micro chapter 10

A purely competitive firm is a price _______ (Enter one word).

taker

Firms within pure competition are considered to be price ________

takers

Changes in _______ and changes in prices of variable inputs alter costs and shift the marginal cost or short run supply curve.

technology

A purely competitive firm will maximize its profits by producing up to the point where Multiple choice question. the vertical distance between the total revenue and total cost curves is the greatest. the horizontal distance between the total revenue and average variable cost curve is the greatest. the vertical distance between the total revenue and total cost curve is the least. the horizontal distance between the total revenue and average fixed cost curve is the greatest.

the vertical distance between the total revenue and total cost curves is the greatest.

Select all that apply A wage increase would increase marginal costs and shift the supply curve: Multiple select question. to the left to the right upward downward

to the left upward

n pure competition, if the first unit of output sold increases total revenue from $0 to $131, marginal revenue for that unit is $131. If the second unit sold increases total revenue from $131 to $262, marginal revenue is again $131. The third unit sold increases total revenue to $______ and marginal revenue is now $______. Multiple choice question. 131; 393 393; 262 393; 131 131; 131

393; 131

Which action would increase market price in a purely competitive market? Multiple choice question. An individual firm reducing its output Market demand declining A new firm entering the industry, increasing output All firms reducing output simultaneously

All firms reducing output simultaneously

Which of the following best describes pure competition? Multiple choice question. An industry involving a very large number of firms producing identical products and in which new firms can enter or exit the industry very easily. An industry involving a few firms producing identical products and in which new firms cannot enter or exit the industry very easily. An industry involving one large firm producing many products and in which new firms cannot enter or exit the industry very easily. An industry involving two firms producing identical products and in which new firms can enter or exit the industry very easily.

An industry involving a very large number of firms producing identical products and in which new firms can enter or exit the industry very easily.

______ is relatively rare in the real world, although this market model is highly ______ to several industries. Multiple choice question. Pure monopoly; irrelevant Oligopoly; relevant Pure competition; relevant Monopolistic competition; relevant

Pure competition; relevant

Which of the following is a method of calculating economic profit in pure competition? Multiple choice question. Price minus average total cost plus quantity Price minus average variable cost multiplied by quantity Price minus average total cost multiplied by quantity Total revenue minus marginal cost divided by quantity

Price minus average total cost multiplied by quantity

Which of the following are considered to be the four basic market structures? Multiple select question. Monopolistic competition Oligopoly Representative democracy Pure monopoly Pure competition

Monopolistic competition Oligopoly Pure monopoly Pure competition

When the marginal cost of an additional unit of output exceeds the marginal revenue, what should the firm do? Multiple choice question. Continue producing more units output Shut down Reduce its fixed plant size Not produce that additional unit of output

Not produce that additional unit of output

Which market structure has the fewest obstacles to entry or exit? Multiple choice question. Pure competition Oligopoly Monopoly Monopolistic competition

Pure competition

At which stage of production is marginal revenue most likely to exceed marginal cost? Multiple choice question. The late-middle stage The initial stage The end stage The early-middle stage

The initial stage

Which of the following best describes the economic break-even point? Multiple choice question. The point where total revenue covers fixed costs but not variable costs. The point where total revenue covers all costs, but there is no economic profit. The point where total revenue exceeds total costs and economic profits are realized. The point where total revenues exceed those of the strongest competitor in the industry.

The point where total revenue covers all costs, but there is no economic profit.

Select all that apply Which of the following are true of purely competitive firms? Multiple select question. They are price takers. They do not exert control over product price. They produce a small fraction of total supply. They produce a large fraction of total supply.

They are price takers. They do not exert control over product price. They produce a small fraction of total supply.

After a company has determined that it should produce a product and the amount of the product to produce, what basic question should it ask? Multiple choice question. What economic profit (or loss) will we realize? Which sales promotions should we offer? What level of output is provided by our closest competitor? How will our level of output affect market price?

