Question 1

All of the following statements apply to a purely competitive market in the long run, except

Accepted Answer

A)  in the long run, all inputs are variable in quantity.
B)  firms can expand their plant capacities in the long run.
C)  total fixed costs remain constant even when output expands in the long run.
D)  firms may enter or leave the industry in the long run.

Question 2

Long-run supply curves for a purely competitive industry can never be downsloping.

Accepted Answer

A) True 
 B)False

Question 3

If the price in a competitive market falls and goes below the equilibrium price, then consumer surplus might increase, but producer surplus will definitely decrease.

Accepted Answer

A) True 
 B)False

Question 4

Allocative efficiency occurs when the

Accepted Answer

A)  minimum of average total cost equals average revenue.
B)  minimum of average total cost equals marginal revenue.
C)  marginal cost equals the marginal benefit to society.
D)  marginal revenue equals marginal benefit to society.

Question 5

The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is

Accepted Answer

A)  allocative efficiency.
B)  productive efficiency.
C)  the consumer surplus.
D)  the producer surplus.

Question 6

The difference between the actual price that a producer receives and the minimum acceptable price a producer is willing to accept is

Accepted Answer

A)  the consumer surplus.
B)  the producer surplus.
C)  allocative efficiency.
D)  productive efficiency.

Question 7

When some firms leave a purely competitive industry, the market supply curve will shift in such a way that the remaining firms' profits will increase.

Accepted Answer

A) True 
 B)False

Question 8

When a competitive firm is in long-run equilibrium, its accounting profits are greater than zero.

Accepted Answer

A) True 
 B)False

Question 9

The long-run supply curve for a competitive, decreasing-cost industry is downward-sloping.

Accepted Answer

A) True 
 B)False

Question 10

Some economists are now proposing that patents may be detrimental to technological advance in industries with complicated multiple-component products.

Accepted Answer

A) True 
 B)False

Question 11

If firms are losing money in a purely competitive industry, then the long-run adjustments in this situation will cause the market supply to

Accepted Answer

A)  increase, and consequently the representative firm's profits will increase.
B)  decrease, and consequently the representative firm's profits will increase.
C)  increase, and consequently the representative firm's profits will decrease.
D)  decrease, and consequently the representative firm's profits will decrease.

Question 12

Which of the following statements is true for a long-run supply curve that slopes upward?

Accepted Answer

A)  If total market output is increased, unit costs of production increase.
B)  If total market output is unchanged, unit costs of production increase.
C)  The total cost of producing 15 units is no larger than the cost of producing 10 units.
D)  If total market output is decreased, total costs of production will remain unchanged.

Question 13

The long-run supply curve for a purely competitive industry would be horizontal when

Accepted Answer

A)  an increase in product demand causes an increase in resource prices.
B)  an increase in product demand causes a decrease in resource prices.
C)  a decrease in product demand causes a decrease in the number of firms.
D)  a decrease in product demand causes no effect in resource prices.

Question 14

The operation of the invisible hand means the pursuit of private interests promotes social interests in pure competition.

Accepted Answer

A) True 
 B)False

Question 15

If for a firm P = minimum ATC = MC, then

Accepted Answer

A)  neither allocative efficiency nor productive efficiency is being achieved.
B)  productive efficiency is being achieved, but allocative efficiency is not.
C)  both allocative efficiency and productive efficiency are being achieved.
D)  allocative efficiency is being achieved, but productive efficiency is not.

Question 16

When firms in a purely competitive industry are earning profits that are greater than normal, the supply of the product will tend to decrease in the long run.

Accepted Answer

A) True 
 B)False

Question 17

Producer surplus is the difference between the market price a producer receives for a product and the minimum price producers are willing to accept for a product.

Accepted Answer

A) True 
 B)False

Question 18

A patent is the legal right granted to a firm that allows it to

Accepted Answer

A)  make copies of other firm's products.
B)  be the sole buyer of a particular product or resource.
C)  sell its new product exclusively for a set number of years.
D)  be the exclusive distributor of a particular imported product.

