Question 1

Figure 14-1
Suppose that a firm in a competitive market has the following cost curves: 
-Refer to Figure 14-1. If the market price is $4.00, the firm will earn

Accepted Answer

A)  positive economic profits in the short run.
B)  negative economic profits in the short run but remain in business.
C)  negative economic profits and shut down.
D)  zero economic profits in the short run.E) A) and B)
F) A) and C)

Question 2

Scenario 14-1
Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit.
-Refer to Scenario 14-1. At Q = 999, the firm's total costs equal

Accepted Answer

A)  $10,985.
B)  $10,990.
C)  $10,995.
D)  $10,999.E) None of the above
F) B) and C)

Question 3

Under what condition is the long-run market supply curve for a competitive market perfectly elastic?

Accepted Answer

There must exist a l...

Question 4

Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs: 
-Refer to Table 14-9. If the firm produces 3 units of output,

Accepted Answer

A)  marginal cost is $4.
B)  total revenue is greater than variable cost.
C)  marginal revenue is less than marginal cost.
D)  the firm is maximizing profit.E) A) and B)
F) B) and C)

Question 5

A firm will shut down in the short run if revenue is not sufficient to cover all of its fixed costs of production.

Accepted Answer

A) True 
 B)False

Question 6

​Table 14-17
The table below shows the price and cost information for a firm that operates in a perfectly competitive market. 
-Refer to Table 14-17. Based upon this information, if the firm is producing the profit maximizing output, how much profit does the firm make?

Accepted Answer

A)  ​$32.
B)  ​$40.
C)  ​$4.
D)  ​$6.E) A) and D)
F) All of the above

Question 7

Competitive firms that earn a loss in the short run should

Accepted Answer

A)  shut down if P 
B)  raise their price.
C)  lower their output.
D)  All of the above are correct.E) All of the above
F) C) and D)

Question 8

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct? (i) 
Marginal revenue equals $3.
(ii) 
Average revenue equals $100.
(iii) 
Total revenue equals $300.

Accepted Answer

A)  (i)  only
B)  (iii)  only
C)  (i)  and (ii)  only
D)  (i) , (ii) , and (iii) E) C) and D)
F) B) and D)

Question 9

Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs: 
-Refer to Table 14-9. At which quantity of output is marginal revenue equal to marginal cost?

Accepted Answer

A)  3 units
B)  5 units
C)  7 units
D)  9 unitsE) All of the above
F) A) and C)

Question 10

Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each. Which of the following statements is correct? (i) 
Marginal revenue equals $4.
(ii) 
Average revenue equals $100.
(iii) 
Total revenue equals $1,600.

Accepted Answer

A)  (i)  only
B)  (iii)  only
C)  (i)  and (iii)  only
D)  (i) , (ii) , and (iii) E) None of the above
F) A) and B)

Question 11

In a certain large city there are two firms that supply concrete. The concrete sold by the first firm is indistinguishable from the concrete sold by the second firm. Is the market competitive?

Accepted Answer

The market is not co...

Question 12

Entry into a market by new firms will increase the

Accepted Answer

A)  supply of the good.
B)  profits of existing firms.
C)  price of the good.
D)  marginal cost of producing the good.E) A) and B)
F) None of the above

Question 13

Table 14-3
The table represents a demand curve faced by a firm in a competitive market. 
-Refer to Table 14-3. For this firm, the average revenue is

Accepted Answer

A)  $39.
B)  $26.
C)  $13.
D)  $0.E) A) and D)
F) All of the above

Question 14

Table 14-1 
-Refer to Table 14-1. The price and quantity relationship in the table is most likely a demand curve faced by a firm in a

Accepted Answer

A)  monopoly.
B)  concentrated market.
C)  competitive market.
D)  strategic market.E) All of the above
F) B) and D)

Question 15

List and describe the characteristics of a perfectly competitive market.

Accepted Answer

There are many buyers and sell...

Question 16

The long-run supply curve in a competitive market is more elastic than the short-run supply curve.

