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Question;MULTIPLE CHOICE93) One of the requirements for a monopoly is that;A) products are high priced.;B) there is a unique product with no close substitutes.;C) there are several close substitutes for the product.;D) there is no barrier to entry.;E) the product cannot be produced by small firms.;93);94) A monopoly is a market with;A) no barriers to entry.;B) many substitutes.;C) one supplier.;D) many suppliers each producing an identical product.;E) many suppliers each producing a slightly different product.;94);95) Technology reduces the average cost of production, so in;the long run;i. perfectly competitive firms produce at a lower average cost.;ii. the market price of the good falls.;iii. firms with older plants either exit the market or adopt;the new technology.;A) i and ii.;B) i only.;C) iii only.;D) i and iii.;E) i, ii, and iii.;95);96) When a firm adopts new technology, generally its;A) cost curves are unaffected.;B) cost curves shift downward.;C) production permanently decreases.;D) supply curve shifts leftward.;E) cost curves shift upward.;96);97) Suppose a perfectly competitive market is in long-run equilibrium with a price of $12. Then;there is a permanent increase in demand. As a result, in the;short run the market price;and in the long run the number of firms ________ and the price;is ________ the price was in the;short run.;A) falls, decreases, is equal to;B) rises, does not change, lower than;C) rises, increases, higher than;D) rises, increases, lower than;E) rises, does not change, is equal to;97);98) Keith is a perfectly competitive carnation grower. The;market price is $2 per dozen carnations.;Keith's average total cost to grow carnations is $2.50 per;dozen. In the long run, Keith will;A) continue to earn an economic profit.;B) raise his price to more than $2.50 per dozen carnations.;C) raise his price to $2.50 per dozen carnations.;D) exit the industry if the price and his costs do not change.;E) incur an economic loss.;98);21;99) In the long run, existing firms exit a perfectly;competitive market;A) only if economic profits are zero.;B) only if they incur an economic loss.;C) if they earn a positive economic profit.;D) if they either earn only a normal profit or if they incur an;economic loss.;E) if normal profits are greater than zero.;99);100) Suppose a perfectly competitive market is in short-run equilibrium. Firms that are incurring a;economic loss ________.;A) persistent, exit the industry and shift the market supply;curve rightward;B) temporary, decrease their production but definitely stay;open;C) persistent, exit the industry and shift the market supply;curve leftward;D) temporary, exit the industry;E) persistent, increase their output to increase their profit;100);101) Suppose a perfectly competitive market is in long-run equilibrium and then there is a;permanent increase in the demand for that product. The new long-run equilibrium will have;A) a permanent decrease in supply.;B) fewer firms in the market.;C) the same number of firms in the market.;D) probably a different number of firms, but it is not possible;to determine if there will be;more or fewer firms.;E) more firms in the market.;101);102) The cranberry market is perfectly competitive. Reports;that consuming cranberries can lead to;improved health result in a permanent increase in the demand;for cranberries and an immediate;upward jump in the price of cranberries. As time passes, the;price of cranberries ________ and;the initial firms' economic ________.;A) rises still higher, loss will be eliminated;B) rises still higher, profit will not change;C) falls, profit will not change;D) falls, loss will be increased;E) falls, profit will be eliminated;102);103) In the long run, a perfectly competitive firm;A) makes zero economic profit.;B) makes an economic profit.;C) can make an economic profit, zero economic profit, or incur;an economic loss.;D) incurs an economic loss.;E) can make either an economic profit or a normal profit.;103);104) Juan's Software Service Company is in a perfectly;competitive market. Juan has total fixed cost of;$25,000, average variable cost for 1,000 service calls is $45;and marginal revenue is $75. Juan's;makes 1,000 service calls a month. What is his economic profit?;A) $25,000 B) $45,000 C) $75,000 D) $5,000 E) $50,000;104);105) A perfectly competitive firm definitely earns an economic;profit in the short run if price is;A) equal to average total cost.;B) greater than average total cost.;C) greater than average variable cost.;D) equal to marginal cost.;E) greater than marginal cost.;105);106) In the short run, a perfectly competitive firm;A) must make zero economic profit.;B) must make an economic profit.;C) None of the above answers is correct.;D) must incur an economic loss.;E) might make an economic profit, an economic loss, or a normal;profit.;106);107) The above figure shows a perfectly competitive firm. If;the market price is $20 per unit, the firm;A) will stay open to produce and will earn a normal profit.;B) will definitely shut down to minimize its losses.;C) will stay open to produce and will incur an economic loss.;D) might shut down but more information is needed about the;fixed cost.;E) will