Question 1

Table 14-11
Suppose that a firm in a competitive market faces the following prices and costs: 
-Refer to Table 14-11. Marginal revenue equals marginal cost when the firm produces

Accepted Answer

A)  2 units.
B)  3 units.
C)  4 units.
D)  5 units.E) A) and B)
F) None of the above

Question 2

Figure 14-14  
-Refer to Figure 14-14. Assume that the market starts in equilibrium at point W in panel (b)  and that panel (a)  illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements is correct?

Accepted Answer

A)  Points W, Y, and Z represent both short-run and long-run equilibria.
B)  Points W, Y, Z, and X represent short-run equilibria.
C)  Points W, Y, and Z represent long-run equilibria.
D)  Points W and Z represent long-run equilibria.E) B) and D)
F) B) and C)

Question 3

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8. What would be the firm's marginal revenue if it instead produced and sold 4 units of output?

Accepted Answer

A)  $2
B)  $8
C)  $32
D)  $64E) C) and D)
F) B) and D)

Question 4

Suppose that a competitive market is initially in equilibrium. Then demand increases. If some resources used in production are not available in sufficient quantities for entering firms,

Accepted Answer

A)  the long-run market supply curve will be upward sloping.
B)  the long-run market supply curve will be perfectly elastic.
C)  in the long run firms will suffer economic losses, leading them to exit the industry.
D)  the number of firms will decrease, and the market will become a monopoly.E) A) and B)
F) A) and C)

Question 5

Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs: 
-Refer to Table 14-9. If the firm's marginal cost is $11, it should

Accepted Answer

A)  increase production to maximize profit.
B)  increase the price of the product to maximize profit.
C)  advertise to attract additional buyers to maximize profit.
D)  reduce production to increase profit.E) All of the above
F) C) and D)

Question 6

The analysis of competitive firms sheds light on the decisions that lie behind the

Accepted Answer

A)  demand curve.
B)  supply curve.
C)  way firms make pricing decisions in the not-for-profit sector of the economy.
D)  way financial markets set interest rates.E) C) and D)
F) B) and C)

Question 7

The expression "Let bygones be bygones" is associated with what type of cost?

Accepted Answer

The expres...

Question 8

Table 14-14
The following table presents cost and revenue information for Bob's bakery production and sales. 
-Refer to Table 14-14. What is Bob's total fixed cost?

Accepted Answer

A)  $0
B)  $3
C)  $5
D)  $9E) A) and C)
F) A) and B)

Question 9

When a firm produces 2,000 units of output, its average total cost is $3.00 and its average revenue is $2.90. What is the firm's profit or loss?

Accepted Answer

The firm's...

Question 10

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

Accepted Answer

A)  new firms to enter the market.
B)  the market price to fall.
C)  its profits to fall.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 11

In a competitive market the current price is $6. The typical firm in the market has ATC = $5.00 and AVC = $4.50.

Accepted Answer

A)  In the short run firms will shut down, and in the long run firms will leave the market.
B)  In the short run firms will continue to operate, but in the long run firms will leave the market.
C)  New firms will likely enter this market to capture some of the economic profits.
D)  The firm will earn zero profits in both the short run and long run.E) All of the above
F) A) and D)

Question 12

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A)  Firms are price takers.
B)  Firms have difficulty entering the market.
C)  There are many sellers in the market.
D)  Goods offered for sale are largely the same.E) All of the above
F) B) and C)

Question 13

Figure 14-7 
-Refer to Figure 14-7. At what price is the firm's maximum profit zero?

Accepted Answer

A)  $80
B)  $90
C)  $100
D)  $125E) B) and D)
F) None of the above

Question 14

A firm's marginal cost has a minimum value of $4, its average variable cost has a minimum value of $6, and its average total cost has a minimum value of $7. Then the firm will shut down in the short run once the price of its product falls below

Accepted Answer

A)  $7.
B)  $6.
C)  $4.
D)  We do not have enough information to answer the question.E) None of the above
F) All of the above

Question 15

Who is a price taker in a competitive market?

Accepted Answer

A)  buyers only
B)  sellers only
C)  both buyers and sellers
D)  neither buyers nor sellersE) B) and C)
F) A) and D)

Question 16

Suppose you bought a ticket to a football game for $30 and that you place a $35 value on seeing the game. If you lose the ticket, then what is the maximum price you should pay for another ticket? Assume that losing the ticket does not alter how you value it.

Accepted Answer

A)  $5
B)  $30
C)  $35
D)  $65E) None of the above
F) A) and B)

Question 17

Table 14-13 
-Refer to Table 14-13. What is the marginal cost of the 8th unit?

