Practice Chapter 14 Quiz

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales. If the firm increases its output to 200 units, the average revenue of the 200th unit will be

$12

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales. If the firm increases its output to 200 units, total revenue will be

$2,400

Refer to Table 2. For a firm operating in a competitive market, the marginal revenue is

$8

Refer to Table 3 For a firm operating in a competitive market, the average revenue is

$8

Refer to Table above. For a firm operating in a competitive market, the price is

$8

When a certain competitive firm produces and sells 100 units of output, marginal revenue is $80. When the same firm produces and sells 200 units of output, what is average revenue?

$80

Refer to Table above At which quantity of output is marginal revenue equal to marginal cost?

5

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

A one-unit decrease in output will increase the firm's profit

If Alp's Butcher Shop sells its product in a competitive market, then

Alp's Butcher Shop's total revenue must be proportional to its quantity of output

Who is a price taker in a competitive market?

Buyers and sellers

which of the following is not a characteristic of a perfectly competitive market

Firms have difficulty entering the market

Which of the following is not a characteristic of a competitive market?

Free entry is limited

Tay owns a horse stables and riding academy and gives riding lessons for children at "pony camp." Her business operates in a competitive industry. Tay gives riding lessons to 20 children per month. Her monthly total revenue is $4,000. The marginal cost of pony camp is $100 per child. In order to maximize profits, Tay should

Give riding lessons to more than 20 children per month.

Li is a gourmet chef who runs a small catering business in a competitive industry. Li specializes in making birthday cakes. Li sells 20 birthday cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a birthday cake is $200. In order to maximize profits, Li should

Make more than 20 birthday cakes per month

Kat is a professional opera singer who gives voice lessons. The vocal-music industry is competitive. Kat hires a business consultant to analyze her financial records. The consultant recommends that Kat give fewer voice lessons. The consultant must have concluded that Kat's

Marginal cost exceeds her marginal revenue.

Mr. Kenny sells colored pencils. The colored-pencil industry is competitive. Mr. Kenny hires a business consultant to analyze his company's financial records. The consultant recommends that Mr. Kenny increase his production. The consultant must have concluded that Mr. Kenny's

Marginal revenue exceeds his marginal cost

Refer to Figure 1. If the market price is P1, in the short run, the perfectly competitive firm will earn

Positive economic profits

Refer to Table 4. What is the firm's profit-maximizing strategy? (HINT: REMEMBER THE PROFIT-MAXIMIZING RULE)

Produce 6 units of output because marginal revenue equals marginal cost

Changes in the output of a perfectly competitive firm, without any change in the price of the product, will change the firm's

Total Revenue

Competitive markets are characterized by

free entry and exit by firms