)doubles C.)less than doubles D.)can not be determined because the price of the food may rise or fall

doubles

For competitive firm, marginal revenue is A.)equal to the good of the price sold B.)average revenue divided by quantity sold C.)tots revenue divided by the price D.)equal to the quantity d the good sold

equal to the price of the good sold

The long-run market supply curve A.) is always more elastic than the short run market supply curve B.) is always less elastic than the short run market supply curve C.) how's the same elasticity as the short run market supply curve D.) is always perfectly elastic

is always more elastic than the short-run market supply curve

The competitive firm maximizes profit when it produces output up t the point where A.)marginal cost equal total revenue B.)marginal revenue equals average revenue C.)marginal cost equals marginal revenue D.)price equals average variable cost

marginal cost equals marginal revenue

If al firms in a market have identical cost structures and if inputs used in the production of the good in that market are readily available, then the long-run market supply curve for that good should be A.) perfectly elastic B.) downward sloping C.) upward sloping D.)Perfectly inelastic

perfectly elastic

In the long run, the competitive firm's supply cure is the A.)entire marginal cost curve B.)portion of the marginal-cost curve that lies above the average-total-cost curve C.)portion of the marginal-cost curve that lies above the average-variable-cost curve D.)upward-sloping portion of the average-total-cost curve E.)upward-sloping portion of the average-variable-cost curve

portion of the marginal-cost curve that lies above the average-total-cost curve

If an input necessary for production is in limited supply so that an expansion of the industry raises costs for all existing firms in the market, then the long-run market supply curve for t a good could be A.) perfectly elastic B.) downward sloping C.) upward sloping D.)Perfectly inelastic

upward sloping

In the short run, the competitive firm's supply curve is the A.)entire marginal-cost curve B.)portion of the marginal-cost curve that lies above the average-total-cost curve C.)portion of the marginal-cost curve that lies above the average-variable-cost curve D.)upward-sloping portion of the average-total-cost curve E.)upward-sloping portion of the average-variable-cost curve

portion of the marginal-cost curve that lies above the average-variable-cost curve

Marginal revenue

the change in total revenue from an additional unit sold

A grocery store should close at night if the A.) cost of staying open are greater than the total revenue due to staying open B.) total cost of staying open our lesson the total revenue due to saying open C.) variable cost of staying open are greater than the total revenue due to staying open D.) Google cost of staying open or less than the total revenue due to staying open

variable costs of staying open are greater than the total revenue de to staying open