Microeconomics Chapter 8

Idaho farmers can sell as large a quantity of their potato crop as they wish, a. if they set their own price in the short run, but in the long run, the market sets the price b. provided each is willing to accept the prevailing market price c. if they set their own price in the long run, but in the short run, the market sets the price. provided quality is perceptible and determines the market price.

b. provided each is willing to accept the prevailing market price

If a perfectly competitive firm is a price taker, then a. pressure from competing firms will force acceptance of the prevailing market price. b. it must be a relatively small player compared to its competitors in the overall market c. it can increase or decrease its output without affecting the overall quantity supplied in the market d. quantity differences will be very perceptible and will play a major role in purchasers decisions

a. pressure from competing firms will force acceptance of the prevailing market price.

If the quality difference of similar products are mostly imperceptible to the average consumer's eye, which of the following will most likely play a major role in influencing the decisions of purchasers? a. price of competing products b. size of competing products c. purchaser's opportunity cost d. geographic origin of products

a. price of competing products

If the price that chirm charges is lower than its ___ of production, the firm will suffer losses. a. average cost b. marginal cost c. fixed cost d. variable cost

a. average cost

Economic profit can be derived from calculating total revenues minus all the firm's costs a. excluding it opportunity costs b. including its opportunity costs c. including its marginal revenue d. excluding its marginal revenue

b. including its opportunity costs

Under perfect competition, and profit-maximizing producer faces a market price equal to its a. average costs b. marginal costs c. total costs d. variable costs

b. marginal costs

For a perfectly competitive firm, the marginal curve is identical to the firm's ___. a. demand curve b. supply curve c. average total cost curve d. average variable cost curve

b. supply curve

A manufacturer would likely make an entry into a market following the long-run process of beginning and expanding production in response to ___ a. a strategy to grow profits b. an incentive for profit c. a sustained pattern of profits d. an incentive to add to profits

c. a sustained pattern of profits

In economics, the term "shutdown point" refers to the point where the a. marginal cost curve crosses the total revenue curve b. average variable cost curve crosses the total revenue curve c. average variable cost curve crosses the marginal curve d. marginal cost curve crosses the fixed cost curve

c. average variable cost curve crosses the marginal cost curve

The term ___ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product. a. price setter b. business entity c. price taker d. trend setter

c. price taker