Quiz 12: Perfect Competition

Perfect competition arises if the ________ efficient scale of a single producer is ________ relative to the demand for the good or service. A) minimum; small B) minimum; large C) maximum; small D) maximum; large

Which of the following is TRUE regarding a perfectly competitive firm? A) The firm can charge a lower price than its competitors and thereby sell more output and increase its profits. B) The firm always earns a normal profit. C) The firm's marginal revenue continually decreases. D) The firm's minimum efficient scale is small relative to the market demand.

The smallest quantity of output at which long-run average cost is at a minimum is a firm's A) maximum efficient scale. B) profit-maximizing output point. C) minimum efficient scale. D) efficient output point.

If the minimum efficient scale of a firm is small relative to the demand for the good, then A) many small firms can compete in the market. B) several large firms will enter the market thereby reducing competition. C) there will be no economic profits for any small firms, so no new firms will ever enter the market. D) the firms already in the market have lower average total cost than any new firm entering the market.

In perfect competition, the A) market demand for the good or service is large relative to the minimum efficient scale of a single producer. B) market demand for the good or service is small relative to the minimum efficient scale of a single producer. C) market demand for the good or service can be small relative to the minimum efficient scale of a single producer as long as the goods or services are not identical. D) size of the market demand for the good or service relative to the minimum efficient scale of a single producer does not affect competition.

In perfect competition A) there are restrictions on entry into the market. B) firms in the market have advantages over firms that plan to enter the market. C) only firms know their competitors' prices. D) there are many firms that sell identical products.

Perfect competition exists in a market if A) there are many firms producing an identical product. B) there are many firms producing a similar product, each of which may have unique features. C) the firm is protected by a barrier to entry. D) the firm is always at the break-even point where it is earning only a normal profit.

A market is perfectly competitive if A) each firm in it can influence the price of its product. B) there are many firms in it, each selling a slightly different product. C) there are many firms in it, each selling an identical product. D) there are few firms in the market.

In a perfectly competitive market, there are A) many buyers and many sellers. B) many buyers, but there might be only one or two sellers. C) many sellers, but there might be only one or two buyers. D) one firm that sets the price for the others to follow.

In perfect competition, the product of a single firm A) has many perfect substitutes produced by other firms. B) has many perfect complements produced by other firms. C) is sold under many differing brand names. D) is sold to different customers at different prices.

Which of the following is a defining characteristic of a perfectly competitive market? A) advertisements by well-known celebrities B) persistent economic profits in the long run C) no restrictions on entry into the industry D) higher prices being charged for certain name brands

Which of the following is TRUE regarding perfect competition? I. The firms are price takers. II) Marginal revenue equals the price of the product. III) Established firms have no advantage over new firms. A) I and II B) II and III C) I, II and III D) I only

In perfect competition A) many firms sell slightly different products to many buyers. B) sellers are better informed about the prices than buyers. C) firms face no restrictions on entry into market. D) established firms have advantage over new ones.

Perfect competition implies that A) there are many firms in the market. B) all firms are price takers. C) all firms are producing the same identical product. D) All of the above answers are correct.

A perfectly competitive market is characterized by A) high barriers to entry. B) firms that are price setters. C) firms facing a downward sloping demand curve. D) no restrictions on entry into the market.

In perfect competition, restrictions on entry into an market A) apply to both capital and labor. B) apply to labor but not to capital. C) apply to capital but not to labor. D) do not exist.

Which of the following is NOT an assumption of perfect competition? A) many firms B) many buyers C) restrictions on entry into the market D) each firm sells an identical product

Which of the following is NOT an assumption of perfect competition? A) Firms compete by making their product different from products produced by other firms. B) There are no restrictions on entry into the market. C) Established firms have no advantage over new firms. D) Sellers and buyers are well informed about prices.

Which of the following is NOT an assumption of perfectly competitive markets? A) many buyers and many sellers B) no restriction on entry C) complete information about prices D) new entrants have higher costs

Which of the following is NOT an assumption of perfect competition? A) There are many firms, each selling an identical product. B) There are many buyers. C) The price each firm sets differs from the prices set by the other firms. D) There are no restrictions on entry into the market.

Which of the following is NOT a defining characteristic of perfectly competitive industries? A) many buyers and sellers B) unrestricted entry and exit C) consumer knowledge about prices charged by each firm D) higher prices being charged for certain name brands

Which of the following is NOT a characteristic of a perfectly competitive industry? A) There are many firms. B) There are no restrictions on entry into the market. C) Each firm produces a slightly differentiated product. D) Each firm takes price as given, determined by the equilibrium of industry supply and industry demand.

An example of a perfectly competitive industry is A) a big city police department. B) the market for corn in the United States. C) the market for French impressionists' paintings. D) the National Football League.

An example of a perfectly competitive firm is A) an oat farmer in the United States. B) the local cable TV company. C) a U.S. automobile producer. D) a big city newspaper.

In perfect competition A) each firm can influence the price of the good. B) there are few buyers. C) there are significant restrictions on entry. D) all firms in the market sell their product at the same price.

In perfect competition, each firm A) can influence the price that it charges. B) produces as much as it can. C) is a price taker. D) faces a perfectly inelastic demand for its product.

In a perfectly competitive industry A) each firm sets its own price so that it is different from the prices of its competitors. B) earning an economic profit is certain. C) each firm is a price taker. D) consumers band together to demand the lowest price possible.

The assumption that a perfectly competitive industry has many sellers, each selling an identical product, leads to the conclusion that A) consumers get to see a variety of outputs. B) there are many buyers. C) the economic profit will be positive in the long run. D) firms are price takers.

When a firm is considered to be a "price taker" that means that the firm A) can charge any price that it wants to charge, that is, "take" any price it wants. B) pays a fixed price for all of its inputs. C) will accept ("take") the lowest price that its customers offer. D) cannot influence the market price of the good that it sells.

