Chapter 8 Questions
Answer the question on the basis of the following data confronting a firm: Refer to the above data. At the profit-maximizing output the firm's total revenue is:
$48.
Answer the question on the basis of the following cost data for a purely competitive seller: Refer to the above data. The marginal cost of the fifth unit of output is
$80.
Refer to the above diagram. The firm's supply curve is the segment of the:
MC curve above its intersection with the AVC curve.
Marginal revenue is the addition to total revenue resulting from the sale of one more unit of output.
T
Oligopoly firms may produce either standardized or differentiated products.
T
Price and marginal revenue are identical for an individual purely competitive seller.
T
The short-run supply curve slopes upward because producers must be compensated for rising marginal costs.
T
The term imperfect competition refers to every market structure besides pure competition.
T
An industry comprised of a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions is called:
oligopoly.
A firm finds that at its MR = MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should:
produce because the resulting loss is less than its TFC.
Refer to the above diagram, which pertains to a purely competitive firm. Curve C represents:
average revenue and marginal revenue.
A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating:
marginal revenue and marginal cost.
An industry comprised of 40 firms, none of which has more than 3 percent of the total market for a differentiated product is an example of:
monopolistic competition.
An industry comprised of four firms, each with about 25 percent of the total market for a product is an example of:
oligopoly.
An industry comprised of a very large number of sellers producing a standardized product is known as:
pure competition.
Answer the question on the basis of the following data confronting a firm: Refer to the above data. This firm is selling its output in a(n):
purely competitive market.
Answer the question on the basis of the following cost data for a purely competitive seller: Refer to the above data. Given the $75 product price, at its optimal output the firm will:
realize a $30 economic profit.
A purely competitive firm's short-run supply curve is:
upsloping and equal to the portion of the marginal cost curve that lies above the average variable cost curve.
A purely competitive seller is:
a "price taker."
Answer the question on the basis of the following cost data for a purely competitive seller: Refer to the above data. At 5 units of output average fixed cost, average variable cost, and average total cost are:
$10, $60, and $70 respectively.
Answer the question on the basis of the following data confronting a firm: Refer to the above data. If the firm's minimum average variable cost is $10, the firm's profit-maximizing level of output would be:
3
Answer the question on the basis of the following cost data for a purely competitive seller: Refer to the above data. If product price is $75, the firm will produce:
4 units of output
A competitive firm will produce in the short run so long as its price exceeds its average fixed cost.
F
Although individual purely competitive firms can influence the price of their product, these firms as a group cannot influence market price.
F
Firms in a monopolistically competitive industry have no reason to engage in nonprice competition because their products are uniquely different from other sellers in the market.
F
Refer to the above diagram. The firm will shut down at any price less than:
P1
Refer to the above diagram. The firm will produce at a loss if price is:
P2
Refer to the above diagram. This firm will earn only a normal profit if product price is:
P3
Refer to the above diagram. The firm will realize an economic profit if price is:
P4
Refer to the above diagram. At any price below R the firm will shut down in the short run.
T
Refer to the above diagram. At output C production will result in an economic profit.
T
Refer to the above diagram. If the firm produced D units of output at price G, it would earn a normal profit.
T
Answer the question on the basis of the following data confronting a firm: Refer to the above data. Assuming total fixed costs equal to zero, the firm's:
economic profit is $16.
Answer the question on the basis of the following cost data for a purely competitive seller: The above data are for:
the short run.
Refer to the above diagram, which pertains to a purely competitive firm. Curve A represents:
total revenue only.
A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its:
total variable costs.
In a purely competitive industry competition centers more on advertising and sales promotion than on price.
F
In maximizing profit a firm will always produce that output where total revenues are at a maximum.
F
In the short run a competitive firm will always choose to shut down if product price is less than the lowest attainable average total cost.
F
Refer to the above diagram. At the profit-maximizing output total revenue will be 0GLD.
F
Refer to the above diagram. If demand fell to the level of FNJ, there would be no output at which the firm could realize an economic profit.
F
Refer to the above diagram. This firm will maximize profits by producing output D.
F
The demand curve for a purely competitive industry is perfectly elastic, but the demand curves faced by individual firms in such an industry are downsloping.
F
