Principles of Economics Pearson Reading Quiz Ch. 9

A buyer or seller that is unable to affect the market price is called A. a price taker. B. a monopoly. C. a price maker. D. an independent producer.

A. a price taker.

Refer to the graph to the right of the costs for a perfectly competitive firm. Which of the following best represents profit per unit of​ output? A. the distance between points A and B Your answer is correct. B. the market price C. the shaded rectangle D. None of the above. Part 2 Which of the following best represents total​ profit? A. the market price B. the distance between points A and B C. the shaded rectangle D. None of the above.

A. the distance between points A and B C. the shaded rectangle

Refer to the graphs above. Suppose the graph on the left represents a typical​ firm's supply curve in a perfectly competitive​ industry, and there are 100 identical firms in the industry. What does the graph on the right​ represent? A. the market supply curve B. the individual supply curve for each firm in the industry C. the average total cost curve for the industry D. the individual demand curve facing each firm in the industry

A. the market supply curve

Based on the numbers in the table​ below, how many bushels should this farmer produce in order to maximize​ profit? Quantity ​(Bushels) ​(Q) Total Revenue (TR) Total Costs (TC) Marginal Revenue ​(MR) Marginal Cost ​(MC) 4 $16.00 $9.50 $4.00 ​$2.00 5 20.00 12.00 4.00 2.50 6 24.00 15.00 4.00 3.00 7 28.00 19.50 4.00 4.50 8 32.00 25.50 4.00 6.00 9 36.00 32.50 4.00 7.00 10 40.00 40.50 4.00 8.00 A.4 bushels B. 6 bushels C. 9 bushels D. 10 bushels Part 2 Refer to the graph to the​ right, which shows the marginal cost and marginal revenue curves for a farmer in the perfectly competitive market for wheat. What is the​ profit-maximizing level of output if the farmer can produce only whole units of​ output? A. 3 bushels B. 6 bushels C. 8 bushels D.10 bushels

B. 6 bushels B. 6 bushels

Refer to the graphs above. What do you expect to happen in this market as it approaches​ long-run equilibrium? A. an upward shift of the​ firm's demand curve as new firms enter B. a shift to the right of the market supply curve as new firms enter C. a shift to the right of the market demand curve as new firms enter D. a shift to the left of the market demand curve as new firms enter Part 3 If the market demand curve shifts to the​ right, how will a competitive​ firm's level of output​ change? A. The firm will keep its output​ constant, but its profits will increase. B. The firm will need to decrease its output and therefore suffer losses. C. The firm will decrease its​ output, which will increase its profit. D. The firm will increase its​ output, and its profits will increase. Part 4 A perfectly competitive firm is losing money in the short​ run, and its price is less than its average variable cost. In order to minimize its losses in the short​ run, this firm should A. increase its level of output. B. continue producing its current level of output. C. shut down. D. do none of the above.

B. a shift to the right of the market supply curve as new firms enter D. The firm will increase its​ output, and its profits will increase. C. shut down.

The increase in total revenue that results from selling one more unit of output is A. marginal cost. B. marginal revenue. C. average revenue. D. None of the above. Part 2 What is the relationship between​ price, average​ revenue, and marginal revenue for a firm in a perfectly competitive​ market? A. Price is greater than average revenue and equal to marginal revenue. B. Price is equal to average revenue and greater than marginal revenue. C. Price, average​ revenue, and marginal revenue usually all have different values. D. Price is equal to both average revenue and marginal revenue.

B. marginal revenue. D. Price is equal to both average revenue and marginal revenue.

In perfect​ competition, long-run equilibrium occurs when the economic profit is A. positive. B. zero. C. negative. D. None of the above.

B. zero.

Which demand curve in the graph to the right is associated with the shutdown point for this perfectly competitive​ firm? A. D1 B.D2 C. D3 D. D4

B.D2

Refer to the graph to the right of the demand curve facing a firm in the perfectly competitive market for wheat. The fact that the demand curve is horizontal implies which of the​ following? A. The market demand for wheat is identical to the demand for wheat faced by an individual firm. B. The firm must lower the price of wheat to increase the quantity demanded. C. The firm can sell any amount of output as long as it accepts the market price of​ $7.00. D. The marginal revenue from the ​7,500th bushel is greater than the marginal revenue from the ​3,000th bushel.

C. The firm can sell any amount of output as long as it accepts the market price of​ $7.00.

If a perfectly competitive firm is producing at point A​, in the graph to the​ right, which of the following is​ true? A. The firm earns positive economic profit. B. The firm earns zero accounting profit. C. The firm earns zero economic profit. D. The firm suffers a loss. Part 2 What does the shaded area in the second graph to the right represent for a perfectly competitive firm that produces at output level Q​? A. accounting profit B. negative economic profit C. total cost of producing Q D. positive economic profit

C. The firm earns zero economic profit. B. negative economic profit

Which of the following terms best describes a state of the economy in which production reflects consumer​ preferences? A. consumer equilibrium B. socialism C. productive efficiency D. allocative efficiency Part 2 ​Long-run equilibrium in perfect competition results in A. productive efficiency. B. allocative efficiency. C. Both A and B. D. Neither A nor B.

D. allocative efficiency C. Both A and B.

In a perfectly competitive industry with constant​ costs, the​ long-run supply curve will be A. upward sloping. B. downward sloping. C. vertical. D. horizontal.

D. horizontal.

Which of the following terms best describes the result of the forces of competition driving the market price to the minimum average cost of the typical​ firm? A. competitive markdown B. decreasing-cost industry C. allocative efficiency D. productive efficiency

D. productive efficiency

In a perfectly competitive industry with increasing average​ costs, the​ long-run supply curve will be A. horizontal. B. vertical. C. downward sloping. D. upward sloping. Part 2 Which of the graphs above best depicts an industry in which the typical​ firm's average costs decrease as the industry expands​ production? A. neither graph B. the graph on the left C. the graph on the right D. either graph could be associated with that industry

D. upward sloping. B. the graph on the left