Exam 14: Firms in Competitive Markets

A) $2
B) $8
C) $32
D) $64

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A) 10,000
B) 20,000
C) 50,000
D) 150,000

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A) If the firm were to charge more than the going price, it would sell none of its goods.
B) The firm has an incentive to charge less than the market price to earn higher revenue.
C) The firm can sell only a limited amount of output at the market price before the market price will fall.
D) Price-taking firms maximize profits by charging a price above marginal cost.

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A) its variable costs but not its fixed costs.
B) its fixed costs but not its variable costs.
C) both its variable costs and its fixed costs.
D) neither its variable costs nor its fixed costs.

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A) You should stay and watch the remainder of the show.
B) You should go home and watch TV.
C) You should go home and read a book.
D) You should go home and either watch TV or read a book.

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A) 6,000
B) 12,000
C) 60,000
D) 120,000

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A) may be horizontal if entry into the industry lowers average total cost.
B) may be upward-sloping if higher-cost firms enter the industry.
C) will be horizontal if there is free entry into the industry.
D) will be upward-sloping if there are barriers to entry into the industry.

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A) an increase in demand in the short run will result in a new price above the minimum of average total cost, allowing firms to earn a positive economic profit in both the short run and the long run.
B) firms cannot earn positive economic profit in either the short run or long run.
C) firms can earn positive economic profit in the long run if the long-run market supply curve is upward sloping.
D) free entry and exit into the market requires that firms earn zero economic profit in the long run even though they may be able to earn positive economic profit in the short run.

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A) give riding lessons to more than 20 children per month.
B) give riding lessons to fewer than 20 children per month.
C) continue to give riding lessons to 20 children per month.
D) We do not have enough information to answer the question.

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A) ​Continue to produce 200 units, since costs per unit are minimized
B) ​Increase output beyond 200 units, since this higher output will yield the profit maximizing output level.
C) ​Decrease output below 200 units, since this lower output will result in the profit maximizing output level.
D) ​More information is needed to determine the firm's next step.

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A) Go back to the bookstore and purchase another hat.
B) Wait until the cost of the hat falls to $15 or less before purchasing another hat.
C) Wait until the cost of the hat falls to $5 or less before purchasing another hat.
D) Do not purchase another hat regardless of the price.

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A) the minimum point on the firms' average variable cost curve.
B) the minimum point on the firms' average total cost curve.
C) the portion of the marginal cost curve below average variable cost.
D) a firm's level of sunk costs.

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A) $24,995.
B) $25,550.
C) $25,750.
D) $26,025.

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A) marginal revenue equal to long-run average total cost.
B) total revenue equal to average total cost.
C) average revenue greater than marginal cost.
D) accounting profits equal to zero.

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A) $1.00
B) $1.50
C) $2.00
D) The price cannot be determined from the information provided.

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