Chapter 10 Quiz
Average revenue is conceptually equivalent to the A. unit price of the product. B. average cost of the product. C. marginal cost of the product. D. total revenue of the product.
A.
Curve (4) in the diagram is a purely competitive firm's A. total cost curve. B. total revenue curve. C. marginal revenue curve. D. total profit curve.
A.
There would be some control over price within rather narrow limits in which market model? A. monopolistic competition B. pure competition C. pure monopoly D. oligopoly
A.
Which point in the accompanying graph is definitely not on the competitive firm's short-run supply curve? A. A B. B C. C D. D
A.
At P2 in the accompanying diagram, this firm will A. produce 44 units and realize an economic profit. B. produce 44 units and earn only a normal profit. C. produce 68 units and earn only a normal profit. D. shut down in the short run.
B.
Refer to the accompanying diagram. The firm will produce at a loss if price is A. less than P1. B. P2. C. P3. D. P4.
B.
Technological advance improves productivity in a purely competitive industry. This change will result in a shift A. down of the individual firm's MC curve, causing the market supply curve to shift to the left. B. down of the individual firm's MC curve, causing the market supply curve to shift to the right. C. up of the individual firm's MC curve, causing the market supply curve to shift to the left. D. up of the individual firm's MC curve, causing the market supply curve to shift to the right.
B.
The accompanying table gives cost data for a firm that is selling in a purely competitive market. If product price is $75, the firm will produce A. 3 units of output. B. 4 units of output. C. 5 units of output. D. 6 units of output.
B.
The lowest point on a purely competitive firm's short-run supply curve corresponds to A. the minimum point on its ATC curve. B. the minimum point on its AVC curve. C. the minimum point on its AFC curve. D. the minimum point on its MC curve.
B.
The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing it is known as the A. output-maximizing rule. B. profit-maximizing rule. C. shut-down rule. D. break-even rule.
B.
Economists would describe the U.S. automobile industry as A. purely competitive. B. an oligopoly. C. monopolistically competitive. D. a pure monopoly.
C.
In answering the question, assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis. For a purely competitive firm, marginal revenue graphs as a A. straight, upsloping line. B. straight line, parallel to the vertical axis. C. straight line, parallel to the horizontal axis.Correct D. straight, downsloping line.
C.
A firm reaches a break-even point (normal profit position) where A. marginal revenue cuts the horizontal axis. B. marginal cost intersects the average variable cost curve. C. total revenue equals total variable cost. D. total revenue and total cost are equal.
D.
The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $68.10, it will produce A. 8 units at an economic profit of zero. B. 6 units at a loss of $90. C. 9 units at an economic profit of $281.97. D. 8 units at an economic profit of $130.72.
D.
If there are many firms in an industry, then it must be a purely competitive market. True False
F
In the short run, fixed costs are important in determining a competitive firm's optimal level of output. True False
F
As long as its total revenues are greater than its total costs, a firm will earn positive economic profits. True False
T
In the accompanying diagram, at any price below R, the firm will shut down in the short run. True False
T
The short-run supply curve slopes upward because producers must be compensated for rising marginal costs. True False
T