What economic profit (or loss) will we realize?

When will a firm earn an economic profit? Multiple choice question. When price is greater than average total cost. When price is less than average total price. When price is equal to average total price. When price is equal to average variable price.

When price is greater than average total cost.

Select all that apply A purely competitive firm's demand schedule is equal to which of the following? Multiple select question. average revenue total revenue quantity supplied marginal revenue

average revenue marginal revenue

The profit-maximizing rule of MR=MC states that in the short run, the firm will maximize profit or minimize loss by producing the output for which marginal revenue ______ marginal cost. Multiple choice question. is less than equals is greater than eliminates

equals

A firm should produce any unit of output whose ______. Multiple choice question. price is less than marginal cost marginal revenue is greater than marginal cost total revenue is greater than marginal cost marginal cost is greater than marginal revenue

marginal revenue is greater than marginal cost

A firm's total revenue is calculated as _______ times quantity produced. (Enter one word in the blank)

price

The market structures designated as "imperfect competition" are: Multiple choice question. pure monopoly; oligopoly; monopolistic competition pure competition; monopolistic competition; oligopoly pure monopoly; pure competition; oligopoly pure monopoly; pure competition; monopolistic competition

pure monopoly; oligopoly; monopolistic competition

A(n) ______ competitive firm's average-revenue schedule is also known as its demand schedule.

purely

The portion of a firm's marginal cost curve that lies above its average variable cost is the firm's short-run _________ curve.

supply

If price is below a firm's minimum average _______ cost, the firm will not operate.

variable

At a price of $10 and a profit-maximizing (or loss-minimizing) level of output of 20 units, a perfectly competitive firm's average total cost is $15. This firm's economic profit or loss equals: Multiple choice question. -$100 -$50 $75 $5

-$100

True or false: Quantity supplied increases as price decreases, and economic profit is usually higher at lower product prices and output. True false question

False

In the initial stages of production, where output is relatively low, marginal revenue will usually ______ marginal cost. Multiple choice question. be equal to be lower than eliminate exceed

exceed

An oligopoly has ___ sellers and must consider the decisions of its rivals in determining its own ___ and output. Multiple choice question. many; costs many; price few; price few; costs

few; price

Economists group industries into ______ distinct market structures.

four

In regard to its slope, a purely competitive firm's demand curve is perfectly (horizontal/vertical).

horizontal

Because of the law of diminishing returns, marginal costs ______ at a(n) ______ rate at higher levels of output. Multiple choice question. decrease; decreasing decrease; increasing increase; increasing increase; decreasing

increase; increasing

A wage ______ would raise marginal cost and shift the supply curve _______. Multiple choice question. increase; upward decrease; upward decrease; downward increase; downward

increase; upward

For purely competitive firms, the MR = MC rule can be restated so that ______ replaces marginal revenue. Multiple choice question. output total cost price average fixed cost

price

In pure competition, marginal revenue and _______ are equal.

price

________ competition is considered to be rare in the real world.

pure

The market demand curve for a purely competitive industry: Multiple choice question. slopes downward is perfectly inelastic is perfectly elastic slopes upward

slopes downward

In a purely competitive industry, an increase in the price of the product produced by firm A will cause buyers to ______. Multiple choice question. leave the industry substitute with products of firms B, C, or D enter the industry substitute with products from a monopolistically competitive industry

substitute with products of firms B, C, or D

A firm produces 10 units of a product with a market price of $5 and an average total cost of $3. What is the firm's economic profit? Multiple choice question. $20 $50 $30 $2

$20

If a firm's loss-minimizing output is 10 units and its average total cost at that level of output is $25, it will suffer a loss of $____ given a price of $20.

50

Which of the following is a characteristic of a monopolistically competitive market? Multiple choice question. A perfectly elastic demand curve A relatively large number of sellers producing differentiated products Firms not having any control over the selling price of goods High barriers to entry and exit

A relatively large number of sellers producing differentiated products

Select all that apply Which of the following statements about product price are true? Multiple select question. All competitive producers as a group can influence product price with their supply plans. Individual firms can affect product price with their supply decisions. Product price is a given fact for all competitive producers as a group. Product price is a given fact for the individual firm.

