Question 1

A purely competitive firm currently producing 30 units of output earns marginal revenues of $12 from each extra unit of output it sells. If it sells 30 units, then its total revenues would be

Accepted Answer

A)  $360.
B)  $240.
C)  $120.
D)  indeterminate based on the information given.E) A) and D)
F) C) and D)

Question 2

Why does price equal marginal revenue for the purely competitive firm? What is the relationship to the demand curve for the firm?

Accepted Answer

Price equals marginal revenue for the pu...

Question 3

An industry comprising 40 firms, none of which has more than 3 percent of the total market for a differentiated product, is an example of

Accepted Answer

A)  monopolistic competition.
B)  oligopoly.
C)  pure monopoly.
D)  pure competition.E) B) and C)
F) A) and B)

Question 4

Assume that labor is a variable input. The average wage of workers increases in a purely competitive industry. This change will result in a(n)

Accepted Answer

A)  increase in marginal cost for firms in the industry and an increase in the industry supply curve.
B)  decrease in marginal cost for firms in the industry and a decrease in the industry supply curve.
C)  decrease in marginal cost for firms in the industry and an increase in the industry supply curve.
D)  increase in marginal cost for firms in the industry and a decrease in the industry supply curve.E) A) and C)
F) C) and D)

Question 5

Refer to the provided graph for a purely competitive firm in the short run. If the firm increases its output level from B to C, then its total profits will be

Accepted Answer

A)  negative and decreasing.
B)  negative and increasing.
C)  positive and increasing.
D)  positive and decreasing.E) A) and B)
F) C) and D)

Question 6

Suppose that Joe sells pork in a purely competitive market. The market price of pork is $3 per pound. Joe's marginal revenue from selling the 12th pound of pork would be

Accepted Answer

A)  $3.
B)  $36.
C)  12 lbs.
D)  $12.E) B) and D)
F) A) and C)

Question 7

The short-run supply curve slopes upward because producers must be compensated for rising marginal costs.

Accepted Answer

A) True 
 B)False

Question 8

The accompanying table shows cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $60, the firm will

Accepted Answer

A)  shut down.
B)  produce 3 units.
C)  produce 2 units.
D)  produce 5 units.E) None of the above
F) C) and D)

Question 9

According to the information in the provided diagram, this firm is selling its product in a(n)

Accepted Answer

A)  purely competitive market.
B)  oligopoly market.
C)  monopolistically competitive market.
D)  monopolistic market.E) A) and C)
F) A) and B)

Question 10

The table gives data for a purely competitive firm. When the firm produces 3 units of output, it makes an economic

Accepted Answer

A)  profit of $40.
B)  loss of $3.
C)  profit of $3.
D)  loss of $39.E) B) and D)
F) B) and C)

Question 11

If the market demand for the product increases, in the short run a purely competitive firm

Accepted Answer

A)  will not change its output quantity because there are so many firms that the individual firm will not be affected by the change.
B)  will earn higher profits or experience smaller losses as a result of the change in the market.
C)  will experience no change in costs as it steps up production in response to the change in the market.
D)  can employ more inputs and increase the size of its plant, to respond to the change in the market.E) A) and D)
F) B) and C)

Question 12

The accompanying graph shows the cost curves for a competitive firm. What is the lowest price at which the firm will start producing output in the short run?

Accepted Answer

A)  $1.25
B)  $1.05
C)  $0.90
D)  $0.60E) A) and B)
F) All of the above

Question 13

The first table shows cost data for a single firm. Now suppose that there are 600 identical firms in this industry, each with the same cost data. Suppose, too, that the demand curve for this industry is as shown in the second table.  When the market is in equilibrium, each of the firms will be producing

Accepted Answer

A)  5 units.
B)  6 units.
C)  7 units.
D)  9 units.E) A) and C)
F) B) and D)

Question 14

This purely competitive firm shown in the accompanying graph will not produce unless price is at least

Accepted Answer

A)  $2.
B)  $5.
C)  $7.
D)  $10.E) B) and C)
F) A) and B)

Question 15

For a purely competitive firm, total revenue

Accepted Answer

A)  is price times quantity sold.
B)  increases by a constant absolute amount as output expands.
C)  graphs as a straight upsloping line from the origin.
D)  has all of these characteristics.E) A) and C)
F) B) and D)

Question 16

Refer to the accompanying graph for a purely competitive firm operating at a loss in the short run. Which area in the graph represents the portion of total costs that the firm can recoup by continuing to produce rather than shutting down?

Accepted Answer

A)  0 beg
B)  bcde
C)  acdf
D)  abefE) All of the above
F) A) and B)

Question 17

The data in the accompanying table indicates that this firm is selling its output in a(n)

Accepted Answer

A)  monopolistically competitive market.
B)  monopolistic market.
C)  purely competitive market.
D)  oligopolistic market.E) None of the above
F) A) and B)

Question 18

Refer to the accompanying cost table. If a competitive firm faced with these costs finds that it can sell its product at $60 per unit, it will

Accepted Answer

A)  produce 5 units and incur a loss of $50.
B)  produce 6 units and incur a loss of $30.
C)  produce 7 units and realize a profit of $32.
D)  close down in the short run.E) B) and C)
F) A) and C)

Question 19

In answering the question, assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis.For a purely competitive firm, total revenue graphs as a

