Micro Chapter 8a Practice - Assignment Essays

question

Which of the following is not necessarily a characteristic of perfect competition?

answer

low prices

question

Which of the following is likely to be present in a perfectly competitive market?

answer

firms producing identical products

question

Which of the following characterizes a perfectly competitive market?

answer

perfect information

question

Firms in perfect competition have no control over

answer

what price to charge

question

A firm in a perfectly competitive market

answer

accepts the market price for its product

question

Perfectly competitive firms are price takers because

answer

each firm is small and goods are perfect substitutes for one another

question

Because it is small relative to the market, a perfectly competitive firm faces an inelastic demand curve for its output.

answer

False

question

If a perfectly competitive firm raises its price, its sales decrease to zero.

answer

True

question

The price charged by a perfectly competitive firm is determined by

answer

market demand and market supply

question

If every firm is a price taker, then which of the following characteristics does their industry have?

answer

large number of sellers

question

The demand curve for the output of a perfectly competitive firm is

answer

perfectly elastic

question

The demand curve facing a perfectly competitive firm is

answer

perfectly elastic

question

Individual firms in a perfectly competitive market can

answer

sell all they produce at the market price

question

A Midwestern wheat farmer faces a horizontal demand curve because

answer

it is so small relative to the market as a whole that it has no impact on market price

question

Suppose the equilibrium price in a perfectly competitive industry is $100 and a firm in the industry charges $112. Which of the following will happen?

answer

The firm will not sell any of its output.

question

Suppose the equilibrium price in a perfectly competitive industry is $10 and a firm in the industry charges $9. Which of the following will happen?

answer

The firm will make less profit than it could at the $10 price.

question

The perfectly competitive firewood market is composed of 1,000 identical consumers and 1,000 identical firms. Exhibit 8-1 shows cost data for one firm and demand data for one consumer. What is the equilibrium price?

answer

$100

question

answer

three cords of wood

question

A perfectly competitive firm has no control over the

answer

price of the product

question

Economic theory assumes that the goal of firms is to maximize

answer

profit

question

The total revenue curve of a perfectly competitive firm

answer

has a constant slope as output increases

question

Given the information in Exhibit 8-2, the price of a wool blanket

answer

is $10

question

Given the information in Exhibit 8-2, what is the profit-maximizing (or loss-minimizing) quantity?

answer

five blankets

question

How much profit is the firm in Exhibit 8-2 earning (or how much of a loss is it suffering)?

answer

-$10

question

Which point in Exhibit 8-3 indicates the quantity at which this firm will maximize profit?

answer

point c

question

Which point in Exhibit 8-3 indicates the quantity at which marginal revenue and marginal cost are equal?

answer

point c

question

Consider Exhibit 8-4. If the market price is $8.50, what are the profit-maximizing output and profit?

answer

output = 40; profit = $35

question

Does Exhibit 8-4 represent a long-run or a short-run situation?

answer

short run because there is fixed cost

question

Consider Exhibit 8-5. If the market price is $21, this perfectly competitive firm will

answer

earn a profit of $3.00

question

Consider Exhibit 8-5. If the market price is $15, the minimum loss this perfectly competitive firm can incur is

answer

$10

question

Consider Exhibit 8-5. Assume the firm is perfectly competitive and the market price is $21. To maximize profit or minimize loss, the firm will

answer

produce 5 units

question

Consider Exhibit 8-5. Assume the firm is perfectly competitive and the market price is $15. To maximize profit or minimize loss, the firm will

answer

shut down

question

The total revenue curve for a perfectly competitive firm

answer

is a straight line starting from the origin and sloping upward

question

For a perfectly competitive firm, price is identical to marginal revenue at every quantity.

answer

True

question

Marginal revenue is the change in total revenue from selling one more unit of output.

answer

True

question

If a perfectly competitive firm charges the market price of $14 per unit,

answer

its average revenue is $14, and its marginal revenue is $14

question

Perfectly competitive firms that earn an economic profit in the short run choose the output that

answer

maximizes the difference between total revenue and total cost

question

The golden rule of profit maximization states that any firm maximizes profit by producing where

answer

marginal revenue equals marginal cost

question

If a firm is producing at an output where the total revenue curve crosses the total cost curve,

answer

profit is zero

question

Consider Exhibit 8-6. At which price will this firm shut-down?

answer

question

Consider Exhibit 8-6. At which price will this firm earn zero profit?

answer

question

At which price and quantity is profit maximized for the perfectly competitive firm represented in Exhibit 8-7?