Individual firms in perfectly competitive industries are price takers because A) the government sets all prices. B) buyers set prices. C) firms decide together on the best price to charge. D) each individual firm is too small to affect the market price.

In a perfectly competitive market A) each firm sets its own price so that it is different from its competitors. B) an economic profit is certain. C) each firm takes the good's price as given to it by the market. D) consumers are persuaded by advertising.

Price taking behavior exists in A) perfectly competitive markets. B) markets with a monopolist, where consumers have to take price as it is given to them by the monopolist. C) automobile markets where consumers have to take the price set by the dealer. D) Both answers B and C are correct.

In perfect competition, the market demand for the good ________ perfectly elastic and the demand for the output of one firm ________ perfectly elastic. A) is; is B) is; is not C) is not; is D) is not; is not

Firms in perfectly competitive industries have a ________ individual demand curve when the price is on the vertical axis and the quantity is on the horizontal axis. The shape of the curve is result of the firm being a ________. A) horizontal; price taker B) downward sloping; price maker C) vertical; price taker D) downward sloping; price taker

In perfect competition, an individual firm A) sets the price and determines the quantity it sells in the marketplace. B) sets the price but does not determine the quantity it sells in the marketplace. C) determines the quantity it sells in the marketplace but has no influence over its price. D) can not affect its price nor determine the quantity it sells in the marketplace.

The market for lawn services is perfectly competitive. Larry's Lawn Service cannot increase its total revenue by raising its price because A) Larry's supply of lawn services is perfectly inelastic. B) the demand for Larry's services is perfectly inelastic. C) Larry's supply of lawn services is inelastic. D) the demand for Larry's services is perfectly elastic.

The price elasticity of demand for any particular perfectly competitive firm's output is A) less than 1. B) 1. C) equal to zero. D) infinite.

The demand for wheat from farm A is perfectly elastic because wheat from farm A is A) a perfect complement for wheat from farm B. B) a normal good. C) a perfect substitute for wheat from farm B. D) an inferior good.

In a perfectly competitive industry, the demand for a single firm's product is perfectly elastic A) because this firm's output is a perfect substitute for any other firm's output. B) because this firm is a price maker. C) only in the long run. D) because there are many buyers in this market.

In perfect competition, the elasticity of demand for the product of a single firm is A) 0. B) between 0 and 1. C) 1. D) infinite.

In perfect competition, the elasticity of demand for the product of a single firm is A) zero because the firm produces a unique product. B) zero because many other firms produce identical products. C) infinite because the firm produces a unique product. D) infinite because many other firms produce identical products.

Because each perfectly competitive firm sells a product identical to that of the other firms A) each firm tries to cut prices to increase its market share. B) each firm's output is a perfect substitute for the output of any other firm. C) each firm expects to earn some economic profit. D) the demand for each firm's product is perfectly inelastic.

In perfect competition, each individual firm faces ________ demand curve. A) an inelastic B) an upward sloping C) a perfectly elastic D) a downward sloping

A perfectly competitive firm's demand curve is A) upward sloping. B) downward sloping. C) a vertical line. D) a horizontal line.

In perfect competition, an individual firm A) faces unitary elasticity of demand. B) has a price elasticity of supply equal to one. C) faces a perfectly elastic demand. D) has perfectly elastic supply.

In a perfectly competitive market, which of the following determines the market price? A) market demand and a firm's supply B) market supply and a firm's demand C) a firm's demand and its supply D) market demand and market supply

In perfect competition, the price of the product is determined where the market A) elasticity of supply equals the market elasticity of demand. B) supply curve and market demand curve intersect. C) average variable cost equals the market average total cost. D) fixed cost is zero.

The goal of a perfectly competitive firm is to maximize its A) normal profit. B) revenue. C) output. D) economic profit.

Economic profit is A) included in the firm's total opportunity cost. B) equal to normal profit minus total opportunity cost. C) equal to total revenue minus marginal cost. D) equal to total revenue minus total opportunity cost.

The difference between a firm's total revenue and its total opportunity cost is the firm's A) normal profit. B) economic profit. C) marginal profit. D) marginal revenue.

A competitive firm's total revenue minus its total opportunity cost equals its A) marginal revenue. B) economic profit. C) opportunity cost. D) normal profit.

Total economic profit is A) total revenue minus total opportunity cost. B) total revenue divided by total cost. C) marginal revenue minus marginal cost. D) marginal revenue divided by marginal cost.

The economic profit of a perfectly competitive firm A) is less than its total revenue. B) equals its total revenue. C) is greater than its total revenue. D) is less than its total revenue if its supply curve is inelastic and is greater than its total revenue if its supply curve is elastic.

In perfect competition, a firm that maximizes its economic profit will sell its good at a price that is A) below the market price. B) at the market price. C) above the market price. D) below the market price if its supply curve is inelastic and above the market price if its supply curve is elastic.

The return that the entrepreneur can obtain in the best alternative business is called the A) normal profit. B) economic profit. C) marginal profit. D) marginal revenue.

A perfectly competitive firm has a total revenue curve that is A) upward sloping with an increasing slope. B) downward sloping with a constant slope. C) upward sloping with a decreasing slope. D) upward sloping with a constant slope.

-The above figure shows a firm's total revenue line. The firm must be in a market with A) perfect competition. B) monopolistic competition. C) monopoly. D) oligopoly.

-For a perfectly competitive firm, curve A in the above figure is the firm's A) total fixed cost curve. B) average fixed cost curve. C) average variable cost curve. D) total revenue curve.

-The figure above portrays a total revenue curve for a perfectly competitive firm. Curve A is straight because the firm A) is a price taker. B) faces constant returns to scale. C) wants to maximize its profits. D) has perfect information.

-The figure above portrays a total revenue curve for a perfectly competitive firm. The firm's marginal revenue from selling a unit of output A) equals $0.50. B) equals $1.00. C) equals $2.00. D) cannot be determined.

-The figure above portrays a total revenue curve for a perfectly competitive firm. The price of the product in this industry A) equals $0.50. B) equals $1.00. C) equals $2.00. D) cannot be determined.

-In the above figure showing a perfectly competitive firm's total revenue line, the firm's marginal revenue A) falls as output increases. B) does not change as output increases. C) rises as output increases. D) cannot be determined.

-In the above table, if the firm sells 5 units of output, its total revenue is A) $15. B) $30. C) $75. D) $90.

-In the above table, if the quantity sold by the firm rises from 5 to 6, its marginal revenue is A) $15. B) $30. C) $75. D) $90.

-In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is A) $15. B) $30. C) $90. D) $105.

In a perfectly competitive industry, the demand for a single firm's product is A) perfectly inelastic. B) perfectly elastic. C) as elastic as the market demand. D) inelastic, but not perfectly inelastic.

The market demand for wheat is ________ and the demand for wheat produced by an individual farm is ________. A) perfectly elastic; perfectly inelastic B) not perfectly elastic; perfectly elastic C) not perfectly inelastic; inelastic D) elastic; unit elastic

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has A) zero elasticity. B) unitary elasticity. C) elasticity equal to the price of apples. D) infinite elasticity.

In a perfectly competitive market, the price elasticity of demand for the market demand is ________ and the price elasticity of demand for an individual firm's demand is ________. A) infinite; infinite B) less than infinite; infinite C) infinite; less than infinite D) less than infinite; less than infinite

The market for fish is perfectly competitive. So, the price elasticity of demand for fish from a single fishing boat A) is less than the elasticity of demand for fish overall. B) equals the elasticity of demand for fish overall. C) is greater than the elasticity of demand for fish overall. D) is sometimes greater than and sometimes less than the elasticity of demand for fish overall.

Marginal revenue is equal to A) total revenue divided by price. B) the change in total revenue divided by total output. C) the change in total revenue divided by the change in quantity sold. D) price divided by quantity sold.

Marginal revenue is defined as A) the value of a firm's sales. B) the total revenue from the total amount the firm sells. C) the change in total revenue that results from a one-unit increase in the quantity sold. D) total revenue divided by the total quantity sold.

In perfect competition, the marginal revenue of an individual firm A) is zero. B) is positive but less than the price of the product. C) equals the price of the product. D) exceeds the price of the product.

In perfect competition, at all levels of output the market price is the same as the firm's ________. A) marginal revenue B) normal profit C) average variable cost D) fixed cost

For a perfectly competitive firm, price is the same as A) marginal revenue. B) average variable cost. C) total revenue. D) Both answers A and B are correct.

A perfectly competitive firm's marginal revenue A) increases as the firm produces more output. B) decreases as the firm produces more output. C) is less than the market price of its product. D) equals the market price of its product.

Because the demand for a perfectly competitive firm's product is perfectly elastic, marginal revenue is equal to A) one. B) zero. C) the price of the product. D) negative one.

For a perfectly competitive firm, no matter how much the firm produces, price always equals A) marginal product. B) average total cost. C) minimum average total cost. D) marginal revenue.

Which of the following is ALWAYS true for a perfectly competitive firm? A) P = MR B) P = ATC C) MR = ATC D) P = AVC

In perfect competition, the firm's marginal revenue curve A) cuts its demand curve from below, going from left to right. B) cuts its demand curve from above, going from left to right. C) always lies below its demand curve. D) is the same as its demand curve.

The marginal revenue curve for a perfectly competitive firm is A) an upward sloping curve. B) a downward sloping curve. C) a horizontal line. D) None of the above answers is correct.

-Based on the table above, what is the marginal revenue of the tenth unit of output? A) $190 B) $100 C) $10 D) $9

-In the above figure, if the milk industry is perfectly competitive, then the firm's marginal revenue curve is represented by A) curve F. B) curve G. C) curve H. D) curve I.

Which of the following characterizes a perfectly competitive market? A) The market demand curve is vertical. B) The demand for each individual firm's product is perfectly elastic. C) Each firm sets a different price. D) Each firm produces a product slightly different from that of its competitors.

-The above figure shows the total revenue curve for Dizzy Discs. The demand curve for CDs sold by Dizzy Discs A) has negative slope. B) has positive slope. C) is horizontal. D) is vertical.

At a firm's break-even point, its A) total revenue equals its total opportunity cost. B) marginal revenue exceeds its marginal cost. C) marginal revenue equals its average variable cost. D) marginal revenue equals its average fixed cost.

When Sidney's Sweaters, Inc. makes exactly zero economic profit, Sidney, the owner A) is taking a loss. B) will shut down in the short run. C) makes an income equal to his best alternative forgone income. D) will boost output.

The break-even point is defined as occurring at an output rate at which A) total revenue equals total opportunity cost. B) economic profit is maximized. C) marginal revenue equals marginal cost. D) total cost is minimized.

A perfectly competitive firm that is producing a positive quantity of a good maximizes its economic profit if it produces so that A) total revenue = total cost. B) marginal revenue = marginal cost. C) average revenue = average total cost. D) average total cost = average variable cost.

The difference between a perfectly competitive firm's total revenue and its total cost is A) always positive. B) always negative. C) always zero. D) greatest at the profit-maximizing level of output.

A perfectly competitive firm maximizes its profit by A) setting its price so that it exceeds the marginal revenue. B) choosing to produce the quantity that sets MC equal to MR. C) cutting wages. D) manipulating demand.

A firm is producing the profit-maximizing amount of output when it is producing where its ________ curve intersects its ________ curve. A) MC; MR B) MC; AVC C) MC; ATC D) MC; TR

A perfectly competitive firm's economic profit is maximized by producing the amount of output such that A) total revenue equals total variable cost. B) marginal revenue equals marginal cost. C) total revenue equals total cost. D) marginal revenue is equal to total revenue.

A perfectly competitive firm maximizes its profits by producing the amount of output such that A) MR = P. B) MR = MC. C) P = AVC. D) P = ATC.

A perfectly competitive firm maximizes its economic profit when it produces the quantity that sets A) MR = MC. B) TR = TC. C) MC =.AVC. D) MC = ATC.

When the firm produces the quantity that sets marginal revenue equal to marginal cost, a perfectly competitive firm is A) determining the price it will set. B) maximizing its revenues. C) maximizing its profit. D) establishing its shutdown point.

As long as it does NOT shut down, a perfectly competitive firm earns the maximum profit as long as it operates so that A) its price exceeds its average total cost. B) market demand is inelastic. C) its price exceeds its marginal revenue. D) its marginal revenue equals its marginal cost.

As long as it does NOT shut down, a profit-maximizing perfectly competitive firm will A) always earn an economic profit. B) produce so that marginal revenue equals marginal cost. C) produce so that price equals average cost. D) never set its price equal to its marginal revenue.

Charlie's Chimps is a perfectly competitive firm that produces cuddly chimps for children. The market price of a chimp is $10, and Charlie's Chimps produces 100 chimps. The marginal cost of the 100th chimp is $9. Charlie's Chimps A) is maximizing its profit. B) will maximize its profit if it produces more than 100 chimps. C) will maximize its profit if it lowers the price to $9 a chimp. D) will maximize its profit if it produces fewer than 100 chimps.

For a perfectly competitive firm, as its output increases its marginal revenue ________ and its marginal cost ________. A) changes; changes B) changes; does not change C) does not change; changes D) does not change; does not change

-In the above table, the price of the product is A) $30. B) $147. C) $150. D) $180.

-In the above table, the firm A) must be in a perfectly competitive market because its marginal revenue is constant. B) must be in a perfectly competitive market because its marginal cost curve eventually rises. C) cannot be in a perfectly competitive market because its short-run economic profits are greater than zero. D) cannot be in a perfectly competitive market because its long-run economic profits are greater than zero.

-In the above table, the marginal revenue from the fourth unit of output is A) $30. B) $147. C) $150. D) $180.

-In the above table, if the firm produces 2 units of output, it will A) make an economic profit of $9. B) make an economic profit of $60. C) incur an economic loss of $9. D) incur an economic loss of $60.

-The first table shows the market demand schedule for CDs, and the second table shows the cost structure of each firm. The CD market is perfectly competitive and there are 100 identical firms. The market price of a CD is ________, and ________ CDs are produced and sold. A) $9.00; 20,000 B) $9.50; 15,000 C) $10.00; 10,000 D) $8.50; 24,000

-In the above table, the firm's total fixed cost of production is A) $3.00. B) $4.00. C) $7.00. D) $29.00.

-In the above table, the average fixed cost at 4 units of output is A) $1.00. B) $4.50. C) $4.70. D) $4.80.

-In the above table, the average variable cost at 2 units of output is A) $1.00. B) $2.00. C) $4.00. D) $4.80.

-In the above figure, by increasing its output from Q₁ to Q₂, the firm A) reduces its marginal revenue. B) increases its marginal revenue. C) decreases its profit. D) increases its profit.

-In the above figure, by increasing its output from Q₂ to Q₃, the firm A) reduces its marginal revenue. B) increases its marginal revenue. C) decreases its profit. D) increases its profit.

-The above figure illustrates a firm's total revenue and total cost curves. Which one of the following statements is FALSE? A) Economic profit is the vertical distance between the total revenue curve and the total cost curve. B) At output Q₁ the firm makes zero economic profit. C) At an output above Q₃ the firm incurs an economic loss. D) At output Q₂ the firm incurs an economic loss.

-The feature of the above figure that indicates that the firm is a perfectly competitive firm is the A) shape of the total cost curve. B) shape of the total revenue curve. C) fact that the total cost and total revenue curves are farthest apart at output is Q₂. D) fact that the total cost and total revenue curves cross twice.

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will earn a positive economic profit? A) from 0 to 30,000 bushels B) from 0 to 60,000 bushels C) between 30,000 and 80,000 bushels D) over 80,000 bushels

-Given the total cost and total revenue curves in the above figure, what are the output levels at which the perfect competitor will incur economic losses? A) below 80,000 bushels B) from 30,000 to 80,000 bushels C) below 30,000 bushels and over 80,000 bushels D) at 30,000 bushels and at 80,000 bushels

-Given the total cost and total revenue curves in the figure above, what is the profit-maximizing output level? A) 30,000 bushels B) 60,000 bushels C) 80,000 bushels D) All output levels occur between 30,000 and 80,000 bushels are profit-maximizing output levels.

-In the above figure, the firm is incurring an economic loss at A) point a. B) point c. C) points b and d. D) points a, b, and d.

-In the above figure, the firm is breaking even at points A) a and c. B) b and d. C) c and d. D) a and d.

-In the above figure, when the firm produces output corresponding to point c, the firm's marginal cost A) is less than its marginal revenue. B) equals its marginal revenue. C) exceeds its marginal revenue. D) equals its average revenue.

A perfectly competitive firm maximizes its profit by producing the output at which its marginal cost equals its A) marginal revenue. B) average total cost. C) average variable cost. D) average fixed cost.