All competitive producers as a group can influence product price with their supply plans. Product price is a given fact for the individual firm.

Select all that apply What are two ways that a purely competitive firm can determine the level of output at which it will realize maximum profit or minimum losses? Multiple select question. By comparing total revenue to total costs By comparing unit costs to total costs By comparing marginal revenue to marginal costs By comparing marginal costs to total costs

By comparing total revenue to total costs By comparing marginal revenue to marginal costs

Select all that apply A purely competitive firm's average revenue curve is equal to or coincides with which of the following? Multiple select question. Demand curve Price Minimum average total cost curve Total revenue curve

Demand curve Price

True or false: A firm within pure competition will maximize its profit when total cost is maximized over total revenue. True false question.TrueFalse

False

What is the firm's most likely response if price is exactly equal to minimum average variable cost? Multiple choice question. Decreasing production to reduce variable costs Indifference to producing or shutting down Allocating more resources to production Shutting down production entirely

Indifference to producing or shutting down

Select all that apply Which of the following features occur in a purely competitive market? Multiple select question. Many independently acting sellers Sales in both national and international markets. One seller dominating the market Major restrictions on where products can be sold

Many independently acting sellers Sales in both national and international markets.

Which of the following are scenarios in which a firm should continue to produce? Multiple select question. Marginal revenue is $0.25 and marginal cost is $0.20. Marginal revenue is $1.50 and marginal cost is $1.45. Marginal revenue is $3 and marginal cost is $3.50. Marginal revenue is $5 and marginal cost is $4.75.

Marginal revenue is $0.25 and marginal cost is $0.20. Marginal revenue is $1.50 and marginal cost is $1.45. Marginal revenue is $5 and marginal cost is $4.75.

Select all that apply What are the effects of technology on the firm and its short-run supply curve? Multiple select question. Market price increases (shifts upward). Productivity increases. The short-run supply curve shifts downward (to the left). Marginal costs decrease.

Productivity increases. The short-run supply curve shifts downward (to the left). Marginal costs decrease.

In which type of market does profit-maximizing output occur at the level at which price is equal to marginal cost? Multiple choice question. Oligopoly Monopolistic competition Monopoly Pure competition

Pure competition

Select all that apply Select all the market structures that are considered forms of imperfect competition. Multiple select question. Pure monopoly Pure competition Oligopoly Monopolistic competition

Pure monopoly Oligopoly Monopolistic competition

Which of the following explains why technological progress reduces marginal cost? Multiple choice question. Technological progress increases the productivity of labor. Technological progress decreases the productivity of labor. Technological progress increases the need for additional variable inputs. Technological progress increases the need for labor.

Technological progress increases the productivity of labor.

Multiplying product price by output reveals which of the following? Multiple choice question. Marginal revenue Quantity demanded Total revenue Average total cost

Total revenue

A firm operating in a purely competitive market is a price taker because it ______. Multiple choice question. cannot change the market price in the long run cannot change the market price, it can only adjust to it can change the market price in the short run can change the market price in the long run

cannot change the market price, it can only adjust to it

A purely competitive firm's marginal revenue curve will ______ the firm's demand curve. Multiple choice question. not be parallel to the coincide with be perpendicular to be above

coincide with

Select all that apply Which of the following are conditions necessary to have pure competition? Multiple select question. free entry and exit barriers to entry very large number of firms or sellers standardized product price searchers

free entry and exit very large number of firms or sellers standardized

In pure competition the demand curve faced by an individual firm graphs as a(n) ______ line and the market demand in pure competition is graphed as a(n) ______ curve. Multiple choice question. horizontal; downward sloping downward sloping; upward sloping upward sloping; vertical vertical; horizontal

horizontal; downward sloping

A purely competitive industry has a very ______ number of sellers, whereas the other three market structures reflect a progressively ______ or ______ number of sellers. Multiple choice question. small; larger; increasing large; smaller; decreasing large; smaller; increasing large; larger; increasing small; smaller; decreasing

large; smaller; decreasing

The change in total revenue that results from selling one more unit of output is called ______ revenue.