Accepted Answer

A)  straight, upsloping line.
B)  straight line, parallel to the vertical axis.
C)  straight line, parallel to the horizontal axis.
D)  straight, downsloping line.E) All of the above
F) A) and C)

Question 20

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating

Accepted Answer

A)  price and average total cost.
B)  price and average fixed cost.
C)  marginal revenue and marginal cost.
D)  price and marginal revenue.E) B) and D)
F) B) and C)

Exam 10: Pure Competition in the Short Run

This purely competitive firm shown in the accompanying graph will not produce unless price is at least

Correct Answer
verified

A purely competitive firm currently producing 30 units of output earns marginal revenues of $12 from each extra unit of output it sells. If it sells 30 units, then its total revenues would be

Correct Answer
verified

Refer to the provided graph for a purely competitive firm in the short run. If the firm increases its output level from B to C, then its total profits will be

Correct Answer
verified

The short-run supply curve slopes upward because producers must be compensated for rising marginal costs.

Correct Answer
verified

According to the information in the provided diagram, this firm is selling its product in a(n)

Correct Answer
verified

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating

Correct Answer
verified

The data in the accompanying table indicates that this firm is selling its output in a(n)

Correct Answer
verified

Suppose that Joe sells pork in a purely competitive market. The market price of pork is $3 per pound. Joe's marginal revenue from selling the 12th pound of pork would be

Correct Answer
verified

Refer to the accompanying cost table. If a competitive firm faced with these costs finds that it can sell its product at $60 per unit, it will

Correct Answer
verified

Refer to the accompanying graph for a purely competitive firm operating at a loss in the short run. Which area in the graph represents the portion of total costs that the firm can recoup by continuing to produce rather than shutting down?

Correct Answer
verified

For a purely competitive firm, total revenue

Correct Answer
verified

Why does price equal marginal revenue for the purely competitive firm? What is the relationship to the demand curve for the firm?

Correct Answer
verified
Price equals marginal revenue for the pu...
View Answer

If the market demand for the product increases, in the short run a purely competitive firm

Correct Answer
verified

The accompanying graph shows the cost curves for a competitive firm. What is the lowest price at which the firm will start producing output in the short run?

Correct Answer
verified

The table gives data for a purely competitive firm. When the firm produces 3 units of output, it makes an economic

Correct Answer
verified

The accompanying table shows cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $60, the firm will

Correct Answer
verified

Assume that labor is a variable input. The average wage of workers increases in a purely competitive industry. This change will result in a(n)

Correct Answer
verified

An industry comprising 40 firms, none of which has more than 3 percent of the total market for a differentiated product, is an example of

Correct Answer
verified

Correct Answer
verified

In answering the question, assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis.For a purely competitive firm, total revenue graphs as a

Correct Answer
verified

Exam 10: Pure Competition in the Short Run

This purely competitive firm shown in the accompanying graph will not produce unless price is at least

Correct AnswerverifiedShow Answer

A purely competitive firm currently producing 30 units of output earns marginal revenues of $12 from each extra unit of output it sells. If it sells 30 units, then its total revenues would be

Correct AnswerverifiedShow Answer

Refer to the provided graph for a purely competitive firm in the short run. If the firm increases its output level from B to C, then its total profits will be

Correct AnswerverifiedShow Answer

The short-run supply curve slopes upward because producers must be compensated for rising marginal costs.

Correct AnswerverifiedShow Answer

According to the information in the provided diagram, this firm is selling its product in a(n)

Correct AnswerverifiedShow Answer

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating

Correct AnswerverifiedShow Answer

The data in the accompanying table indicates that this firm is selling its output in a(n)

Correct AnswerverifiedShow Answer

Suppose that Joe sells pork in a purely competitive market. The market price of pork is $3 per pound. Joe's marginal revenue from selling the 12th pound of pork would be

Correct AnswerverifiedShow Answer

Refer to the accompanying cost table. If a competitive firm faced with these costs finds that it can sell its product at $60 per unit, it will

Correct AnswerverifiedShow Answer

Refer to the accompanying graph for a purely competitive firm operating at a loss in the short run. Which area in the graph represents the portion of total costs that the firm can recoup by continuing to produce rather than shutting down?

Correct AnswerverifiedShow Answer

For a purely competitive firm, total revenue

Correct AnswerverifiedShow Answer

Why does price equal marginal revenue for the purely competitive firm? What is the relationship to the demand curve for the firm?

Correct AnswerverifiedPrice equals marginal revenue for the pu...View AnswerShow Answer

If the market demand for the product increases, in the short run a purely competitive firm

Correct AnswerverifiedShow Answer

The accompanying graph shows the cost curves for a competitive firm. What is the lowest price at which the firm will start producing output in the short run?

Correct AnswerverifiedShow Answer

The table gives data for a purely competitive firm. When the firm produces 3 units of output, it makes an economic

Correct AnswerverifiedShow Answer

The accompanying table shows cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $60, the firm will

Correct AnswerverifiedShow Answer

Assume that labor is a variable input. The average wage of workers increases in a purely competitive industry. This change will result in a(n)

Correct AnswerverifiedShow Answer

An industry comprising 40 firms, none of which has more than 3 percent of the total market for a differentiated product, is an example of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In answering the question, assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis.For a purely competitive firm, total revenue graphs as a

Correct AnswerverifiedShow Answer

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Price equals marginal revenue for the pu...
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