Question 1

Statement I.Marginal revenue is the additional revenue from selling one more unit of output.
Statement II.A firm will always produce at an output at which marginal revenue is greater than marginal cost,except when it is minimizing its losses.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement I is false and statement II is true.
C)  Both statements are true.
D)  Both statements are false.

Question 2

-Profit per unit is

Accepted Answer

A)  TF.
B)  TG.
C)  SH.
D)  GF.

Question 3

-The firm's break-even point occurs at an output of

Accepted Answer

A)  40.
B)  45.
C)  50.
D)  55.
E)  60.

Question 4

-The firm's long-run supply curve begins at an output of

Accepted Answer

A)  0.
B)  40.
C)  45.
D)  50.
E)  55.

Question 5

Firms that remain in an industry after other firms that have lost money exit the market,will have the tendency to ____________ their output.

Accepted Answer

The answer of Firms that remain in an industry after...

Question 6

Which statement is false?

Accepted Answer

A)  The break-even point lies on the firm's short-run supply curve.
B)  The firm's short-run and long-run supply curves both run along the marginal cost curve.
C)  In the short run a firm losing money will operate if the price is between the break-even point and the shutdown point.
D)  The lowest price acceptable to a firm in the short run is at the break-even point.

Question 7

Under perfect competition,price is equal to

Accepted Answer

A)  marginal revenue.
B)  total revenue divided by output.
C)  average revenue.
D)  All of the choices are equal to price under perfect competition.

Question 8

A firm that accepts the price as determined by industry supply and demand is called a ______.

Accepted Answer

price take...

Question 9

Statement I: The Internet has moved entire markets much closer to the ideal of perfect knowledge.
Statement II: The advent of the Internet has brought wide sectors of business closer to the ideal of perfect competition.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.

Question 10

Which statement is true?

Accepted Answer

A)  The perfect competitor sets her price.
B)  Perfect competitors sell below market price to attract new customers.
C)  In the long run the perfect competitor produces at an output at which ATC is falling.
D)  The perfect competitor makes zero economic profit in the long run.

Question 11

In the short run if price is below average variable cost the firm will

Accepted Answer

A)  go out of business.
B)  stay in business.
C)  shut down.
D)  operate.

Question 12

If there are short-run losses in a perfectly competitive industry,in the long run some firms will __________ and the industry-wide price will _______.

Accepted Answer

exit the i...

Question 13

What is the lowest price the firm would accept in the short run?

Accepted Answer

The answer of What is the lowest price the firm...

Question 14

All of the following variables are used to calculate total profit except

Accepted Answer

A)  output.
B)  price.
C)  AVC.
D)  ATC.

Question 15

Total profit is always maximized when __________ equals ___________.

Accepted Answer

marginal c...

Question 16

What is the lowest price the firm would accept in the long run?

Accepted Answer

The answer of What is the lowest price the firm...

Question 17

The ___________ curve facing a perfectly competitive firm is perfectly elastic.

Accepted Answer

A)  average total cost
B)  marginal cost
C)  supply
D)  demand

Question 18

-The perfect competitor shown in the graph above is in the

Accepted Answer

A)  short run making a profit.
B)  short run taking a loss.
C)  long run making a profit.
D)  long run taking a loss.
E)  long run breaking even.

Question 19

In the long run under perfect competition

Accepted Answer

A)  most firms make a profit.
B)  most firms lose money.
C)  firms operate at the minimum points of their average total cost curves.
D)  most firms make economic profits,but not accounting profits.

Question 20

The existence of economic profits in a perfectly competitive industry

Accepted Answer

A)  will signal resources to flow into that industry.
B)  gives the investors in that industry a return on investment that just covers opportunity costs.
C)  indicates an inelastic demand for the industry's products.
D)  indicates that economic resources are being used efficiently in that industry.

Exam 21: Profit, loss, and Perfect Competition

What is the lowest price the firm would accept in the short run?

Correct AnswerverifiedShow Answer

Which statement is true?

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All of the following variables are used to calculate total profit except

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-Profit per unit is

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The existence of economic profits in a perfectly competitive industry

Correct AnswerverifiedShow Answer

Firms that remain in an industry after other firms that have lost money exit the market,will have the tendency to ____________ their output.

Correct AnswerverifiedShow Answer

Total profit is always maximized when __________ equals ___________.

Correct Answerverifiedmarginal c...View AnswerShow Answer

If there are short-run losses in a perfectly competitive industry,in the long run some firms will __________ and the industry-wide price will _______.

Correct Answerverifiedexit the i...View AnswerShow Answer

-The firm's break-even point occurs at an output of

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Which statement is false?

Correct AnswerverifiedShow Answer

-The perfect competitor shown in the graph above is in the

Correct AnswerverifiedShow Answer

Statement I: The Internet has moved entire markets much closer to the ideal of perfect knowledge. Statement II: The advent of the Internet has brought wide sectors of business closer to the ideal of perfect competition.

Correct AnswerverifiedShow Answer

What is the lowest price the firm would accept in the long run?

Correct AnswerverifiedShow Answer

A firm that accepts the price as determined by industry supply and demand is called a ______.

Correct Answerverifiedprice take...View AnswerShow Answer

-The firm's long-run supply curve begins at an output of

Correct AnswerverifiedShow Answer

In the long run under perfect competition

Correct AnswerverifiedShow Answer

In the short run if price is below average variable cost the firm will

Correct AnswerverifiedShow Answer

Under perfect competition,price is equal to

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The ___________ curve facing a perfectly competitive firm is perfectly elastic.

Correct AnswerverifiedShow Answer

Statement I.Marginal revenue is the additional revenue from selling one more unit of output. Statement II.A firm will always produce at an output at which marginal revenue is greater than marginal cost,except when it is minimizing its losses.

Correct AnswerverifiedShow Answer

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Total profit is always maximized when equals _.

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marginal c...
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If there are short-run losses in a perfectly competitive industry,in the long run some firms will ____ and the industry-wide price will _.

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exit the i...
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price take...
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