stay open to produce and will earn an economic profit.;107);23;108) The above figure shows a perfectly competitive firm. If;the market price is $15, the firm;A) is earning an economic profit.;B) is incurring an economic loss.;C) is earning a normal profit.;D) might shut down but more information is needed about theAVC.;E) will immediately shut down.;108);109) A perfectly competitive firm is producing 50 units of;output and selling at the market price of;$23. The firm's average total cost is $20. What is the firm's;total cost?;A) $20 B) $150 C) $23 D) $1,000 E) $1,150;109);110) Suppose that marginal revenue for a perfectly competitive;firm is $20. When the firm produces;10 units, its marginal cost is $20, its average total cost is;$22, and its average variable cost is $17.;Then to maximize its profit in the short run, the firm;A) must decrease its output to increase its profit.;B) should shut down.;C) must increase its output to increase its profit.;D) should not change its production because it is already;maximizing its profit and is earning;a normal profit.;E) should stay open and incur an economic loss of $20.;110);111) Peter's Pencils is a perfectly competitive company;producing pencils. Suppose Peter is;producing 1,000 pencils an hour. If the total cost of 1,000;pencils is $500, the market price per;pencil is $2, and the marginal cost is $2, then Peter;A) has an economic profit because marginal revenue is equal to;marginal cost at this output;level.;B) should decrease his output to increase his profit.;C) is not maximizing his profit but is earning a normal profit;anyway.;D) should increase his output to increase his profit.;E) is maximizing his profit and is earning an economic profit.;111);112) In the short run, a perfectly competitive firm can;experience which of the following?;i. an economic profit;ii. an economic loss but it continues to stay open;iii. an economic loss equal to its total fixed cost when it;shuts down;A) i and ii;B) i, ii, and iii;C) i and iii;D) onlyi;E) ii and iii;112);113) For a perfectly competitive corn grower in Nebraska, the;marginal revenue curve is;A) the same as its demand curve.;B) upward sloping.;C) downward sloping.;D) vertical at the profit maximizing quantity of production.;E) U-shaped.;113);114) Suppose a perfectly competitive firm's minimum average;variable cost is $3 when it produces;50. If the price is $2 and the firm's marginal cost is $2, the;firm should;A) continue to produce 50.;B) continue to operate, but to determine the amount of;production needs more information;than is given.;C) continue to produce, but produce less than 50.;D) shut down.;E) continue to produce, but produce more than 50.;114);115) A perfectly competitive firm will continue to operate in;the short run when the market price is;below its average total cost if the;A) marginal cost is minimized.;B) price is at least equal to the minimum average variable;cost.;C) price is also less than the minimum average variable cost.;D) marginal revenue is greater than marginal cost.;E) total fixed costs are less than total revenue.;115);116) A perfectly competitive firm will shutdown when the price;is just below the minimum point on;the;A) marginal revenue curve.;B) average fixed cost curve.;C) average total cost curve.;D) average variable cost curve.;E) marginal cost curve.;116);117) The above figure illustrates a perfectly competitive firm.;If the market price is $40 a unit, to;maximize its profit (or minimize its loss) the firm should;A) produce more than 10 and less than 30 units.;B) produce more than 30 units and less than 40 units..;C) produce 40 units.;D) shut down.;E) produce 30 units.;117);118) In a perfectly competitive industry, when a firm is;producing so that its total revenue equals its;total cost, the firm is;A) definitely not maximizing its profit.;B) earning zero economic profit, that is, earning a normal;profit.;C) incurring an economic loss.;D) earning an economic profit.;E) None of the above answers is correct because the;relationship between total revenue and;total cost has nothing to do with the firm's profit or loss.;118);119) For a perfectly competitive firm, marginal revenue is;A) equal to the change in profit from selling one more unit.;B) less than the price.;C) equal to the price.;D) undefined because the firm's demand curve is horizontal.;E) greater than the price.;119);120) If the market price of a product is $14 and all sellers;are price takers, then which of the following;is correct?;A) Each seller can earn more total revenue by raising the price;he or she charges above $14.;B) The demand curve for each seller's product is a downward-sloping straight line.;C) Each seller's total revenue is graphed as an upside-down U-shaped curve.;D) The demand curve for each seller's product is a downward-sloping but not necessarily a;straight line.;E) Each seller's total revenue line is graphed as an upward-sloping straight line.;120);121) For the perfectly competitive broccoli producers in;California, themarketdemand curve for;broccoli is;A) a horizontal line.;B) nonexistent.;C) downward sloping.;D) the same as the demand curve each firm faces.;E) upward sloping.


Paper#57929 | Written in 18-Jul-2015

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