marginal

The portion of a firm's ________ cost curve lying above its average ________ cost curve is its short-run supply curve

marginal variable

A purely competitive firm's profit is ______ when total revenue exceeds total cost by the maximum amount. Multiple choice question. minimized maximized normalized eliminated

maximized

In the short run, a purely competitive firm can maximize its economic profit (or minimize its loss) by adjusting its _______

output

In the short run, a purely competitive firm will maximize profit by producing up to the point where marginal revenue is equal to marginal cost only if which of the following is true? Multiple choice question. Market price exceeds minimum average total cost. Market price exceeds minimum average variable cost. Market price is less than minimum average variable cost. Market price is less than minimum average total cost.

Market price exceeds minimum average variable cost.

Which of the following indicates the profit-maximizing level of output? Multiple choice question. The highest point on the total revenue curve The points at which total revenue and total cost intersect The lowest point on the total cost curve The vertical distance between the total revenue and total cost curves

The vertical distance between the total revenue and total cost curves

Which statement about obstacles to selling in a purely competitive market is true? Multiple choice question. There are many legal obstacles to selling. There are many financial obstacles to selling. There are many technological obstacles to selling. There are no significant obstacles to selling.

There are no significant obstacles to selling.

True or false: Firms within pure competition will produce standardized products. True false question. True False

True

Each purely competitive firm's demand curve is perfectly ______ at the equilibrium price.

elastic

In a perfectly competitive market, the demand curve for an individual firm is perfectly _________ at the market price.

elastic

In purely competitive industries, firms can freely: Multiple choice question. earn economic profits increase or decrease prices raise input costs enter and exit

enter and exit

In pure competition, a firm's average revenue will be _____ the product's price. Multiple choice question. equal to less than greater than

equal to

in pure competition, a firm's product price is ______ marginal revenue. Multiple choice question. not equal to less than equal to greater than

equal to

A firm would not stop producing if the loss is less than its ______ costs. Multiple choice question. fixed variable marginal total

fixed

A firm should not produce a unit of output when the marginal cost is ________ (greater/lesser) than its marginal revenue.

greater

Whenever price is ______ average variable costs but is ______ average total costs, the firm can pay part, but not all, its fixed costs by producing. Multiple choice question. less than; greater than less than; equal to greater than; less than equal to; greater than

greater than; less than

A purely competitive firm's total revenue curve will Multiple choice question. have a constant slope because each extra unit of sales increases total revenue by a constant amount have a variable slope due to changes in each extra unit of sales that vary with different levels of sales slope downward and to the right because each extra unit of sales increases total revenue by a constant amount

have a constant slope because each extra unit of sales increases total revenue by a constant amount

From an economic standpoint, the break-even point is the level of output at which a firm makes a(n) ______ profit. Multiple choice question. normal accounting economic negative

normal

Which of the following best describes oligopoly? Multiple choice question. Involves only a few sellers of a standardized or differentiated product, so each firm is unaffected by the decisions of its rivals. Involves only a few sellers of a standardized or differentiated product, so each firm is affected by the decisions of its rivals. Involves many sellers of a standardized or differentiated product, so each firm is affected by the decisions of its rivals. Involves only a few sellers of an identical product, so each firm is affected by the decisions of its rivals.

nvolves only a few sellers of a standardized or differentiated product, so each firm is affected by the decisions of its rivals.

