Question 1

If price is above the long-run competitive equilibrium level,

Accepted Answer

A)   Firms will enter the market.
B)   Firms will shut down.
C)   Firms will incur losses.
D)   The market supply will shift to the left.E) A) and B)
F) A) and C)

Question 2

The exit of firms from a market, ceteris paribus,

Accepted Answer

A)   Shifts the market supply curve to the right.
B)   Has no effect on the economic losses of remaining firms in the market.
C)   Increases the equilibrium price in the market.
D)   Shifts the market demand curve to the left.E) B) and D)
F) A) and C)

Question 3

Which of the following is characteristic of a perfectly competitive market?

Accepted Answer

A)   A small number of firms.
B)   Exit of small firms when profits are high for large firms.
C)   Zero economic profit in the long run.
D)   Marginal revenue lower than price for each firm.E) None of the above
F) All of the above

Question 4

A profit-maximizing producer seeks to

Accepted Answer

A)   Maximize profit per unit.
B)   Minimize marginal cost.
C)   Minimize average total costs.
D)   Maximize total profit.E) All of the above
F) A) and D)

Question 5

The behavior expected in a competitive market includes

Accepted Answer

A)   Very little entry and exit.
B)   Marginal cost pricing.
C)   Aggressive behavior among competitors to control prices.
D)   Little technological growth.E) A) and D)
F) B) and D)

Question 6

In which of the following cases would a firm enter a market?

Accepted Answer

A)   P > short-run ATC.
B)   P 
C)   P > long-run ATC.
D)   P < long-run ATC.E) All of the above
F) None of the above

Question 7

Which of the following is consistent with long-run equilibrium for a perfectly competitive market?

Accepted Answer

A)   Average total costs of production are maximized.
B)   Economic profits are positive.
C)   Maximum technical efficiency is achieved.
D)   Average variable costs of production are maximized.E) All of the above
F) A) and C)

Question 8

Most product markets are perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 9

When economic profits exist in the market for a particular product, this is a signal to producers that

Accepted Answer

A)   Consumers would like more scarce resources devoted to the production of this product.
B)   The market is oversupplied with this product.
C)   The best mix of goods and services is being produced with society's scarce resources.
D)   Price is at the minimum of the ATC curve.E) A) and B)
F) All of the above

Question 10

If a new sushi restaurant opens, then

Accepted Answer

A)   The market supply curve for sushi will shift to the right.
B)   The market supply curve for sushi will shift to the left.
C)   There will be a movement up along the market supply curve for sushi.
D)   There will be a movement down along the market supply curve for sushi. If the number of producers increases, the supply of sushi will increase.E) B) and D)
F) None of the above

Question 11

If the price of ricotta cheese, an ingredient in lasagna, increases, then

Accepted Answer

A)   The market supply curve for lasagna will shift to the right.
B)   The market supply curve for lasagna will shift to the left.
C)   There will be a movement up along the market supply curve for lasagna.
D)   There will be a movement down along the market supply curve for lasagna. If the cost of producing lasagna increases, the supply of lasagna will decrease.E) All of the above
F) B) and D)

Question 12

When an athletic shoe company is producing a level of output at which price is greater than MC, from society's standpoint the company is producing too

Accepted Answer

A)   Much because society is giving up more to produce additional shoes than the shoes are worth.
B)   Much because society would be willing to give up more alternative goods in order to get additional shoes.
C)   Little because society is giving up more to produce additional shoes than the shoes are worth.
D)   Little because society would be willing to give up more alternative goods in order to get additional shoes. High profits in a particular industry indicate that consumers want a different mix of output (more of that particular industry's goods) .E) None of the above
F) A) and B)

Question 13

The "$99 iPads" The Economy Tomorrowanalysis indicates that the success of the iPad

Accepted Answer

A)   Attracted new firms with identical products.
B)   Created new entrants into the tablet market.
C)   Caused exit of firms from the tablet market.
D)   Caused the quality of products to fall.E) B) and C)
F) None of the above

Question 14

Entry and exit are long-run investment decisions.

Accepted Answer

A) True 
 B)False

Question 15

Refer to Figure 23.5 for a perfectly competitive firm.This firm will maximize profits by producing the level of output that corresponds to point

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   DE) A) and B)
F) A) and C)

Question 16

Perfectly competitive firms are heavy advertisers because they produce differentiated products.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)   Zero economic profit in the long run.
B)   Perfect information.
C)   Homogeneous products.
D)   High barriers.E) B) and C)
F) C) and D)

Question 18

In Figure 23.3, diagram "a" presents the cost curves that are relevant to a firm's production decision, and diagram "b" shows the market demand and supply curves for the market.Use both diagrams to answer the following question: In the long run, at prices below p2 in Figure 23.3,

Accepted Answer

A)   There is economic profit.
B)   The firm will produce the quantity where MC = MR.
C)   Firms will enter the market.
D)   Firms will exit the market.E) A) and B)
F) A) and C)

Question 19

To maximize profits, a competitive firm will seek to expand output until

Accepted Answer

A)   Total revenue equals total cost.
B)   The elasticity of demand equals 1.
C)   Price equals marginal cost.
D)   Price equals $0.E) A) and D)
F) A) and C)

Question 20

Refer to Figure 23.4.In the long run, which of the following would not be expected?

Accepted Answer

A)   A decrease in market supply.
B)   An increase in total revenue for the remaining firms.
C)   An increase in output for the remaining firms.
D)   A decrease in MR for the remaining firms.E) A) and B)
F) B) and D)

Exam 9: Competitive Markets

Refer to Figure 23.5 for a perfectly competitive firm.This firm will maximize profits by producing the level of output that corresponds to point

Correct AnswerverifiedShow Answer

If the price of ricotta cheese, an ingredient in lasagna, increases, then

Correct AnswerverifiedShow Answer

Which of the following is consistent with long-run equilibrium for a perfectly competitive market?

Correct AnswerverifiedShow Answer

Which of the following is characteristic of a perfectly competitive market?

Correct AnswerverifiedShow Answer

Most product markets are perfectly competitive.

Correct AnswerverifiedShow Answer

Entry and exit are long-run investment decisions.

Correct AnswerverifiedShow Answer

Refer to Figure 23.4.In the long run, which of the following would not be expected?

Correct AnswerverifiedShow Answer

If a new sushi restaurant opens, then

Correct AnswerverifiedShow Answer

In which of the following cases would a firm enter a market?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When economic profits exist in the market for a particular product, this is a signal to producers that

Correct AnswerverifiedShow Answer

If price is above the long-run competitive equilibrium level,

Correct AnswerverifiedShow Answer

The exit of firms from a market, ceteris paribus,

Correct AnswerverifiedShow Answer

A profit-maximizing producer seeks to

Correct AnswerverifiedShow Answer

The behavior expected in a competitive market includes

Correct AnswerverifiedShow Answer

When an athletic shoe company is producing a level of output at which price is greater than MC, from society's standpoint the company is producing too

Correct AnswerverifiedShow Answer

To maximize profits, a competitive firm will seek to expand output until

Correct AnswerverifiedShow Answer

Perfectly competitive firms are heavy advertisers because they produce differentiated products.

Correct AnswerverifiedShow Answer

The "$99 iPads" The Economy Tomorrowanalysis indicates that the success of the iPad

Correct AnswerverifiedShow Answer

In Figure 23.3, diagram "a" presents the cost curves that are relevant to a firm's production decision, and diagram "b" shows the market demand and supply curves for the market.Use both diagrams to answer the following question: In the long run, at prices below p2 in Figure 23.3,

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified