Question 1

​Whenever firms in a perfectly competitive market produce the output level where marginal revenue equals marginal cost, we know that the firm is earning an economic profit.

Accepted Answer

A) True 
 B)False

Question 2

Why would a firm in a perfectly competitive market always choose to set its price equal to the current market price? If a firm set its price below the current market price, what effect would this have on the market?

Accepted Answer

The firm could not sell any more of its ...

Question 3

A firm that shuts down temporarily has to pay

Accepted Answer

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

Question 4

Which of the following represents the firm's short-run condition for shutting down?

Accepted Answer

A)  shut down if TR 
B)  shut down if TR 
C)  shut down if P 
D)  shut down if TR < VCE) A) and C)
F) A) and B)

Question 5

Mr. Rogers sells colored pencils. The colored-pencil industry is competitive. Mr. Rogers hires a business consultant to analyze his company's financial records. The consultant recommends that Mr. Rogers increase his production. The consultant must have concluded that Mr. Roger's

Accepted Answer

A)  total revenues equal his total economic costs.
B)  marginal revenue exceeds his total cost.
C)  marginal revenue exceeds his marginal cost.
D)  marginal cost exceeds his marginal revenue.E) A) and B)
F) A) and C)

Question 6

A competitive market begins in a situation of long-run equilibrium. Then, there is an increase in demand. Describe the process that eventually leads to a new long-run equilibrium.

Accepted Answer

The increase in demand results in firms ...

Question 7

A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $4.75. The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses).

Accepted Answer

A) True 
 B)False

Question 8

Table 14-8
Suppose that a firm in a competitive market faces the following revenues and costs: 
-Refer to Table 14-8. In order to maximize profits, the firm will produce

Accepted Answer

A)  1 unit of output because marginal cost is minimized.
B)  4 units of output because marginal revenue exceeds marginal cost.
C)  5 units of output because marginal revenue equals marginal cost.
D)  7 units of output because total revenue is maximized.E) A) and D)
F) A) and C)

Exam 14: Firms in Competitive Markets

Whenever firms in a perfectly competitive market produce the output level where marginal revenue equals marginal cost, we know that the firm is earning an economic profit.

Correct Answer
verified

A competitive market begins in a situation of long-run equilibrium. Then, there is an increase in demand. Describe the process that eventually leads to a new long-run equilibrium.

Correct Answer
verified
The increase in demand results in firms ...
View Answer

Mr. Rogers sells colored pencils. The colored-pencil industry is competitive. Mr. Rogers hires a business consultant to analyze his company's financial records. The consultant recommends that Mr. Rogers increase his production. The consultant must have concluded that Mr. Roger's

Correct Answer
verified

Which of the following represents the firm's short-run condition for shutting down?

Correct Answer
verified

Why would a firm in a perfectly competitive market always choose to set its price equal to the current market price? If a firm set its price below the current market price, what effect would this have on the market?

Correct Answer
verified
The firm could not sell any more of its ...
View Answer

A firm that shuts down temporarily has to pay

Correct Answer
verified

Table 14-8 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-8. In order to maximize profits, the firm will produce

Correct Answer
verified

A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $4.75. The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses).

Correct Answer
verified

Exam 14: Firms in Competitive Markets

​Whenever firms in a perfectly competitive market produce the output level where marginal revenue equals marginal cost, we know that the firm is earning an economic profit.

Correct AnswerverifiedShow Answer

A competitive market begins in a situation of long-run equilibrium. Then, there is an increase in demand. Describe the process that eventually leads to a new long-run equilibrium.

Correct AnswerverifiedThe increase in demand results in firms ...View AnswerShow Answer

Mr. Rogers sells colored pencils. The colored-pencil industry is competitive. Mr. Rogers hires a business consultant to analyze his company's financial records. The consultant recommends that Mr. Rogers increase his production. The consultant must have concluded that Mr. Roger's

Correct AnswerverifiedShow Answer

Which of the following represents the firm's short-run condition for shutting down?

Correct AnswerverifiedShow Answer

Why would a firm in a perfectly competitive market always choose to set its price equal to the current market price? If a firm set its price below the current market price, what effect would this have on the market?

Correct AnswerverifiedThe firm could not sell any more of its ...View AnswerShow Answer

A firm that shuts down temporarily has to pay

Correct AnswerverifiedShow Answer

Table 14-8 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-8. In order to maximize profits, the firm will produce

Correct AnswerverifiedShow Answer

A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $4.75. The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses).

Correct AnswerverifiedShow Answer

Whenever firms in a perfectly competitive market produce the output level where marginal revenue equals marginal cost, we know that the firm is earning an economic profit.

Correct Answer
verified

Correct Answer
verified
The increase in demand results in firms ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The firm could not sell any more of its ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified