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Question;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);only i;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#57943 | Written in 18-Jul-2015

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