question
For a perfectly competitive firm, the demand curve:
A. is convex to the origin.
B. is parallel to the vertical axis.
C. is upward sloping.
D. coincides with the marginal revenue curve.
A. is convex to the origin.
B. is parallel to the vertical axis.
C. is upward sloping.
D. coincides with the marginal revenue curve.
answer
D
question
The following figure shows the marginal cost curve, average total cost curve, average variable cost curve, and marginal revenue curve for a firm for different levels of output.
The maximum profit per unit is equal to _____.
A. GZ
B. ZM
C. GM
D. FH
The maximum profit per unit is equal to _____.
A. GZ
B. ZM
C. GM
D. FH
answer
NOT A OR B
question
The following figure shows the marginal cost curve, average total cost curve, average variable cost curve, and marginal revenue curve for a firm for different levels of output.
At the profit-maximizing level of output in Figure 9-3, the profit of the firm is equal to the area given by _____.
A. RGHS
B. RGCO
C. RGZW
D. RLMG
At the profit-maximizing level of output in Figure 9-3, the profit of the firm is equal to the area given by _____.
A. RGHS
B. RGCO
C. RGZW
D. RLMG
answer
NOT A OR D
question
A profit-maximizing firm expands output until marginal revenue equals the _____ of producing the last unit.
A. average variable cost
B. average total cost
C. marginal cost
D. average fixed cost
A. average variable cost
B. average total cost
C. marginal cost
D. average fixed cost
answer
C
question
The short-run supply curve for the firm operating in a perfectly competitive industry is:
A. its marginal cost curve above the minimum of average variable cost.
B. the average variable cost curve above average revenue curve.
C. its marginal cost curve.
D. its marginal cost curve above the minimum of average total cost.
A. its marginal cost curve above the minimum of average variable cost.
B. the average variable cost curve above average revenue curve.
C. its marginal cost curve.
D. its marginal cost curve above the minimum of average total cost.
answer
A
question
Which of the following will reduce the competitive nature of the agricultural industry?
A. There are no import and export restrictions on agricultural products.
B. The output of the agricultural industry is more or less homogeneous.
C. There are restrictions on price volatility in the agricultural market.
D. The number of farms across the country is relatively large.
A. There are no import and export restrictions on agricultural products.
B. The output of the agricultural industry is more or less homogeneous.
C. There are restrictions on price volatility in the agricultural market.
D. The number of farms across the country is relatively large.
answer
C
question
Which of the following is an assumption in the model of perfect competition?
A. The firms in a competitive industry have a decreasing short-run marginal cost curve.
B. There are no natural impediments to entry in a competitive industry, but there may be artificial impediments such as licensing.
C. The firms in a competitive industry actively compete with each other by advertising.
D. The firms in a competitive industry produce a homogeneous product.
A. The firms in a competitive industry have a decreasing short-run marginal cost curve.
B. There are no natural impediments to entry in a competitive industry, but there may be artificial impediments such as licensing.
C. The firms in a competitive industry actively compete with each other by advertising.
D. The firms in a competitive industry produce a homogeneous product.
answer
D
question
The short-run supply curve for a competitive industry:
A. is subject to the law of diminishing returns.
B. coincides with the marginal revenue curve.
C. is the industry's marginal cost curve.
D. is horizontal because there are many buyers and sellers.
A. is subject to the law of diminishing returns.
B. coincides with the marginal revenue curve.
C. is the industry's marginal cost curve.
D. is horizontal because there are many buyers and sellers.
answer
A
question
Assume that labor is the variable input for a firm. Which of the following will occur if the wage rate increases?
A. Its average variable cost, average fixed cost, average total cost, and marginal costs will increase.
B. Its average variable cost and average total costs will increase and profits will decrease.
C. Its marginal cost, average total costs, and output will increase.
D. Its marginal cost and average variable costs will increase.
A. Its average variable cost, average fixed cost, average total cost, and marginal costs will increase.
B. Its average variable cost and average total costs will increase and profits will decrease.
C. Its marginal cost, average total costs, and output will increase.
D. Its marginal cost and average variable costs will increase.
answer
NOT A OR B
question
The following figure shows the total cost and total revenue for a firm when it prices its products at $8 and $10.
When the firm is producing the profit-maximizing level of output at a price of $10:
A. economic profits equal BH.
B. average cost equals DG divided by OG.
C. total cost is minimized at B.
D. total fixed costs are OA.
When the firm is producing the profit-maximizing level of output at a price of $10:
A. economic profits equal BH.
B. average cost equals DG divided by OG.
C. total cost is minimized at B.
D. total fixed costs are OA.
answer
D
question
A perfectly competitive firm faces a horizontal demand curve, which implies that:
A. the price in the market never changes.
B. the quantity of output produced by the firm is indeterminate.
C. the firm makes zero accounting profits.
D. the firm cannot affect price by any action it takes.
A. the price in the market never changes.
B. the quantity of output produced by the firm is indeterminate.
C. the firm makes zero accounting profits.
D. the firm cannot affect price by any action it takes.
answer
D
question
The perfectly competitive firm minimizes losses by shutting down whenever:
A. price is below average fixed costs.
B. price is below the minimum point of the average variable cost curve.
C. price is below the minimum point of the average cost curve.
D. total variable costs are greater than total fixed costs.
A. price is below average fixed costs.
B. price is below the minimum point of the average variable cost curve.
C. price is below the minimum point of the average cost curve.
D. total variable costs are greater than total fixed costs.
answer
D
question
The following figure shows the marginal cost curve, the average cost curve, the average variable cost curve, and the demand curve for a firm over different levels of output. The market price is $P.
Given that the market price is $P, the firm will be operating at a loss of _____.
A. TBOV
B. RZOA
C. GKPS
D. KTVP
Given that the market price is $P, the firm will be operating at a loss of _____.
A. TBOV
B. RZOA
C. GKPS
D. KTVP
answer
C
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