answer

$8 and 70

question

If the price-taking firm in Exhibit 8-8 is currently producing 6 units, then to maximize profit in the short run, it should

answer

increase production to 12 units

question

In Exhibit 8-9, price equals

answer

$28

question

In Exhibit 8-9, total revenue at the profit-maximizing output equals

answer

$5,600

question

In Exhibit 8-9, total cost at the profit-maximizing output equals

answer

$4,400

question

At the profit-maximizing output level, the firm represented in Exhibit 8-9 experiences

answer

a profit of $1,200

question

In Exhibit 8-10, price equals

answer

$40

question

In Exhibit 8-10, total revenue at the profit-maximizing output level equals

answer

$8,000

question

In Exhibit 8-10, total cost at the profit-maximizing output level equals

answer

$4,800

question

At the profit-maximizing output level, the firm represented in Exhibit 8-10 experiences

answer

a profit of $3,200

question

In Exhibit 8-11, the profit-maximizing output is

answer

question

In Exhibit 8-11, total revenue at the profit-maximizing output level equals

answer

a × z

question

In Exhibit 8-11, total cost at the profit-maximizing output level is shown by area

answer

mfz0

question

At the profit-maximizing output level, the firm represented in Exhibit 8-11 experiences

answer

a profit of abfm

question

For a perfectly competitive firm,

answer

P = MR at all output levels

question

Which of the following is true at each output level for a perfectly competitive firm?

answer

AR = MR = P

question

If the market price rises, the total revenue (TR) curve in Exhibit 8-12 will

answer

rotate upward and become steeper

question

If the market price rises, the profit maximizing level of output in Exhibit 8-12 will

answer

increase

question

In the short run, if a firm shuts down, its loss is equal to

answer

its fixed costs

question

If Harry's Blueberries, a perfectly competitive firm, shuts down in the short run, Harry must pay

answer

only fixed cost

question

Which of the following does not characterize a perfectly competitive firm that has shut down in the short run?

answer

fixed cost is zero

question

In the short run, a perfectly competitive ball bearing manufacturer will continue to produce at a loss if

answer

it is covering all of its variable cost plus part of its fixed cost

question

If a perfectly competitive firm is incurring a short-run loss, it

answer

will continue to operate in the short run if its variable cost is covered

question

If the market price in Exhibit 8-13 is $6, what is the greatest possible short-run profit for this perfectly competitive firm?

answer

-$30

question

In Exhibit 8-14, what area represents fixed cost at the loss-minimizing output?

answer

cjkd

question

In Exhibit 8-14, what area represents variable cost at the loss-minimizing output?

answer

0cda

question

The purely competitive firm in Exhibit 8-15 should

answer

produce 12 units of output

question

The maximum economic profit (or minimum economic loss) for the firm in Exhibit 8-15 is a

answer

loss of $480

question

If a perfectly competitive firm shuts down in the short run, its variable cost equals zero.

answer

True

question

If a perfectly competitive firm shuts down in the short run, its total cost equals zero.

answer

False

question

In the short run, a firm will produce a positive amount of output as long as

answer

P > AVC at some output level

1 of 72

question

Which of the following is not necessarily a characteristic of perfect competition?

answer

low prices

question

Which of the following is likely to be present in a perfectly competitive market?

answer

firms producing identical products

question

Which of the following characterizes a perfectly competitive market?

answer

perfect information

question

Firms in perfect competition have no control over

answer

what price to charge

question

A firm in a perfectly competitive market

answer

accepts the market price for its product

question

Perfectly competitive firms are price takers because

answer

each firm is small and goods are perfect substitutes for one another

question

Because it is small relative to the market, a perfectly competitive firm faces an inelastic demand curve for its output.

answer

False

question

If a perfectly competitive firm raises its price, its sales decrease to zero.

answer

True

question

The price charged by a perfectly competitive firm is determined by

answer

market demand and market supply

question

If every firm is a price taker, then which of the following characteristics does their industry have?

answer

large number of sellers

question

The demand curve for the output of a perfectly competitive firm is

answer

perfectly elastic

question

The demand curve facing a perfectly competitive firm is

answer

perfectly elastic

question

Individual firms in a perfectly competitive market can

answer

sell all they produce at the market price

question

A Midwestern wheat farmer faces a horizontal demand curve because

answer

it is so small relative to the market as a whole that it has no impact on market price

question

Suppose the equilibrium price in a perfectly competitive industry is $100 and a firm in the industry charges $112. Which of the following will happen?

answer

The firm will not sell any of its output.

question

Suppose the equilibrium price in a perfectly competitive industry is $10 and a firm in the industry charges $9. Which of the following will happen?

answer

The firm will make less profit than it could at the $10 price.

question

answer

$100

question

answer

three cords of wood

question

A perfectly competitive firm has no control over the

answer

price of the product

question

Economic theory assumes that the goal of firms is to maximize

answer

profit

question

The total revenue curve of a perfectly competitive firm

answer

has a constant slope as output increases

question

Given the information in Exhibit 8-2, the price of a wool blanket

answer

is $10

question

Given the information in Exhibit 8-2, what is the profit-maximizing (or loss-minimizing) quantity?

answer

five blankets

question

How much profit is the firm in Exhibit 8-2 earning (or how much of a loss is it suffering)?

answer

-$10

question

Which point in Exhibit 8-3 indicates the quantity at which this firm will maximize profit?

answer

point c

question

Which point in Exhibit 8-3 indicates the quantity at which marginal revenue and marginal cost are equal?

