Micro S16D: Chapter 9 - Assignment Essays

question

Real-world markets that approximate the four assumptions of the theory of perfect competition include

answer

"some agricultural markets" and "the stock market".

question

The theory of perfect competition generally assumes that

answer

buyers and sellers act independently of other buyers and sellers.

question

Does a real-world market have to meet all the assumptions of the theory of perfect competition before it is considered a perfectly competitive market?

answer

No, probably no real-world market meets all the assumptions of the theory of perfect competition. All that is necessary is that a real-world market behave as if it satisfies all the assumptions.

question

Perfectly competitive industries are

answer

None of these choices are correct.

question

A "price taker" is a firm that

answer

does not have the ability to control the price of the product it sells.

question

Perfectly competitive firms are price takers for all of the following reasons except that

answer

barriers to exit force firms to sell at the market price.

question

The demand curve for a perfectly competitive firm

answer

is perfectly horizontal.

question

The market demand curve in a perfectly competitive market is

answer

downward sloping

question

In the theory of perfect competition,

answer

both "the single firm's demand curve is horizontal" and "the market demand curve is downward sloping".

question

The price at which a perfectly competitive firm sells its product is determined by

answer

all sellers and buyers of the product.

question

The perfectly competitive firm will seek to produce the output level for which

answer

marginal cost equals marginal revenue.

question

Marginal revenue is

answer

the change in total revenue brought about by selling an additional unit of the good.

question

For a perfectly competitive firm,

answer

the marginal revenue curve and the demand curve are the same.

question

Refer to EXHIBIT 9-1. The dollar amounts that go in blanks (A) and (B) are, respectively,

answer

$12 & $12

question

Refer to EXHIBIT 9-1. The data in this table are relevant to a perfectly competitive firm because

answer

it doesn't have to lower price to sell additional units of the product.

question

Refer to EXHIBIT 9-1. The firm's demand curve represented by the information in this table is

answer

horizontal.

question

A perfectly competitive firm should increase its level of production as long as

answer

marginal revenue is greater than marginal cost.

question

For a perfectly competitive firm, profit maximization or loss minimization occurs at the output at which

answer

MR = MC.

question

If MR > MC, then

answer

the firm can increase its profits or minimize its losses by increasing output.

question

If, for the last unit of a good produced by a perfectly competitive firm, MR > MC, then in producing that unit the firm

answer

added more to total revenue than it added to total costs

question

Refer to EXHIBIT 9-2. What quantity does the profit-maximizing or loss-minimizing firm produce?

answer

Q2, where the difference between "what is coming in" on the last unit and "what is going out" is zero.

question

Refer to EXHIBIT 9-3. What quantity of output should the profit-maximizing firm produce?

answer

44 Units

question

In the short-run, if P < ATC, a perfectly competitive firm should

answer

There is not enough information to answer the question

question

The perfectly competitive firm will produce in the

answer

short run if price is below average total cost but above average variable cost.

question

In order for a firm to continue producing, price must exceed __________ and total revenue must exceed __________.

answer

AVC; total variable costs

question

The perfectly competitive firm's short-run supply curve is the

answer

portion of its marginal cost curve that lies above its average variable cost curve.

question

Firm X is producing the quantity of output at which marginal revenue equals marginal cost. It is

answer

There is not enough information to answer the question.

question

The short-run industry supply curve is the

answer

horizontal summation of the short-run supply curves for all firms in the industry.

question

Which of the following conditions does not characterize long-run competitive equilibrium?

answer

Price is greater than marginal cost.

question

If firms are earning zero economic profits, they must be producing at an output level at which

answer

price equals average total cost.

question

Why must profits be zero in long-run competitive equilibrium?

answer

If profits are not zero, firms will enter or exit the industry.

question

A constant-cost industry has a long-run (industry) supply curve that is

answer

Horizontal

question

Resource allocative efficiency occurs when a firm

answer

produces the quantity of output at which price equals marginal cost.

question

If an industry advertises, then it

answer

may or may not be a perfectly competitive industry.

question

Which of the following is the best example of a homogeneous good?

answer

Wheat

question

A decreasing-cost industry is characterized by

answer

a downward-sloping long-run supply curve.

question

An increasing-cost industry is characterized by

answer

an upward-sloping long-run supply curve.

question

A constant-cost industry is characterized by

answer

a perfectly elastic long-run supply curve.

question

The profit-maximization rule is as follows:

answer

Produce the quantity of output at which marginal revenue equals marginal cost.