Exam 11: Pure Competition in the Long Run

A patent is the legal right granted to a firm that allows it to

Correct Answer
verified

The operation of the invisible hand means the pursuit of private interests promotes social interests in pure competition.

Correct Answer
verified

Long-run supply curves for a purely competitive industry can never be downsloping.

Correct Answer
verified

The long-run supply curve for a competitive, decreasing-cost industry is downward-sloping.

Correct Answer
verified

If for a firm P = minimum ATC = MC, then

Correct Answer
verified

The difference between the actual price that a producer receives and the minimum acceptable price a producer is willing to accept is

Correct Answer
verified

Allocative efficiency occurs when the

Correct Answer
verified

When firms in a purely competitive industry are earning profits that are greater than normal, the supply of the product will tend to decrease in the long run.

Correct Answer
verified

When some firms leave a purely competitive industry, the market supply curve will shift in such a way that the remaining firms' profits will increase.

Correct Answer
verified

If firms are losing money in a purely competitive industry, then the long-run adjustments in this situation will cause the market supply to

Correct Answer
verified

The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is

Correct Answer
verified

Which of the following statements is true for a long-run supply curve that slopes upward?

Correct Answer
verified

Producer surplus is the difference between the market price a producer receives for a product and the minimum price producers are willing to accept for a product.

Correct Answer
verified

The long-run supply curve for a purely competitive industry would be horizontal when

Correct Answer
verified

Some economists are now proposing that patents may be detrimental to technological advance in industries with complicated multiple-component products.

Correct Answer
verified

If the price in a competitive market falls and goes below the equilibrium price, then consumer surplus might increase, but producer surplus will definitely decrease.

Correct Answer
verified

When a competitive firm is in long-run equilibrium, its accounting profits are greater than zero.

Correct Answer
verified

All of the following statements apply to a purely competitive market in the long run, except

Correct Answer
verified

Exam 11: Pure Competition in the Long Run

A patent is the legal right granted to a firm that allows it to

Correct AnswerverifiedShow Answer

The operation of the invisible hand means the pursuit of private interests promotes social interests in pure competition.

Correct AnswerverifiedShow Answer

Long-run supply curves for a purely competitive industry can never be downsloping.

Correct AnswerverifiedShow Answer

The long-run supply curve for a competitive, decreasing-cost industry is downward-sloping.

Correct AnswerverifiedShow Answer

If for a firm P = minimum ATC = MC, then

Correct AnswerverifiedShow Answer

The difference between the actual price that a producer receives and the minimum acceptable price a producer is willing to accept is

Correct AnswerverifiedShow Answer

Allocative efficiency occurs when the

Correct AnswerverifiedShow Answer

When firms in a purely competitive industry are earning profits that are greater than normal, the supply of the product will tend to decrease in the long run.

Correct AnswerverifiedShow Answer

When some firms leave a purely competitive industry, the market supply curve will shift in such a way that the remaining firms' profits will increase.

Correct AnswerverifiedShow Answer

If firms are losing money in a purely competitive industry, then the long-run adjustments in this situation will cause the market supply to

Correct AnswerverifiedShow Answer

The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is

Correct AnswerverifiedShow Answer

Which of the following statements is true for a long-run supply curve that slopes upward?

Correct AnswerverifiedShow Answer

Producer surplus is the difference between the market price a producer receives for a product and the minimum price producers are willing to accept for a product.

Correct AnswerverifiedShow Answer

The long-run supply curve for a purely competitive industry would be horizontal when

Correct AnswerverifiedShow Answer

Some economists are now proposing that patents may be detrimental to technological advance in industries with complicated multiple-component products.

Correct AnswerverifiedShow Answer

If the price in a competitive market falls and goes below the equilibrium price, then consumer surplus might increase, but producer surplus will definitely decrease.

Correct AnswerverifiedShow Answer

When a competitive firm is in long-run equilibrium, its accounting profits are greater than zero.

Correct AnswerverifiedShow Answer

All of the following statements apply to a purely competitive market in the long run, except

Correct AnswerverifiedShow Answer

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