For a firm in perfect competition, a diagram shows quantity on the horizontal axis and both the firm's marginal cost (MC) and its marginal revenue (MR) on the vertical axis. The firm's profit-maximizing quantity occurs at the point where the A) slope of the MC curve is zero. B) MC and MR curves are parallel. C) MC curve intersects the MR curve from below, going from left to right. D) MC curve intersects the MR curve from above, going from left to right.

A firm will expand the amount of output it produces as long as its A) average total revenue exceeds its average total cost. B) average total revenue exceeds its average variable cost. C) marginal cost exceeds its marginal revenue. D) marginal revenue exceeds its marginal cost.

A perfectly competitive firm is producing at the point where its marginal cost equals its marginal revenue. If the firm boosts its output, its total revenue will ________ and its profit will ________. A) rise; rise B) rise; fall C) fall; rise D) fall; fall

A perfectly competitive firm is producing at the point where its marginal cost equals its marginal revenue. If the firm boosts its output, its total revenue will A) rise and its total variable cost will rise even more. B) rise and its total variable cost will rise, but not by as much. C) fall but its total variable cost will rise. D) fall and its total variable cost will fall, but not by as much.

A perfectly competitive firm's marginal revenue exceeds its marginal cost at its current output. To increase its profit, the firm will A) lower its price. B) raise its price. C) decrease its output. D) increase its output.

A perfectly competitive firm's marginal cost exceeds its marginal revenue at its current output. To increase its profit, the firm will A) lower its price. B) raise its price. C) decrease its output. D) increase its output.

A perfectly competitive firm is producing more than the profit-maximizing amount of its product. You can conclude that its A) total cost exceeds its total revenue. B) average total cost exceeds the price of the product. C) marginal revenue is less than the price of the product. D) marginal cost exceeds the price of the product.

If a perfectly competitive firm is producing an amount of output such that MR > MC and P > AVC, to maximize its profit the firm will A) leave the industry. B) decrease its output. C) increase its output. D) not change its behavior.

If marginal revenue exceeds marginal cost, to increase its profit the firm will A) decrease its output. B) increase its output. C) keep its output the same. D) shut down.

If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will A) earn an economic profit. B) not suffer any losses. C) earn the largest profit possible. D) survive in the long run.

In a perfectly competitive market, if a firm finds it is producing an amount of output such that its marginal cost exceeds its price, it will A) immediately shut down for the short run. B) be maximizing profits. C) increase its output to increase its profit. D) decrease its output to increase its profit.

Jane's Garage Cleaning is a perfectly competitive firm that currently cleans 40 garages a week. Jane's marginal cost is less than the price she charges. Jane can increase her profit if she A) charges a higher price. B) charges a lower price. C) cleans fewer than 40 garages a week. D) cleans more than 40 garages a week.

Bob's Lawn Care Services is a perfectly competitive firm that currently mows 22 lawns a week. Bob's marginal cost exceeds the price he charges. Bob can increase his profit if he A) charges a higher price. B) charges a lower price. C) mows fewer than 22 lawns a week. D) mows more than 22 lawns a week.

-The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm increases its output from 2 pounds of cookies to 3 pounds, the marginal revenue is ________ per pound of cookies. A) $11 B) $15 C) $30 D) $45

-The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm increases its output from 2 pounds of cookies to 3 pounds, the marginal cost is ________ per pound of cookies. A) $11 B) $15 C) $24 D) $39

-The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm is producing 1 pound of cookies, to maximize its profit it will A) increase its output. B) decrease its output. C) continue producing 1 pound of cookies. D) shut down.

-The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm is producing 4 pounds of cookies, to maximize its profit it will A) increase its output. B) decrease its output. C) continue producing 4 pounds of cookies. D) shut down.

-The table above shows some of the costs for a perfectly competitive firm. The firm will produce 9 units of output if the price per unit is A) $1750. B) $200. C) $300. D) $500.

-The table above shows some of the costs for a perfectly competitive firm. If the price is $160 per unit, how many units of output will the firm produce? A) 8 B) 9 C) 10 D) more than 10

-The table above provides cost data for a perfectly competitive firm producing toy cars. The firm is producing non-divisible goods. If the market price is $70 and the firm is a profit maximizer, the firm can earn a maximum economic profit of A) a loss of $500. B) a loss of $10. C) a loss of $510. D) $210.

-In the above figure, the line represented by the "2" is the A) average fixed cost. B) average variable cost. C) total cost. D) average total cost.

-In the above figure, the line represented by the "1" is the A) average fixed cost. B) marginal revenue. C) total cost. D) average total cost.

-In the above figure, the line represented by the "4" is the A) average fixed cost. B) marginal revenue. C) average total cost. D) marginal cost.

-The table above shows the total cost incurred by Sue's Coat Shop, a perfectly competitive firm. If the market price of a coat is $285, Sue's will maximize economic profit by selling ________ coats a day. A) 7 B) 11 C) 8 D) 9

-Tammy sells woolen hats in a perfectly competitive market. The marginal cost of producing 1 hat is $24. The marginal cost of producing a second hat is $26 and the marginal cost of producing a third hat is $28. The market price of a hat is $26. To maximize profit, Tammy produces ________ per day. A) 1 hat B) 3 hats C) 2 hats D) as many hats as possible

-In the above figure, the firm will produce A) 0 units. B) 5 units. C) 15 units. D) 20 units.

-In the above figure, the marginal cost of the last unit produced by the profit maximizing firm is A) $5. B) $10. C) $15. D) $20.

-In the above figure, the firm's total economic profit is equal to A) $60. B) $200. C) $150. D) MR - MC.

By producing less, a firm can reduce A) its fixed costs and its variable costs. B) its fixed costs but not its variable costs. C) its variable costs but not its fixed costs. D) neither its variable costs nor its fixed costs.

The costs incurred even when no output is produced are called A) fixed costs. B) variable costs. C) external costs. D) marginal costs.

A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its A) total cost. B) total variable cost. C) total fixed cost. D) marginal cost.

A perfectly competitive firm shuts down if the price of its product is A) greater than its minimum average variable cost. B) less than its minimum average variable cost. C) greater than its maximum variable cost. D) less than its minimum total cost.

The owners will shut down a perfectly competitive firm if the price of its good falls below its minimum A) average total cost. B) average marginal cost. C) average variable cost. D) wage rate.

A firm's shutdown point is the output and price at which the firm just covers its A) total fixed cost. B) total variable cost. C) total cost. D) marginal cost.

For a perfectly competitive firm, the shutdown point is the A) amount of output at which price equals minimum average variable cost. B) amount of output at which price equals minimum average total cost. C) price at which economic profit is zero. D) price at which total opportunity cost is zero.

A perfectly competitive firm's short-run shutdown point is the level of output at which A) price equals average total cost. B) price equals average fixed cost. C) price equals the minimum average variable cost. D) price is above the minimum average total cost but below the minimum average fixed cost.

In the short run a perfectly competitive firm will A) never shut down. B) shut down if P < ATC. C) shut down if P < AVC. D) shut down if P > AFC.

A perfectly competitive firm will shut down rather than produce if its A) price is less than average variable cost. B) price is less than total variable cost. C) total revenue is less than total cost. D) price is less than marginal cost.

In the short run, a perfectly competitive firm will shut down if A) it incurs any economic loss. B) price equals average cost. C) total revenue is less than total variable cost. D) total revenue is less than total fixed cost.

In the short run, a perfectly competitive firm will shut down if at the profit maximizing quantity the A) P < AVC. B) AVC < ATC. C) P > ATC. D) P > MC.

If a perfectly competitive firm decides to shut down in the short run, its loss will equal its A) minimum average variable cost, AVC. B) total variable cost, TVC. C) total fixed cost, TFC. D) average total cost, ATC.

A firm that shuts down and produces no output incurs a loss equal to its A) total fixed costs. B) total variable costs. C) marginal costs. D) marginal revenue.

In the short run, a firm will A) not produce if its total revenue does not cover its total cost. B) produce and incur an economic loss if its total revenue covers its total variable cost but not its total cost. C) produce and break even if its total revenue covers its total fixed cost but not its total variable cost. D) produce and earn an economic profit if its total revenue is equal to its total cost.

The shutdown point occurs at the level of output for which the ________ is at its minimum. A) marginal cost B) average variable cost C) average fixed cost D) total cost

A perfectly competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its A) fixed costs. B) variable costs. C) external costs. D) depreciation due to machinery becoming obsolete.

If the price of its product falls below the minimum point on the AVC curve, the best a perfectly competitive firm can do is to A) keep producing and incur an economic loss equal to its total variable cost. B) keep producing and incur an economic loss equal to its total fixed cost. C) shut down and incur an economic loss equal to its total variable cost. D) shut down and incur an economic loss equal to its total fixed cost.

When a perfectly competitive firm produces the profit-maximizing output and it is at its shutdown point, the firm's A) marginal revenue equals its average fixed cost. B) total revenue equals its total variable cost. C) marginal cost is less than its average variable cost. D) total revenue is less than its total variable cost.

At its shutdown point, a perfectly competitive firm earns total revenue that A) exceeds its total cost. B) generates a normal profit. C) just equals its total variable cost. D) exceeds its total variable cost.

If the market price of a perfectly competitive firm's product is below its average variable cost, then the firm's A) marginal revenue is zero. B) total revenue is as large as possible. C) total revenue if it stayed open would be less than its total variable costs. D) total revenue if it stayed open is less than its total cost but greater than its total fixed costs.

In the short run, a perfectly competitive firm NEVER A) earns an economic profit. B) incurs a loss greater than its total fixed costs. C) produces where MR = MC. D) earns a normal profit.

In the short run, a perfectly competitive firm might A) set its price above marginal cost. B) set its price above marginal revenue. C) adjust the size of its fixed inputs. D) operate even though it is incurring an economic loss.

In the short run, a perfectly competitive firm A) shuts down if it incurs any economic loss. B) incurs an economic loss if it shuts down. C) does not consider total revenue in its shut down decision. D) can earn a small economic profit while being shut down.

A perfectly competitive firm will operate and incur an economic loss in the short run if A) the loss is smaller than its total fixed costs. B) it knows it can recoup the loss in the long run. C) shareholders do not know about the loss. D) the loss can offset future profits.

If the price of its product just equals the average variable cost of production for a competitive firm A) total revenue equals total fixed cost and the firm's loss equals total variable cost. B) total revenue equals total variable cost and the firm's loss equals total fixed cost. C) total fixed cost is zero. D) total variable cost equals total fixed cost.

If the market price in a perfectly competitive market is less than a firm's minimum average variable cost, then the firm's total revenue will always A) exceed its total fixed cost. B) be less than its total economic loss. C) equal its total cost. D) be less than its total variable cost.

-Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip's profit-maximizing output is A) less than one ton. B) between two and three tons. C) between three and four tons. D) between one and two tons.

-Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip will A) shut down because he incurs an economic loss. B) shut down because the price is below his minimum average variable cost. C) stay open because he makes an economic profit. D) stay open because the price is above his minimum average variable cost.

-Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip A) makes an economic profit and should stay open in the short run. B) makes an economic profit, but should shut down in the short run. C) incurs an economic loss, but should stay open in the short run. D) incurs an economic loss and should shut down in the short run.

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his total cost will be A) $0. B) $1,000. C) $1,200. D) $4,000.

-Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his economic loss will be A) $0. B) $1,000. C) $1,200. D) $4,000.