A purely competitive firm's horizontal demand curve indicates ______. Multiple choice question. relative price inelasticity perfect price elasticity perfect price inelasticity relative price elasticity

perfect price elasticity

In a purely competitive industry, buyers view the products of firms B, C, D and E as ______ for the product of firm A. Multiple choice question. relative substitutes perfect substitutes perfect complements relative complements

perfect substitutes

In a purely competitive market, marginal revenue is a constant that is equal to which of the following? Multiple choice question. quantity average total cost consumer surplus price

price

In pure competition, to calculate economic profit, we first calculate the difference between ________ and average total cost and then multiply it by output.

price

Assume that there are 100 identical firms in an industry that produces a product with a market price of $10. Each firm has an average total cost of $2 and an equilibrium output of 10 units. What is the industry's economic profit? Multiple choice question. $8 $80,000 $80 $8,000

$8,000

Which of the following explains why a purely competitive firm is a price taker? Multiple choice question. A purely competitive firm offers only a negligible fraction of total market supply and therefore must set the price for the market A purely competitive firm offers a large fraction of total market supply and therefore determines market price A purely competitive firm offers only a negligible fraction of total market supply and therefore must accept the price determined by the market A purely competitive firm produces all of total market supply and therefore must accept the price determined by the market

A purely competitive firm offers only a negligible fraction of total market supply and therefore must accept the price determined by the market

Which of the following market structures produces only a standardized product? Multiple choice question. An oligopoly A monopolistically competitive market A purely competitive market A pure monopoly

A purely competitive market

Which of the following best summarizes why a firm in a purely competitive market will not increase its product price? Multiple choice question. Asking a price higher than the market price would be futile because consumers could substitute with identical products that are cheaper. Asking a price higher than the market price would shift the industry demand curve to the left. Asking a price lower than the market price would be futile because all other firms would lower their price. Asking a price higher than the market price would subject the firm to fines from the government.

Asking a price higher than the market price would be futile because consumers could substitute with identical products that are cheaper.

Which of the following best explains why the price-marginal cost relationship improves as production increases? Multiple choice question. At the very early stages of production, marginal revenue is low, making marginal cost unusually high. At the very early stages of production, marginal product is high, making marginal cost unusually high. At the very late stages of production, marginal product is low, making marginal cost unusually high. At the very early stages of production, marginal product is low, making marginal cost unusually high.

At the very early stages of production, marginal product is low, making marginal cost unusually high.

Which of the following best explains why the price-marginal cost relationship improves as production increases? Multiple choice question. At the very late stages of production, marginal product is low, making marginal cost unusually high. At the very early stages of production, marginal product is high, making marginal cost unusually high. At the very early stages of production, marginal product is low, making marginal cost unusually high. At the very early stages of production, marginal revenue is low, making marginal cost unusually high.

At the very early stages of production, marginal product is low, making marginal cost unusually high.

Which of the following reasons explains why the purely competitive firm's demand curve is perfectly elastic? Multiple choice question. Because the individual firm is a price taker, the marginal cost curve coincides with the firm's equilibrium price. Because the individual firm is a price maker, the total revenue curve coincides with the firm's equilibrium price. Because the individual firm is a price taker, the marginal revenue curve coincides with the firm's equilibrium price. Because the individual firm is a price maker, the marginal revenue curve coincides with the firm's equilibrium price.

Because the individual firm is a price taker, the marginal revenue curve coincides with the firm's equilibrium price.

Which of the following best summarizes why firms in purely competitive industries do not differentiate their products? Multiple choice question. Because there are so many of them selling a standardized product Because there are so many of them selling a non-standardized product Because there is not enough demand for differentiated products Because of scarce resources that limit the production of alternative products

Because there are so many of them selling a standardized product

True or false: A pure monopoly involves a very large number of firms producing a single unique product. True false question. True False

False

True or false: A purely competitive firm in the short run will maximize profit by producing up to the point where marginal revenue is equal to marginal cost if the market price is less than minimum average variable cost. True false question.TrueFalse

False

True or false: Because of the law of diminishing returns, marginal costs eventually fall as more units of output are produced. True false question. True False

False

Which of the following best explains why a purely competitive firm would not stop producing if the loss is less than its fixed costs? Multiple choice question. Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some FC. At a certain level of output, fixed costs decline. Therefore, the firm will earn a profit by expanding its output. Pure competition involves high barriers to exit. Therefore, shutting down would cost the firm more than the losses it sustains while producing. When purely competitive firms suffer losses in the short run, the price will rise to the point of total cost in the long run.

Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some FC.

Which of the following best explains why a purely competitive firm would not stop producing if the loss is less than its fixed costs? Multiple choice question. Pure competition involves high barriers to exit. Therefore, shutting down would cost the firm more than the losses it sustains while producing. At a certain level of output, fixed costs decline. Therefore, the firm will earn a profit by expanding its output. When purely competitive firms suffer losses in the short run, the price will rise to the point of total cost in the long run. Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some FC.

Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some FC.

In the short run, a purely competitive firm will maximize profit by producing up to the point where marginal revenue is equal to marginal cost only if which of the following is true? Multiple choice question. Market price is less than minimum average variable cost. Market price exceeds minimum average variable cost. Market price is less than minimum average total cost. Market price exceeds minimum average total cost.

Market price exceeds minimum average variable cost.

Which of the following best describes a pure monopoly? Multiple choice question. One firm selling a single unique product, with ease of entry into the industry and little control over price Many firms selling a single unique product, where entry of additional firms is blocked and there is considerable control over price One firm selling a single unique product, where entry of additional firms is blocked and there is considerable control over price One firm selling differentiated products or services and in which entry of additional firms is blocked

One firm selling a single unique product, where entry of additional firms is blocked and there is considerable control over price

In which scenario will production result in an economic profit? Multiple choice question. Marginal cost is equal to average total cost. Total cost exceeds total revenue. Price is equal to marginal cost. Price exceeds average total cost.

Price exceeds average total cost.

In which scenario can a firm pay part, but not all, of its fixed costs and should therefore continue producing even though it is experiencing a loss? Multiple choice question. Price is less than average variable cost but exceeds average total cost. Price exceeds both average variable cost and average total cost. Price is less than both average variable cost and average total cost. Price exceeds average variable cost but is less than average total cost.

Price exceeds average variable cost but is less than average total cost.

Which of the following improves as production increases? Multiple choice question. Opportunity cost Price-marginal cost relationship Fixed costs Price-marginal revenue relationship

Price-marginal cost relationship

Select all that apply Which of the following factors will alter costs and shift the marginal cost or short-run supply curve to a new location? Multiple select question. Prices of variable inputs Availability of product substitutes Consumer preferences Technology

Prices of variable inputs Technology

A basic feature of the purely competitive market is the presence of ______. Multiple choice question. a large number of sellers high barriers to entry differentiated products differentiated prices

a large number of sellers

Which of the following explains why a firm would not produce a unit of output where MC exceeds MR? Multiple choice question. Producing it would add more to costs than to revenue, and profit would increase or loss would decrease Producing it would add more to revenue than to costs, and profit would decline or loss would increase Producing it would add more to costs than to revenue, and profit would decline or loss would increase Producing it would add more to revenue than to costs, and profit would increase or loss would decrease

Producing it would add more to costs than to revenue, and profit would decline or loss would increase

In purely competitive markets, an individual firm lacks control over which factor? Multiple choice question. Product price Whether it enters or exits the industry Individual output The location of its facilities

Product price

Which of the following is a given fact to the individual competitive firm, but a basic determinant of quantity supplied for the entire competitive industry? Multiple choice question. Input prices Product price Marginal cost Marginal revenue

Product price

The supply schedule for a purely competitive firm confirms that there is a direct relationship between which two factors? Multiple choice question. Average total cost and total revenue Marginal cost and product price Product price and quantity supplied Average total cost and quantity demanded

Product price and quantity supplied

in which type of market structure does a single firm produce a unique product with no close substitutes? Multiple choice question. Pure monopoly Oligopoly Pure competition Monopolistic competition

Pure monopoly

Select all that apply Confronted with the market price of its product, a purely competitive producer will ask which three questions? Multiple select question. Should we produce this product? If we produce this product, in what amount? If we produce this product, what price should we charge? If we sell above market price what will our profits be? What economic profit or loss will we realize if we produce this product?