Accepted Answer

A) True 
 B)False

Question 17

Figure 14-1
Suppose that a firm in a competitive market has the following cost curves: 
-Refer to Figure 14-1. The firm's short-run supply curve is its marginal cost curve above

Accepted Answer

A)  $1.
B)  $3.
C)  $4.50.
D)  $6.30.E) All of the above
F) None of the above

Question 18

Figure 14-5
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-5. When market price is P2, a profit-maximizing firm's losses can be represented by the area

Accepted Answer

A)  (P4 - P2)  × Q2.
B)  (P2 - P1)  × (Q2-Q1) .
C)  At a market price of P2, the firm earns profits, not losses.
D)  At a market price of P2 the firm has losses, but the reference points in the figure don't identify the losses.E) B) and D)
F) A) and D)

Question 19

For an individual firm operating in a competitive market, marginal revenue equals

Accepted Answer

A)  average revenue and the price for all levels of output.
B)  average revenue, which is greater than the price for all levels of output.
C)  average revenue, the price, and marginal cost for all levels of output.
D)  marginal cost, which is greater than average revenue for all levels of output.E) None of the above
F) A) and B)

Question 20

In the long-run equilibrium of a competitive market, the number of firms in the market adjusts until the market demand is satisfied at a price equal to the minimum of

Accepted Answer

A)  average fixed cost for the marginal firm.
B)  marginal cost of the marginal firm.
C)  average total cost of the marginal firm.
D)  average variable cost of the marginal firm.E) A) and B)
F) A) and D)

Exam 14: Firms in Competitive Markets

​Table 14-17 The table below shows the price and cost information for a firm that operates in a perfectly competitive market. -Refer to Table 14-17. Based upon this information, if the firm is producing the profit maximizing output, how much profit does the firm make?

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The long-run supply curve in a competitive market is more elastic than the short-run supply curve.

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Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 14-1. The firm's short-run supply curve is its marginal cost curve above

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List and describe the characteristics of a perfectly competitive market.

Correct AnswerverifiedThere are many buyers and sell...View AnswerShow Answer

Entry into a market by new firms will increase the

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For an individual firm operating in a competitive market, marginal revenue equals

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Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 14-1. If the market price is $4.00, the firm will earn

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Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9. If the firm produces 3 units of output,

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A firm will shut down in the short run if revenue is not sufficient to cover all of its fixed costs of production.

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Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each. Which of the following statements is correct? (i) Marginal revenue equals $4. (ii) Average revenue equals $100. (iii) Total revenue equals $1,600.

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Under what condition is the long-run market supply curve for a competitive market perfectly elastic?

Correct AnswerverifiedThere must exist a l...View AnswerShow Answer

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $100. (iii) Total revenue equals $300.

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Scenario 14-1 Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. -Refer to Scenario 14-1. At Q = 999, the firm's total costs equal

Correct AnswerverifiedShow Answer

In the long-run equilibrium of a competitive market, the number of firms in the market adjusts until the market demand is satisfied at a price equal to the minimum of

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Table 14-1 -Refer to Table 14-1. The price and quantity relationship in the table is most likely a demand curve faced by a firm in a

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Table 14-9 Suppose that a firm in a competitive market faces the following revenues and costs: -Refer to Table 14-9. At which quantity of output is marginal revenue equal to marginal cost?

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Table 14-3 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-3. For this firm, the average revenue is

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In a certain large city there are two firms that supply concrete. The concrete sold by the first firm is indistinguishable from the concrete sold by the second firm. Is the market competitive?

Correct AnswerverifiedThe market is not co...View AnswerShow Answer

Competitive firms that earn a loss in the short run should

Correct AnswerverifiedShow Answer

Figure 14-5 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-5. When market price is P2, a profit-maximizing firm's losses can be represented by the area

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Table 14-17 The table below shows the price and cost information for a firm that operates in a perfectly competitive market. -Refer to Table 14-17. Based upon this information, if the firm is producing the profit maximizing output, how much profit does the firm make?

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There are many buyers and sell...
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There must exist a l...
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The market is not co...
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