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, what is Giuseppe's profit-maximizing output? A) 2 pizzas per hour B) 3 pizzas per hour C) 4 pizzas per hour D) 0 pizzas per hour

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, what is Giuseppe's profit-maximizing output? A) 2 pizzas per hour B) 3 pizzas per hour C) 4 pizzas per hour D) 0 pizzas per hour

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. The firm's shutdown point is A) $12. B) $17. C) $8. D) $2.

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $12.50 and if Archibald's does NOT shut down, what is the firm's profit-maximizing output? A) 2 tattoos per hour B) 3 tattoos per hour C) 4 tattoos per hour D) 5 tattoos per hour

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. What is Archibald's shut-down point? A) $10.00 B) $16.67 C) $15.00 D) $12.50

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $12.50 what is the firm's economic profit? A) zero B) $10 per hour C) -$10 per hour D) $20 per hour

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $12, the firm A) incurs an economic loss, but will not shut down. B) will not shut down in the short run, but will leave the industry in the long run. C) will shut down. D) is breaking even.

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $17.50 what is the firm's profit-maximizing output? A) 2 tattoos per hour B) 3 tattoos per hour C) 4 tattoos per hour D) 5 tattoos per hour

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What is Evan's marginal revenue from the 2nd sandwich sold? A) $10.00 B) $13.50 C) $3.00 D) $6.00

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. If Evan's sells the 5th sandwich, the marginal cost is ________ the marginal revenue, so the firm's profit ________. A) greater than; decreases B) greater than; increases C) less than; increases D) less than; decreases

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What quantity of sandwiches produced will maximize Evan's economic profit in the short run? A) 2 sandwiches per hour B) 3 sandwiches per hour C) 4 sandwiches per hour D) 5 sandwiches per hour

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What is Evan's maximum short-run economic profit? A) $6 per hour B) $1 per hour C) -$6 per hour D) zero

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What is Evan's shut-down price? A) $6 per sandwich B) $4 per sandwich C) $3 per sandwich D) $5 per sandwich

-The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. If the market price does NOT change, Evan's will A) continue to operate in the short run, but will exit the industry in the long run. B) continue to operate in the short run and in the long run. C) shut down. D) increase its production in the long run.

-In the above figure, if the price is P₁, the firm will produce A) nothing. B) where MC equals ATC. C) where MC equals P₁. D) where ATC equals P₁.

-In the above figure, if the price is P₁, the firm maximizes its profit by producing A) nothing. B) where MC equals ATC. C) where MC equals P₁. D) where ATC equals P₁.

-In the above figure, if the firm increases its output from Q₁ to Q₂, it will A) reduce its marginal revenue. B) increase its marginal revenue. C) decrease its profit. D) increase its profit.

-In the above figure, if the firm increases its output from Q₂ to Q₃, it will A) reduce its marginal revenue. B) increase its marginal revenue. C) decrease its profit. D) increase its profit.

-The figure above shows a perfectly competitive firm. In the short run, the firm will shut down A) only if the AVC of producing 10 units is less than $20. B) only if the AVC of producing 10 units is more than $20. C) only if the AVC curve reaches its minimum before 10 units are produced. D) always.

-The figure above shows a perfectly competitive firm. The firm will shut down in the short run if total fixed costs A) are between $201 and $400. B) exceed $401. C) are less than $200. D) exceed total costs.

-Consider the perfectly competitive firm in the above figure. The profit maximizing level of output for the firm is equal to A) 0 units. B) 14 units. C) 17 units. D) 19 units.

-Consider the perfectly competitive firm in the above figure. At the profit maximizing level of output, the firm is A) incurring an economic loss equal to $119.00. B) incurring an economic loss equal to $123.50. C) incurring an economic loss equal to $187.00. D) making zero economic profit.

-Consider the perfectly competitive firm in the above figure. The shutdown point occurs at a price of A) $11.00. B) $12.00. C) $16.00. D) $22.00.

-Consider the perfectly competitive firm in the above figure. What will the firm choose to do in the short-run and why? A) shut down because the firm incurs an economic loss B) stay in business because the firm is making an economic profit C) stay in business because the firm's economic loss is less than fixed costs D) stay in business because it is making zero economic profit

A perfectly competitive firm's short-run supply curve is the same as its A) ATC curve. B) MR curve. C) AVC curve. D) MC curve above the minimum of the AVC curve.

The short-run supply curve for a perfectly competitive firm is its A) marginal cost curve above the horizontal axis. B) marginal cost curve above its shutdown point. C) average cost curve above the horizontal axis. D) average cost curve above its shutdown point.

The short-run supply curve for a perfectly competitive firm is its marginal cost curve A) above the horizontal axis. B) above its shutdown point. C) below its shutdown point. D) everywhere.

The short-run supply curve for a perfectly competitive firm is its marginal cost curve above the minimum point on the A) average fixed cost curve. B) average variable cost curve. C) average total cost curve. D) demand curve.

The firm's supply curve is its A) marginal cost curve, at all points above the minimum average variable cost curve. B) marginal cost curve, at all points above the minimum average fixed cost curve. C) marginal cost curve, at all points above the minimum average total cost curve. D) marginal revenue curve, at all points above the minimum average total cost curve.

A perfectly competitive firm's short-run supply curve is A) its marginal cost curve above the shutdown point. B) its marginal revenue curve above the shutdown point. C) its demand curve. D) horizontal at the going price.

The section of the marginal cost curve that lies above the average variable cost curve is A) a perfectly competitive firm's supply curve. B) a perfectly competitive firm's average total cost curve. C) a perfectly competitive firm's total fixed costs curve. D) irrelevant to the firm because it never produces at any point along this curve.

A perfectly competitive firm's supply curve A) shows the relationship between the price and the quantity the firm will produce. B) is the portion of the marginal cost curve above the average variable cost curve. C) is upward sloping. D) All of the above are correct.