Should we produce this product? If we produce this product, in what amount? What economic profit or loss will we realize if we produce this product?

Select all that apply Which factors illustrate that the demand curve for a purely competitive firm is perfectly elastic? Multiple select question. The firm cannot obtain a higher price by restricting its output. The firm has no legal or financial barriers for entering or exiting the industry. The firm does not need to lower its price to increase its sales volume. The firm produces only a small fraction of the total industry output.

The firm cannot obtain a higher price by restricting its output. The firm does not need to lower its price to increase its sales volume.

Which of the following describes the individual competitive firm's supply curve? Multiple choice question. The individual firm's supply curve has no effect on price, but a significant effect on demand. The individual firm's supply curve can only affect price when the firm's output is low. The individual firm's supply curve represents a negligible fraction of total supply and therefore cannot affect price. The individual firm's supply curve represents a significant fraction of total supply and therefore can affect price.

The individual firm's supply curve represents a negligible fraction of total supply and therefore cannot affect price.

What is the primary difference between the individual firm's supply curve and the industry supply curve? Multiple choice question. The individual supply curve has no effect on price, whereas the industry supply curve has an important bearing on price. The individual supply curve has an important bearing on price, whereas the industry supply curve has no effect on price. The individual firm's supply curve slopes downward, whereas the industry supply curve is perfectly vertical. The individual firm's supply curve is perfectly vertical, whereas the industry supply curve slopes downward.

The individual supply curve has no effect on price, whereas the industry supply curve has an important bearing on price.

Which of the following best describes marginal revenue? Multiple choice question. The cost that an additional unit of output contributes to total cost. The sum of revenue received by producing at a certain level of output. The level of output needed to produce revenue that covers all of the firm's costs. The revenue that an additional unit of output contributes to total revenue.

The revenue that an additional unit of output contributes to total revenue.

Which of the following best describes marginal revenue? Multiple choice question. The revenue that an additional unit of output contributes to total revenue. The sum of revenue received by producing at a certain level of output. The cost that an additional unit of output contributes to total cost. The level of output needed to produce revenue that covers all of the firm's costs.

The revenue that an additional unit of output contributes to total revenue.

Select all that apply Which of the following are true about the profit-maximizing rule of MR = MC? Multiple select question. In some cases, MR will equal MC at a fractional level of output and therefore the last complete unit of output should be produced where MR < MC. The rule is an accurate guide to profit maximization for all firms regardless of their market structure. The rule applies only if producing is preferable to shutting down. The rule can be restated as P = MC when applied to a purely competitive firm because product price and MR are equal.

The rule is an accurate guide to profit maximization for all firms regardless of their market structure. The rule applies only if producing is preferable to shutting down. The rule can be restated as P = MC when applied to a purely competitive firm because product price and MR are equal.

The MR = MC rule can be applied to ______ firms; however, the rule can be restated as P = MC only when applied to ______ firms. Multiple choice question. all; purely competitive purely competitive; monopolistically competitive purely monopolistic; oligopolistic monopolistically competitive; purely monopolistic

all; purely competitive

In a purely competitive market, price per unit to a buyer equals: Multiple choice question. average profits to a seller total profits to a seller average revenue to a seller total revenue to a seller

average revenue to a seller

Pure ______ involves a very large number of firms. Multiple choice question. monopoly competition oligopoly

competition

Firms that operate in a purely competitive industry: Multiple choice question. do not differentiate their products make long-run profits never incur short-run profits differentiate their products

