Econ Chapter 15

During the winter, theme parks in Orlando close earlier than in the summer. The reason the theme parks close early during the winter is because during that season the marginal revenue from staying open later is ________ the marginal cost. A. less than B. greater than C. not comparable to D. equal to E. zero compared to

A. less than

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market. If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120. She can sell this batch of cookies at a market price of $110. To maximize her profit, Jennifer A. not produce this additional batch. B. shut down. C. produce this batch of cookies because they will help lower her average fixed cost. D. produce this batch of cookies because their MR exceeds their MC. E. charge $120 for this batch.

A. not produce this additional batch.

As a perfectly competitive firm's output increases, its total revenue ________ and its total cost ________. A. does not change; increases B. increases; increases C. increases; decreases D. decreases; increases E. decreases; decreases

B. increases; increases

firm maximizes its profit by producing the amount of output such that Selected Answer: A. marginal cost is minimized. B. marginal revenue equals marginal cost. C. marginal revenue exceeds marginal cost by the maximum amount possible. D. marginal revenue exceeds marginal cost by some amount. E. marginal revenue is maximized.

B. marginal revenue equals marginal cost.

perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4. The price of the good is $5. To maximize its profit, this firm should A. lower its price. B. increase the price it charges for its product. C. decrease its output. D. increase its output. E. raise its price.

C. decrease its output.

If the market price is $50 per unit for a good produced in a perfectly competitive market and the firm's average total cost is $52, then the firm A. incurs a total economic loss of $52. B. makes zero economic profit. C. incurs an economic loss of $2 per unit. D. makes an economic profit of $2 per unit. E. More information is needed to determine the firm's economic profit or loss per unit.

C. incurs an economic loss of $2 per unit.

In the short run, a perfectly competitive firm A.produces the level of output that sets the average total cost equal to the market price. B. can change only its fixed inputs. C. can vary all its inputs. D. can possibly make an economic profit or possibly incur an economic loss. E. can make only zero economic profit.

D. can possibly make an economic profit or possibly incur an economic loss.

A perfectly competitive firm is producing 50 units of output and selling at the market price of $23. The firm's average total cost is $20. What is the firm's economic profit? A. $23 B. $1,000 C. $50 D. $1,150 E. $150

E. $150

The largest loss a profit- maximizing perfectly competitive firm can incur in the short run equals its A. total variable cost. B. average total cost multiplied by the number of units produced. C. marginal cost multiplied by the number of units produced. D. average variable cost multiplied by output. E. total fixed cost.

E. total fixed cost.

A firm that is a price taker faces A) an inelastic supply curve B) a perfectly inelastic demand curve C) a perfectly elastic demand curve D) an elastic supply curve E) an elastic but not perfectly elastic demand curve

a perfectly elastic demand curve

The U.S. oil industry has only a few firms in it, so an economists is likely to describe the industry as A) a monopoly B) an oligopoly C) perfectly competitive D) monopolistically competitive E) Both answers C and D can be correct

an oligopoly

The market demand curve in a perfectly competitive market is ________ and the demand curve for a perfectly competitive firm's output is ________. A) downward sloping; downward sloping B) downward sloping; upward sloping C) horizontal; downward sloping D) horizontal; horizontal E) downward sloping; horizontal

downward sloping; horizontal

A market is classified as monopolistically competitive when A) many firms produce the same product B) a small number of firms compete C) many firms produce a slightly differentiated product D) there is a barrier that blocks entry by other firms E) there is one firm that sells a good or service with no close substitutes

many firms produce a slightly differentiated product

The characteristics that describe a perfectly competitive industry include A) many firms selling a slightly differentiated product B) a few firms selling to many buyers C) many firms selling an identical product D) one firm selling to many buyers E) None of the above answers is correct

many firms selling an identical product

Which of the following market types has the fewest number of firms? A) perfect competition B) oligopoly C) monopolistic competition D) monopoly E) perfect competition and monopolistic competition

monopoly

A perfectly competitive firm can A) raise its price in order to increase its total revenue B) sell all of its output at the prevailing market price C) sell additional output only by lowering its price D) set a higher price to customers who are willing to pay more E) usually not sell all the output it produces, but still "over-produces" because there are some periods when it can sell the extra output at very profitable prices

sell all of its output at the prevailing market price

Marginal revenue is A) less than price for a perfectly competitive firm B) the change in total cost from producing an additional unit of output C) the change in total revenue from a one-unit increase in the quantity sold D) another name for total revenue E) the economic profit from producing an additional unit of output.

the change in total revenue from a one-unit increase in the quantity sold

If a perfectly competitive firm raised the price of its product, A) the firm will be forced to advertise more B) its profits would increase C) rival firms will follow suit and raise their prices also D) the quantity of output it sells decreases to zero E) its total revenue would rise but its total cost would rise by more

the quantity of output it sells decreases to zero

One requirement for an industry to be perfectly competitive is that A) there are multiple restrictions on entry into or exit from the market B) sellers and buyers have imperfect information about prices C) there are no restrictions on entry into or exit from the market D) there are many firms selling different products E) the many firms sell slightly different products

there are no restrictions on entry into or exit from the market

If a firm in a perfectly competitive market faces an equilibrium price of $5, its marginal revenue A) maybe either greater or less than $5 B) will also be $5 C) will be any amount but $5 D) will be less than $5 E) will be greater than $5

will also be $5