1 of 39

question

Real-world markets that approximate the four assumptions of the theory of perfect competition include

answer

"some agricultural markets" and "the stock market".

question

The theory of perfect competition generally assumes that

answer

buyers and sellers act independently of other buyers and sellers.

question

Does a real-world market have to meet all the assumptions of the theory of perfect competition before it is considered a perfectly competitive market?

answer

No, probably no real-world market meets all the assumptions of the theory of perfect competition. All that is necessary is that a real-world market behave as if it satisfies all the assumptions.

question

Perfectly competitive industries are

answer

None of these choices are correct.

question

A "price taker" is a firm that

answer

does not have the ability to control the price of the product it sells.

question

Perfectly competitive firms are price takers for all of the following reasons except that

answer

barriers to exit force firms to sell at the market price.

question

The demand curve for a perfectly competitive firm

answer

is perfectly horizontal.

question

The market demand curve in a perfectly competitive market is

answer

downward sloping

question

In the theory of perfect competition,

answer

both "the single firm's demand curve is horizontal" and "the market demand curve is downward sloping".

question

The price at which a perfectly competitive firm sells its product is determined by

answer

all sellers and buyers of the product.

question

The perfectly competitive firm will seek to produce the output level for which

answer

marginal cost equals marginal revenue.

question

Marginal revenue is

answer

the change in total revenue brought about by selling an additional unit of the good.

question

For a perfectly competitive firm,

answer

the marginal revenue curve and the demand curve are the same.

question

Refer to EXHIBIT 9-1. The dollar amounts that go in blanks (A) and (B) are, respectively,

answer

$12 & $12

question

Refer to EXHIBIT 9-1. The data in this table are relevant to a perfectly competitive firm because

answer

it doesn't have to lower price to sell additional units of the product.

question

Refer to EXHIBIT 9-1. The firm's demand curve represented by the information in this table is

answer

horizontal.

question

A perfectly competitive firm should increase its level of production as long as

answer

marginal revenue is greater than marginal cost.

question

For a perfectly competitive firm, profit maximization or loss minimization occurs at the output at which

answer

MR = MC.

question

If MR > MC, then

answer

the firm can increase its profits or minimize its losses by increasing output.

question

If, for the last unit of a good produced by a perfectly competitive firm, MR > MC, then in producing that unit the firm

answer

added more to total revenue than it added to total costs

question

Refer to EXHIBIT 9-2. What quantity does the profit-maximizing or loss-minimizing firm produce?

answer

Q2, where the difference between "what is coming in" on the last unit and "what is going out" is zero.

question

Refer to EXHIBIT 9-3. What quantity of output should the profit-maximizing firm produce?

answer

44 Units

question

In the short-run, if P < ATC, a perfectly competitive firm should

answer

There is not enough information to answer the question

question

The perfectly competitive firm will produce in the

answer

short run if price is below average total cost but above average variable cost.

question

In order for a firm to continue producing, price must exceed __________ and total revenue must exceed __________.

answer

AVC; total variable costs

question

The perfectly competitive firm's short-run supply curve is the

answer

portion of its marginal cost curve that lies above its average variable cost curve.

question

Firm X is producing the quantity of output at which marginal revenue equals marginal cost. It is

answer

There is not enough information to answer the question.

question

The short-run industry supply curve is the

answer

horizontal summation of the short-run supply curves for all firms in the industry.

question

Which of the following conditions does not characterize long-run competitive equilibrium?

answer

Price is greater than marginal cost.

question

If firms are earning zero economic profits, they must be producing at an output level at which

answer

price equals average total cost.

question

Why must profits be zero in long-run competitive equilibrium?

answer

If profits are not zero, firms will enter or exit the industry.

question

A constant-cost industry has a long-run (industry) supply curve that is

answer

Horizontal

question

Resource allocative efficiency occurs when a firm

answer

produces the quantity of output at which price equals marginal cost.

question

If an industry advertises, then it

answer

may or may not be a perfectly competitive industry.

question

Which of the following is the best example of a homogeneous good?

answer

Wheat

question

A decreasing-cost industry is characterized by

answer

a downward-sloping long-run supply curve.

question

An increasing-cost industry is characterized by

answer

an upward-sloping long-run supply curve.

question

A constant-cost industry is characterized by

answer

a perfectly elastic long-run supply curve.

question

The profit-maximization rule is as follows:

answer

Produce the quantity of output at which marginal revenue equals marginal cost.

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