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Exam 6: Perfect Competition

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Question 101

Multiple Choice

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An increasing-cost industry is one in which the average cost of production ________ as the total output of the industry ________.

A) increases; increases
B) increases; decreases
C) decreases; increases
D) None of the above; there are no increasing-cost industries.

E) A) and B)
F) A) and C)

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Question 102

Multiple Choice

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A firm's marginal cost curve above the minimum of the average variable cost curve is also

A) the firm's demand for production curve.
B) the firm's producer surplus curve.
C) the firm's short-run supply curve.
D) the market supply curve.

E) A) and B)
F) B) and C)

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Question 103

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A firm's short-run supply curve is its marginal cost curve above the shut down point.

An increase in demand will lead to a decrease in supply in the long run.

You sell your good in a perfectly competitive market where the market price is $7.00. When you sell 100 units your total revenue is $700. When you sell 101 units

In the short run, a firm considers its fixed cost as a(n)

Recall the Application about the wireless phone service provided by thousands of entrepreneurial women in Pakistan to answer the following question(s) . -Recall the Application. Because the average earnings of the "wireless women" in Pakistan are three times the average wage rate, then we would expect that in the long run

-Figure 6.1 shows the cost structure of a firm in a perfectly competitive market. If the firm's fixed cost increases by 3,000 due to a new government regulation

What is a long-run supply curve?

A constant cost industry is one in which

Figure 6.3 -Figure 6.3 shows the cost structure of a firm in a perfectly competitive market. If the market price is $3 and the firm shuts down in the short run, its profit is

If a firm suffers an economic loss, its

-Figure 6.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40, the firm's profit maximizing output level is

Suppose Tim's Cowboy boot factory produces in a perfectly competitive market. Suppose the average total cost of cowboy boots is $65, the average variable cost of cowboy boots is $60, and the price of cowboy boots is $62. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm

Recall the Application about the supply of shipping services to answer the following question(s) . -Recall the Application. The short-run supply curve for shipping services is

Figure 6.3 -Figure 6.3 shows the cost structure of a firm in a perfectly competitive market. Assume the market price is $3 and the firm is currently producing 100 units. If the firm produces zero units in the short run, it will reduce its economic loss by

A constant cost industry is more likely to arise in a market where

What happens in the short run and long run in a constant cost industry such as bags of ice after a natural disaster like a hurricane?

In a constant cost industry, a decrease in price causes

Figure 6.2 -Figure 6.2 shows the cost structure of a firm in a perfectly competitive market. If the market price is $10 and the firm chooses the profit maximizing output level, its profit is