answer

point c

question

Consider Exhibit 8-4. If the market price is $8.50, what are the profit-maximizing output and profit?

answer

output = 40; profit = $35

question

Does Exhibit 8-4 represent a long-run or a short-run situation?

answer

short run because there is fixed cost

question

Consider Exhibit 8-5. If the market price is $21, this perfectly competitive firm will

answer

earn a profit of $3.00

question

Consider Exhibit 8-5. If the market price is $15, the minimum loss this perfectly competitive firm can incur is

answer

$10

question

Consider Exhibit 8-5. Assume the firm is perfectly competitive and the market price is $21. To maximize profit or minimize loss, the firm will

answer

produce 5 units

question

Consider Exhibit 8-5. Assume the firm is perfectly competitive and the market price is $15. To maximize profit or minimize loss, the firm will

answer

shut down

question

The total revenue curve for a perfectly competitive firm

answer

is a straight line starting from the origin and sloping upward

question

For a perfectly competitive firm, price is identical to marginal revenue at every quantity.

answer

True

question

Marginal revenue is the change in total revenue from selling one more unit of output.

answer

True

question

If a perfectly competitive firm charges the market price of $14 per unit,

answer

its average revenue is $14, and its marginal revenue is $14

question

Perfectly competitive firms that earn an economic profit in the short run choose the output that

answer

maximizes the difference between total revenue and total cost

question

The golden rule of profit maximization states that any firm maximizes profit by producing where

answer

marginal revenue equals marginal cost

question

If a firm is producing at an output where the total revenue curve crosses the total cost curve,

answer

profit is zero

question

Consider Exhibit 8-6. At which price will this firm shut-down?

answer

question

Consider Exhibit 8-6. At which price will this firm earn zero profit?

answer

question

At which price and quantity is profit maximized for the perfectly competitive firm represented in Exhibit 8-7?

answer

$8 and 70

question

If the price-taking firm in Exhibit 8-8 is currently producing 6 units, then to maximize profit in the short run, it should

answer

increase production to 12 units

question

In Exhibit 8-9, price equals

answer

$28

question

In Exhibit 8-9, total revenue at the profit-maximizing output equals

answer

$5,600

question

In Exhibit 8-9, total cost at the profit-maximizing output equals

answer

$4,400

question

At the profit-maximizing output level, the firm represented in Exhibit 8-9 experiences

answer

a profit of $1,200

question

In Exhibit 8-10, price equals

answer

$40

question

In Exhibit 8-10, total revenue at the profit-maximizing output level equals

answer

$8,000

question

In Exhibit 8-10, total cost at the profit-maximizing output level equals

answer

$4,800

question

At the profit-maximizing output level, the firm represented in Exhibit 8-10 experiences

answer

a profit of $3,200

question

In Exhibit 8-11, the profit-maximizing output is

answer

question

In Exhibit 8-11, total revenue at the profit-maximizing output level equals

answer

a × z

question

In Exhibit 8-11, total cost at the profit-maximizing output level is shown by area

answer

mfz0

question

At the profit-maximizing output level, the firm represented in Exhibit 8-11 experiences

answer

a profit of abfm

question

For a perfectly competitive firm,

answer

P = MR at all output levels

question

Which of the following is true at each output level for a perfectly competitive firm?

answer

AR = MR = P

question

If the market price rises, the total revenue (TR) curve in Exhibit 8-12 will

answer

rotate upward and become steeper

question

If the market price rises, the profit maximizing level of output in Exhibit 8-12 will

answer

increase

question

In the short run, if a firm shuts down, its loss is equal to

answer

its fixed costs

question

If Harry's Blueberries, a perfectly competitive firm, shuts down in the short run, Harry must pay

answer

only fixed cost

question

Which of the following does not characterize a perfectly competitive firm that has shut down in the short run?

answer

fixed cost is zero

question

In the short run, a perfectly competitive ball bearing manufacturer will continue to produce at a loss if

answer

it is covering all of its variable cost plus part of its fixed cost

question

If a perfectly competitive firm is incurring a short-run loss, it

answer

will continue to operate in the short run if its variable cost is covered

question

If the market price in Exhibit 8-13 is $6, what is the greatest possible short-run profit for this perfectly competitive firm?

answer

-$30

question

In Exhibit 8-14, what area represents fixed cost at the loss-minimizing output?

answer

cjkd

question

In Exhibit 8-14, what area represents variable cost at the loss-minimizing output?

answer

0cda

question

The purely competitive firm in Exhibit 8-15 should

answer

produce 12 units of output

question

The maximum economic profit (or minimum economic loss) for the firm in Exhibit 8-15 is a

answer

loss of $480

question

If a perfectly competitive firm shuts down in the short run, its variable cost equals zero.

answer

True

question

If a perfectly competitive firm shuts down in the short run, its total cost equals zero.

answer

False

question

In the short run, a firm will produce a positive amount of output as long as

answer

P > AVC at some output level

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