Question 1

The provided graph gives short-run data for a firm. Which of the following statements is correct?

Accepted Answer

A)  Production is profitable only when price is above P₃.
B)  Average fixed cost is ( P₃ - P₁) at output Q₄.
C)  The firm will produce an output of Q₁ when price is P₁.
D)  At price P₁, the firm will not supply any quantity.

Question 2

The accompanying table applies to a purely competitive industry composed of 100 identical firms. At the equilibrium price, each of the 100 firms in this industry will produce

Accepted Answer

A)  600,000 units of output.
B)  60,000 units of output.
C)  6,000 units of output.
D)  600 units of output.

Question 3

Curve (4) in the diagram is a purely competitive firm's

Accepted Answer

A)  total cost curve.
B)  total revenue curve.
C)  marginal revenue curve.
D)  total profit curve.

Question 4

A firm reaches a break-even point (normal profit position) where

Accepted Answer

A)  marginal revenue cuts the horizontal axis.
B)  marginal cost intersects the average variable cost curve.
C)  total revenue equals total variable cost.
D)  total revenue and total cost are equal.

Question 5

A profit-maximizing firm in the short run will expand output

Accepted Answer

A)  until marginal cost begins to rise.
B)  until total revenue equals total cost.
C)  as long as marginal revenue is less than marginal cost.
D)  as long as marginal revenue is greater than marginal cost.

Question 6

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $68.10, it will produce

Accepted Answer

A)  8 units at an economic profit of zero.
B)  6 units at a loss of $90.
C)  9 units at an economic profit of $281.97.
D)  8 units at an economic profit of $130.72.

Question 7

In the short run, the individual competitive firm's supply curve is that segment of the

Accepted Answer

A)  average variable cost curve lying below the marginal cost curve.
B)  marginal cost curve lying above the average variable cost curve.
C)  marginal revenue curve lying below the demand curve.
D)  marginal cost curve lying between the average total cost and average variable cost curves.

Question 8

In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is

Accepted Answer

A)  equal to the price.
B)  less than the price.
C)  greater than the price.
D)  equal to the average cost.

Question 9

The table shows the total costs for a purely competitive firm. If the product sells for $1,200 a unit, the firm's profit-maximizing output is

Accepted Answer

A)  4.
B)  2.
C)  3.
D)  5.

Question 10

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $42, the competitive firm should produce

Accepted Answer

A)  12 units at an economic profit of $84.
B)  10 units at an economic profit of $10.
C)  10 units at an economic profit of $104.
D)  12 units at an economic profit of $188.

Question 11

The accompanying table shows cost data for a firm that is selling in a purely competitive market. The firm will produce its output only if the price is at least equal to what minimum level?

Accepted Answer

A)  $3
B)  $4
C)  $5
D)  $9

Question 12

Curve (3) in the diagram is a purely competitive firm's

Accepted Answer

A)  total cost curve.
B)  total revenue curve.
C)  marginal revenue curve.
D)  total economic profit curve.

Question 13

In the short run, a competitive firm will not produce unless price is at least equal to average total costs.

Accepted Answer

A) True 
 B)False

Question 14

What are some examples of the four different market structures?

Accepted Answer

Pure competition is exemplified in the m...

Question 15

Refer to the data in the accompanying table. If the firm's minimum average variable cost is $10, and total fixed costs equal zero, the firm's economic profit (or loss) is

Accepted Answer

A)  $12.
B)  $16.
C)  −$14.
D)  $3.

Question 16

Refer to the provided graph for a purely competitive firm in the short run. What minimum output level should the firm produce just for it to break even?

Accepted Answer

A)  A
B)  B
C)  C
D)  greater than C

Question 17

What are the three questions a firm should ask to determine output?

Accepted Answer

The first question is "Should this firm ...

Question 18

Based on the cost data given in the accompanying table, which of the price-quantity tables correctly represents the firm's short-run supply schedule?

Accepted Answer

A)  table a
B)  table b
C)  table c
D)  table d

Question 19

Refer to the accompanying diagram. The firm will produce at a loss if price is

Accepted Answer

A)  less than P₁.
B)  P₂.
C)  P₃.
D)  P₄.

Question 20

Suppose you find that the price of your product is less than minimum AVC. You should

Accepted Answer

A)  minimize your losses by producing where P = MC.
B)  maximize your profits by producing where P = MC.
C)  close down because, by producing, your losses will exceed your total fixed costs.
D)  close down because total revenue exceeds total variable cost.

Exam 10: Pure Competition in the Short Run

Based on the cost data given in the accompanying table, which of the price-quantity tables correctly represents the firm's short-run supply schedule?

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In the short run, the individual competitive firm's supply curve is that segment of the

Correct AnswerverifiedShow Answer

Curve (3) in the diagram is a purely competitive firm's

Correct AnswerverifiedShow Answer

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $42, the competitive firm should produce

Correct AnswerverifiedShow Answer

Refer to the accompanying diagram. The firm will produce at a loss if price is

Correct AnswerverifiedShow Answer

The table shows the total costs for a purely competitive firm. If the product sells for $1,200 a unit, the firm's profit-maximizing output is

Correct AnswerverifiedShow Answer

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $68.10, it will produce

Correct AnswerverifiedShow Answer

Refer to the data in the accompanying table. If the firm's minimum average variable cost is $10, and total fixed costs equal zero, the firm's economic profit (or loss) is

Correct AnswerverifiedShow Answer

A firm reaches a break-even point (normal profit position) where

Correct AnswerverifiedShow Answer

What are the three questions a firm should ask to determine output?

Correct AnswerverifiedThe first question is "Should this firm ...View AnswerShow Answer

A profit-maximizing firm in the short run will expand output

Correct AnswerverifiedShow Answer

What are some examples of the four different market structures?

Correct AnswerverifiedPure competition is exemplified in the m...View AnswerShow Answer

The accompanying table shows cost data for a firm that is selling in a purely competitive market. The firm will produce its output only if the price is at least equal to what minimum level?

Correct AnswerverifiedShow Answer

Curve (4) in the diagram is a purely competitive firm's

Correct AnswerverifiedShow Answer

In the short run, a competitive firm will not produce unless price is at least equal to average total costs.

Correct AnswerverifiedShow Answer

The accompanying table applies to a purely competitive industry composed of 100 identical firms. At the equilibrium price, each of the 100 firms in this industry will produce

Correct AnswerverifiedShow Answer

The provided graph gives short-run data for a firm. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Suppose you find that the price of your product is less than minimum AVC. You should

Correct AnswerverifiedShow Answer

In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is

Correct AnswerverifiedShow Answer

Refer to the provided graph for a purely competitive firm in the short run. What minimum output level should the firm produce just for it to break even?

Correct AnswerverifiedShow Answer

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The first question is "Should this firm ...
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Pure competition is exemplified in the m...
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