chapter 9 microeconomics practice test

Identify the correct statement about a firm.

The reward-penalty structure of a market indicates that:

Marginal revenue is the:

In price-taker markets, the demand curve:

The figure given below shows a firm's marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves. According to the figure, the firm's total cost is given by the area:

The figure given below shows the market for wheat. According to the figure, the market price of wheat is:

The market supply curve of a product is:

The table below shows the total cost and total revenue for a firm for different levels of output per day. The marginal revenue earned from producing the fifth unit of output is:

Which of the following is a feature of an increasing-cost industry?

Suppose the market for cars is in long-run equilibrium. A constant rise in the price of oil has caused a decrease in the demand for cars. Which of the following is likely to be true in this case?

Price takers refer to those sellers who:

When the firms in a market are price takers, the short-run market supply curve is:

Identify a feature of a price-taker market.

The figure given below shows a firm's total cost (TC) and total revenue (TR) curves. The firm should continue its business operation rather than shutting down if the market price is at:

In a price-taker market, the competitive process motivates firms to:

The figure given below shows a firm's marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves. According to the figure, the area P0q3E denotes:

Which of the following is true of pure competition?

In the long-run equilibrium in a perfectly competitive market, firms will:

The figure given below shows a firm's marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves. Based on the figure, the profit-maximizing output for the firm is:

The table below shows the total cost and total revenue for a firm for different levels of output per day. The profit-maximizing level of daily output for the firm is:

In a decreasing-cost industry, the long-run market supply curve will be:

Mark's firm is a seller of eggs in the city of Wakanda. The current market price of eggs is $0.10 per dozen. Even though his firm is quite large, there is little that Mark can do to change the market price of eggs because there are hundreds of other egg sellers. As a result, Mark supplies only a small portion of the total market supply. The market for eggs in Wakanda is an example of:

Suppose the market for air conditioners, a perfectly competitive market, is in long-run equilibrium. As summer is getting hotter every year, there is an increase in the number of consumers who are willing to purchase air conditioners. This will cause:

Widget Inc., a typewriter-manufacturing company, gathered and analyzed the sales data of its products for the last five years. The company had been operating at a loss for the past three years. In the previous six months, sales had gone down by almost 95 percent after the introduction of user-friendly computers. The CEO of the company realized that the money earned by the firm was not enough to pay its workers or the rent for the factory. Which of the following strategies should the CEO adopt?

The table below shows the total cost and total revenue for a firm for different levels of output per day. The marginal cost of producing the fourth unit of output per day is:

Suppose the market for television sets, which is a perfectly competitive market, is in long-run equilibrium. A fall in the consumer's income will cause:

In a constant-cost industry, the long-run market supply curve will be:

Price searchers refer to those firms that face:

The figure below shows a firm's total cost (TC) and total revenue (TR) curves. Using the total approach, the firm's profit-maximizing output level is shown by point:d

In a price-taker market, a higher economic profit:

Suppose the demand for electronics goods increases, causing the electronics industry to expand. Many firms subsequently adopt large-scale production techniques to supply various components in the electronics market, leading to a lower cost of production for the electronics firms. This shows that the:

Which of the following is true in a price-taker market?

A firm shuts down when:

Which of the following is a necessary condition for long-run equilibrium in a price-taker market?

Which of the following is a feature of the short-run market supply curve in a competitive market?

Which of the following is a feature of a decreasing-cost industry?

Suppose the market of coffee is in long-run equilibrium. Following a recent study that states that excessive consumption of caffeine is harmful to health, consumers switch to green tea and stop drinking coffee. This will:

A firm sells 10 units of a good at a price of $10 each. It incurs a cost of $7 per unit of the good. The profit earned by the firm equals:

The figure given below shows a firm's marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves. Based on the figure, the economic profit earned by the firm in the short run is given by the area:

For a firm to earn zero economic profit, the:

Many ski resorts in Vanadia experience zero demand during summer. During winter, the demand is so high that reservations have to be made three months prior to the skiing season. However, the zero demand during summer is a matter of concern for the managers of the ski resorts. The best course of action for the managers would be:

The table below shows the total cost and total revenue for a firm based on producing different levels of output per day. The firm's profit begins to fall after the:

Suppose a firm is a price-taker in a market. The firm will maximize profit when:

The figure given below shows a firm's total cost (TC) and total revenue (TR) curves. The firm should consider shutting down rather than continuing its business if the market price is:P2.

The short-run market supply curve in a competitive market will be:

In an increasing-cost industry, the long-run market supply curve will be:

The short-run supply curve of a competitive firm is the portion of the firm's short-run:

Which of the following is a feature of a constant-cost industry?

Suppose the market for LED bulbs, a perfectly competitive market, is in long-run equilibrium. Due to a continuous rise in the unit cost of electricity, there is an increase in the number of consumers who are willing to purchase LED bulbs. This will:

Which of the following situations is likely to occur in a competitive market in the long run?