Accepted Answer

A)  $0
B)  $100
C)  $120
D)  $140E) A) and D)
F) A) and C)

Question 18

Shrimp Galore, a shrimp harvesting business in the Pacific Northwest, has a 30-year loan on its shrimp harvesting boat. The annual loan payment is $25,000 and the boat has a market (salvage)  value that exceeds its outstanding loan balance. Prior to the 2010 shrimp harvesting season, Shrimp Galore's accountant predicted that at expected market prices for shrimp, Shrimp Galore would have a net loss of $75,000 dollars after paying all 2010 expenses (including the annual loan payment) . In this case, Shrimp Galore should

Accepted Answer

A)  produce nothing and experience a loss of $25,000.
B)  produce nothing and experience a loss of $75,000.
C)  continue to operate because expected profits will rise in the future.
D)  continue to operate even though it predicts a loss of $75,000.E) All of the above
F) B) and C)

Question 19

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

Accepted Answer

A)  a one-unit increase in output will increase the firm's profit.
B)  a one-unit decrease in output will increase the firm's profit.
C)  total revenue exceeds total cost.
D)  total cost exceeds total revenue.E) B) and C)
F) A) and D)

Question 20

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

Accepted Answer

A)  new firms to enter the market.
B)  the market price to rise.
C)  its profits to rise.
D)  Both b and c are correct.E) A) and D)
F) A) and C)

Exam 14: Firms in Competitive Markets

When a firm produces 2,000 units of output, its average total cost is $3.00 and its average revenue is $2.90. What is the firm's profit or loss?

Correct Answer
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The firm's...
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Which of the following is not a characteristic of a perfectly competitive market?

Correct Answer
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If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

Correct Answer
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Figure 14-14 -Refer to Figure 14-14. Assume that the market starts in equilibrium at point W in panel (b) and that panel (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements is correct?

Correct Answer
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The expression "Let bygones be bygones" is associated with what type of cost?

Correct Answer
verified
The expres...
View Answer

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

Correct Answer
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In a competitive market the current price is $6. The typical firm in the market has ATC = $5.00 and AVC = $4.50.

Correct Answer
verified

Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9. If the firm's marginal cost is $11, it should

Correct Answer
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Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8. What would be the firm's marginal revenue if it instead produced and sold 4 units of output?

Correct Answer
verified

A firm's marginal cost has a minimum value of $4, its average variable cost has a minimum value of $6, and its average total cost has a minimum value of $7. Then the firm will shut down in the short run once the price of its product falls below

Correct Answer
verified

Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: -Refer to Table 14-11. Marginal revenue equals marginal cost when the firm produces

Correct Answer
verified

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

Correct Answer
verified

The analysis of competitive firms sheds light on the decisions that lie behind the

Correct Answer
verified

Who is a price taker in a competitive market?

Correct Answer
verified

Table 14-13 -Refer to Table 14-13. What is the marginal cost of the 8th unit?

Correct Answer
verified

Figure 14-7 -Refer to Figure 14-7. At what price is the firm's maximum profit zero?

Correct Answer
verified

Suppose you bought a ticket to a football game for $30 and that you place a $35 value on seeing the game. If you lose the ticket, then what is the maximum price you should pay for another ticket? Assume that losing the ticket does not alter how you value it.

Correct Answer
verified

Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14. What is Bob's total fixed cost?

Correct Answer
verified

Correct Answer
verified

Suppose that a competitive market is initially in equilibrium. Then demand increases. If some resources used in production are not available in sufficient quantities for entering firms,

Correct Answer
verified

Exam 14: Firms in Competitive Markets

When a firm produces 2,000 units of output, its average total cost is $3.00 and its average revenue is $2.90. What is the firm's profit or loss?

Correct AnswerverifiedThe firm's...View AnswerShow Answer

Which of the following is not a characteristic of a perfectly competitive market?

Correct AnswerverifiedShow Answer

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

Correct AnswerverifiedShow Answer

Figure 14-14 -Refer to Figure 14-14. Assume that the market starts in equilibrium at point W in panel (b) and that panel (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The expression "Let bygones be bygones" is associated with what type of cost?

Correct AnswerverifiedThe expres...View AnswerShow Answer

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

Correct AnswerverifiedShow Answer

In a competitive market the current price is $6. The typical firm in the market has ATC = $5.00 and AVC = $4.50.

Correct AnswerverifiedShow Answer

Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9. If the firm's marginal cost is $11, it should

Correct AnswerverifiedShow Answer

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8. What would be the firm's marginal revenue if it instead produced and sold 4 units of output?

Correct AnswerverifiedShow Answer

A firm's marginal cost has a minimum value of $4, its average variable cost has a minimum value of $6, and its average total cost has a minimum value of $7. Then the firm will shut down in the short run once the price of its product falls below

Correct AnswerverifiedShow Answer

Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: -Refer to Table 14-11. Marginal revenue equals marginal cost when the firm produces

Correct AnswerverifiedShow Answer

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

Correct AnswerverifiedShow Answer

The analysis of competitive firms sheds light on the decisions that lie behind the

Correct AnswerverifiedShow Answer

Who is a price taker in a competitive market?

Correct AnswerverifiedShow Answer

Table 14-13 -Refer to Table 14-13. What is the marginal cost of the 8th unit?

Correct AnswerverifiedShow Answer

Figure 14-7 -Refer to Figure 14-7. At what price is the firm's maximum profit zero?

Correct AnswerverifiedShow Answer

Suppose you bought a ticket to a football game for $30 and that you place a $35 value on seeing the game. If you lose the ticket, then what is the maximum price you should pay for another ticket? Assume that losing the ticket does not alter how you value it.

Correct AnswerverifiedShow Answer

Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14. What is Bob's total fixed cost?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that a competitive market is initially in equilibrium. Then demand increases. If some resources used in production are not available in sufficient quantities for entering firms,

Correct AnswerverifiedShow Answer

Correct Answer
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The firm's...
View Answer

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The expres...
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