do not differentiate their products

In pure competition the demand curve faced by an individual firm graphs as a(n) ______ line and the market demand in pure competition is graphed as a(n) ______ curve. Multiple choice question. downward sloping; upward sloping horizontal; downward sloping upward sloping; vertical vertical; horizontal

horizontal; downward sloping

The quantity of a product supplied by a firm in pure competition should _____ as long as price rises. Multiple choice question. remain constant increase decrease

increase

Within pure competition, a supplier will ______ production as price rises, as long as marginal cost is less than marginal revenue. Multiple choice question. increase maintain the same level of decrease shut down

increase

Because of the law of diminishing returns, marginal costs ______ at a(n) ______ rate at higher levels of output. Multiple choice question. decrease; decreasing increase; decreasing decrease; increasing increase; increasing

increase; increasing

A purely competitive firm can maximize its economic profit (or minimize its loss) by adjusting only its output because it ______. Multiple choice question. has market power is a price maker has access to unlimited resources is a price taker

is a price taker

Which of the following best describes the situation of a price-taking firm? A price-taking firm is one of a ______ number of firms producing a product that is identical to that of every other firm in the industry and providing ______ of total market supply. Multiple choice question. small; a large share small; only a fraction large; a large share large; only a fraction

large; only a fraction

A firm would not produce a unit of output where ______. Multiple choice question. marginal revenue exceeds marginal cost marginal cost exceeds marginal revenue marginal cost equals marginal revenue marginal cost exceeds average revenue

marginal cost exceeds marginal revenue

_______ revenue is the additional revenue that an additional unit of _______ would add to total revenue.

marginal output

In which market model do firms rely on product differentiation to distinguish themselves from the competition? Multiple choice question. monopolistic competition pure monopoly pure competition oligopoly

monopolistic competition

Since firms within pure competition are ________, all the firms in the industry must agree to change output in order to affect price. Multiple choice question. price makers price takers price searchers

price takers

Total revenue equals ______ times ______. Multiple choice question. demand; quantity price; quantity average revenue; price average revenue; demand

price; quantity

The market structure in which individual firms have the least amount of control over price is ______, whereas in ______ a single firm has significant control over price. Multiple choice question. pure monopoly; pure competition oligopoly; pure monopoly pure competition; monopolistic competition pure competition; pure monopoly

pure competition; pure monopoly

A firm will not increase its product price in a(n) _________ competitive market because consumers can switch to a lower-priced identical product.

purley or pure

In a purely competitive market, price per unit to the purchaser is synonymous ________ with per unit or ______ revenue to a seller. (Enter one word per blank.) Listen to the complete question

revenue marginal

Select all that apply In a purely competitive industry, at the profit-maximizing or loss-minimizing level of output, marginal ______ is equal to ______. Multiple select question. revenue; marginal cost cost; price revenue; price output; marginal cost

revenue; marginal cost cost; price

The two ways to determine the level of output at which a firm will realize maximum profit or minimum loss are to compare total revenue to ______ and to compare marginal revenue to ______. Multiple choice question. maximum willingness to pay; equilibrium price average revenue; cost per unit marginal cost; total cost total cost; marginal cost

total cost; marginal cost

The price, multiplied by the firm's output or goods produced, equals ______. Multiple choice question. total profits total revenue average revenue marginal revenue

total revenue

A firm will break even where ______ will just cover ______ because the revenue per unit and the average total cost per unit are equal. Multiple choice question. marginal cost; marginal revenue total revenue; marginal cost marginal revenue; total cost total revenue; total cost

total revenue; total cost

The equation for determining economic profit or loss is ______ minus ______. Multiple choice question. marginal revenue; total cost total revenue; total cost total cost; marginal cost total revenue; marginal cost

total revenue; total cost

A purely competitive firm's total revenue (TR) is a straight line that slopes _______ (upward/downward) and to the _______ (left/right).

upward right

A firm should always stop producing if its average ______ cost is ______ price. Multiple choice question. total; greater than total; less than variable; less than variable; greater than

variable; greater than