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1 | |
Which of the following is a condition of perfect competition? |
| | A) | products produced by rival firms are perfect substitutes |
| | B) | individual firms can affect market supply |
| | C) | industry sales are small |
| | D) | restricted entry and exit |
| | E) | firms do not have complete knowledge about production and prices |
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2 | |
For a firm in a perfectly competitive market, marginal revenue... |
| | A) | is the addition to total revenue from producing one more unit of output. |
| | B) | is equal to price at any level of output. |
| | C) | decreases as the firm produces more output. |
| | D) | both a and b |
| | E) | both a and c |
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3 | |
The next two questions refer to the following figure: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0070601607/124372/chap12_3.gif','popWin', 'width=563,height=419,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (4.0K)</a>]]>
If the firm is producing 100 units of output, increasing output by one unit would ______ the firm's profit by $______. |
| | A) | decrease, $2 |
| | B) | increase, $2 |
| | C) | increase, $1 |
| | D) | decrease, $1 |
| | E) | increase, $3 |
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4 | |
If the firm is producing 200 units of output, decreasing output by one unit would ______ the firm's profit by $______. |
| | A) | increase, $2 |
| | B) | decrease, $2 |
| | C) | increase, $3 |
| | D) | decrease, $5 |
| | E) | increase, $5 |
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5 | |
In order to minimize losses in the short run, a perfectly competitive firm should shut down if... |
| | A) | total revenue is less than total cost. |
| | B) | total revenue is less than total fixed cost. |
| | C) | total revenue is less than the difference between total fixed cost and total variable cost. |
| | D) | total revenue is less than total variable cost. |
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6 | |
When a perfect competitive industry is in long-run equilibrium, |
| | A) | firms have incentives to enter or exit the industry. |
| | B) | market price is equal to minimum long-run average cost. |
| | C) | each firm earns zero profit. |
| | D) | both b and c |
| | E) | all of the above |
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7 | |
The next 4 questions refer to the following figure: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0070601607/124372/chap12_7.gif','popWin', 'width=574,height=460,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (4.0K)</a>]]>
If market price is $50, how much output will the firm produce? |
| | A) | 0 units |
| | B) | 100 units |
| | C) | 300 units |
| | D) | 400 units |
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8 | |
If market price is $50, how much profit will the firm earn? |
| | A) | $12,000 |
| | B) | $15,000 |
| | C) | $3,000 |
| | D) | $6,000 |
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9 | |
If market price is $20, how much profit will the firm earn? |
| | A) | zero |
| | B) | -$3,000 |
| | C) | $3,000 |
| | D) | $300 |
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10 | |
At what level of output will the firm break even? |
| | A) | 100 |
| | B) | 200 |
| | C) | 250 |
| | D) | 350 |
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11 | |
The next 3 questions refer to the following figure: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0070601607/124372/chap12_11.gif','popWin', 'width=637,height=515,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (7.0K)</a>]]>
What output will the firm produce? |
| | A) | 100 |
| | B) | 150 |
| | C) | 200 |
| | D) | 250 |
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12 | |
How much profit will the firm earn? |
| | A) | zero |
| | B) | $200 |
| | C) | $600 |
| | D) | $800 |
| | E) | $1,400 |
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13 | |
If this is a constant cost industry, what will be the price when the industry gets to long-run competitive equilibrium? |
| | A) | $4 |
| | B) | below $4 |
| | C) | between $7 and $4 |
| | D) | $7 |
| | E) | above $7 |
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14 | |
The next 7 questions refer to the following:Suppose that the manager of a firm operating in a perfectly competitive market has estimated the average variable cost function to be:AVC = 4.0 − 0.0024Q + 0.000006Q2 Fixed costs are $500. The marginal cost function is: |
| | A) | MC = 4.0 − 0.0048Q + 0.000018Q2 |
| | B) | MC = 4.0 − 0.0012Q + 0.000002Q2 |
| | C) | MC = 4.0Q − 0.0024Q2 + 0.000012Q3 |
| | D) | MC = 4.0 − 0.0048Q + 0.000012Q2 |
| | E) | none of the above |
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15 | |
Average variable cost reaches its minimum value at _____ units of output. |
| | A) | 20 |
| | B) | 200 |
| | C) | 400 |
| | D) | 600 |
| | E) | |
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16 | |
The minimum value of average variable cost is $_____. |
| | A) | $3.95 |
| | B) | $4.00 |
| | C) | $3.76 |
| | D) | $2.72 |
| | E) | none of the above |
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17 | |
If the forecasted price of the firm's output is $4.00, how much output will the firm produce in the short run? |
| | A) | zero |
| | B) | 266.67 |
| | C) | 200 |
| | D) | 26.67 |
| | E) | none of the above |
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18 | |
If the forecasted price of the firm's output is $4.00, how much profit (loss) will the firm earn? |
| | A) | $57 |
| | B) | -$943 |
| | C) | $557 |
| | D) | -$443 |
| | E) | none of the above |
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19 | |
If the forecasted price of the firm's output is $3.00, how much output will the firm produce in the short run? |
| | A) | zero |
| | B) | 266.67 |
| | C) | 200 |
| | D) | 26.67 |
| | E) | none of the above |
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20 | |
If the firm shuts down, how much profit (loss) will the firm earn? |
| | A) | zero |
| | B) | -$500 |
| | C) | $57 |
| | D) | -$943 |
| | E) | none of the above |
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