chapter eleven practice quiz
at a price of $20, the firm earns profit of:
$75
if you are one of literally thousands of maple syrup producers and you wanted to increase your maple syrup production from 100 gallons to 110 gallons, what price would you charge?
$96
in the long run, what do you expect this firm's economic profit or loss to be?
0
refer to the figures. at a market price of $20, the total quantity supplied in the industry is:
15 units
at a market price of $25, the total quantity supplied in the industry is:
45 units
the profit-maximizing output for this firm is
6
firms should exit the market if:
price falls below the average cost
the market is characterized by demand curve D2 and supply curve S1. the firms in the industry are earning __, which will cause the __.
profit; supply curve to shift to S2
firms in a perfectly competitive industry maximize profits by:
setting a price equal to the market price
economists study decreasing cost industries in order to explain:
the existence of industry clusters
for a small firm in an extremely competitive industry, marginal revenue is always equal to price because
the firm has no ability to influence the market price
economists call the time after all exit or entry has occured:
the long run
assuming that price equals marginal cost, the profit of producing eight barrels of oil is:
$160
a firm should exit an industry if:
P - AC < 0.
how much profit is the firm making at the profit maximizing quantity
a profit of $300
a firm should always shut down if it is earning negative profits
false
a firm's total profit equal to the marginal cost of production multiplied by the quantity produced
false
average total cost is equal to total cost divided by profit
false
decreasing cost industries have supply curves that slope downward forever.
false
economic profit is equal to total revenue minus explicit costs
false
explicit costs incurred by firms include the firm's opportunity costs
false
firms have less pricing power if their firm-level product is more unique.
false
if p=$20, AC=$26, and Q=100, then profit = $3600
false
firms are profitable when price is:
greater than average cost
firms in competitive industries: i. can only charge a price equal to the market price ii. cannot charge any more than the market price iii. will earn less profit if they charge less than the market price
i, ii, iii
a market is considered perfectly competitive if: i. there is a lot of product differentiation among sellers ii. there are many sellers, each small relative to the total market iii. the product sold is similar across sellers iv. there are only a few buyers
ii and iii only
economic profit differs from accounting profits because of its inclusion of:
implicit costs
firms earn negative profit when price is:
less than average cost
refer to the set of four panels in the figure. which panel shows the typical shape of the average cost curve in a competitive market?
panel a
which panel shows a competitive firm making an economic loss?
panel a
refer to four panels in the figure. which panel shows a competitive firm making zero economic profits?
panel b
which panel shows a competitive firm making positive economic profits
panel c
firm profit is defined as
total revenue minus total cost
a competitive firm maximizes profits when price equals marginal costs
true
a firm should exit an industry if price is less than average cost
true
a firm will continue to produce additional output, as long as marginal revenue is greater than marginal cost
true
a firm's short run supply curve is its marginal cost curve.
true
average cost is equal to total cost divided by quantity
true