A perfectly competitive firm's short-run supply curve is A) its marginal cost curve above the shutdown point. B) its average total cost curve above the minimum of the average variable cost. C) its average variable cost curve above the breakeven point. D) horizontal at the market price.

The firm's short run supply curve is equal to the A) entire marginal cost curve. B) marginal cost curve above the AVC curve. C) marginal cost curve above the ATC curve. D) marginal cost curve above the AFC curve.

Which of the following best describes the short-run supply curve for an individual perfectly competitive firm? A) It is the firm's marginal cost curve. B) It is the upward-sloping part of the firm's marginal cost curve. C) It is the vertical axis at prices less than minimum average variable cost and is the firm's marginal cost curve at prices above minimum average variable cost. D) It is the vertical axis at prices less than minimum average total cost and is the firm's marginal cost curve at prices above minimum average total cost.

An individual perfectly competitive firm has a supply curve A) with a positive slope. B) with a negative slope. C) that is parallel to the quantity axis. D) that has a positive slope at lower output levels and a negative slope at higher output levels.

-The figure above shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8, in the short run the firm will A) make zero economic profit. B) make an economic profit. C) incur an economic loss. D) None of the above answers is correct because more information is needed to determine the firm's economic profit or loss.

-The figure above shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8 and the firm does NOT shut down, the firm's output in the short run A) will be 0. B) will be between 0 and 10. C) will be 10 or higher. D) cannot be determined without more information.

-The donut market is perfectly competitive. The figure shows the costs of a typical donut producer. In the short run, the donut producer's supply curve is the curve running from point ________ to point E. A) A B) B C) C D) D

-In the above figure, the perfectly competitive firm's shutdown point is at a price of A) $4 per unit. B) $8 per unit. C) $12 per unit. D) $16 per unit.

-In the above figure, if the price is $16 per unit, how many units will a profit maximizing perfectly competitive firm produce? A) 0 B) 20 C) 30 D) 35

-In the above figure, if the price is $12 per unit, how many units will a profit maximizing perfectly competitive firm produce? A) 0 B) 20 C) 30 D) 35

-In the above figure, if the price is $8 per unit, how many units will a profit maximizing perfectly competitive firm produce? A) 5 B) 20 C) 30 D) 35

-In the above figure, if the price is $4 per unit, how many units will a profit maximizing perfectly competitive firm produce? A) 0 B) 5 C) 20 D) 30

-The figure above shows a firm in a perfectly competitive market. The firm will shut down if price falls below A) P₁. B) P₂. C) P₃. D) P₄.

-The figure above shows a firm in a perfectly competitive market. If the firm does NOT shut down, the least amount of output that it will produce is A) less than 5 units. B) 5 units. C) 8 units. D) 10 units.

-The figure above shows a firm in a perfectly competitive market. If the price rises from P₃ to P₄ then output will increase by A) 0 units. B) 1 unit. C) 2 units. D) 3 units.

-The figure above shows a firm in a perfectly competitive market. The firm's supply curve is the curved line linking A) point a to point c and stopping at point c. B) point b to point d and continuing on past point d along the MC curve. C) point b to point f and stopping at point f. D) point c to point e and continuing on past point e along the ATC curve.

-In the above figure, the vertical distance between the ATC and AVC curves is A) the marginal cost. B) the total cost. C) the average fixed costs. D) None of the above answers is correct.

-In the above figure, if the price is $16, a profit-maximizing perfectly competitive firm will A) produce 50 units. B) produce 35 units. C) produce 10 units. D) choose not to produce.

-In the above figure, if the price is $12, a profit-maximizing perfectly competitive firm will have an economic profit A) of less than $100 but more than $0. B) of more than $100. C) that is negative, that is, it will have an economic loss. D) of zero, that is, it will break even with a normal profit.

-In the above figure, if the price is $10, a profit-maximizing perfectly competitive firm will A) produce 40 units. B) produce 25 units. C) produce 10 units. D) choose not to produce.

-Using the above figure, of the prices below, which price enables a perfectly competitive firm to earn the maximum economic profit? A) $4 per unit B) $10 per unit C) $12 per unit D) $16 per unit

-In the above figure, at any price between $8 per unit to $12 per unit, how many units will a profit-maximizing perfectly competitive firm produce? A) None, because the producer will never choose to operate at a loss. B) Less than 20 because this will reduce marginal cost. C) Between 20 and 30, because variable costs are covered so the firm's losses will be minimized by producing rather than shutting down. D) More than 30, because variable costs are covered so that the producer can earn economic profits.

-In the above figure, below what minimum price will a perfectly competitive firm shut down rather than produce? A) for any price less than $16 per unit B) for any price less than $12 per unit C) for any price less than $8 per unit D) for any price less than $4 per unit

-In the above figure, at a price of $4 per unit, a profit-maximizing perfectly competitive firm will A) shut down because its total revenue is less than its variable costs. B) incur an economic loss. C) produce 5 units. D) Both answers A and B are correct.

Bubba's BBQ has fallen on some hard times. Bubba has analyzed his past revenue and cost information and knows that if he shuts down, he will incur an economic loss equal to $20,000 in remaining lease payments. Apparently, Bubba's current planning horizon is A) the short run because he still faces some fixed costs. B) the long run because he faces only variable costs. C) the short run because he faces only variable costs. D) neither the short run nor the long run because lease payments do not figure into cost determinations.

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Homer's fixed cost is equal to A) 0. B) $5,000. C) $16,000. D) $21,000.

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Homer's variable cost is equal to A) 0. B) $5,000. C) $16,000. D) $21,000.

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Homer's economic profit is equal to A) -$16,000, that is, an economic loss of $16,000. B) -$9,000, that is, an economic loss of $9,000. C) +$9,000. D) +$12,000.

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Should Homer's shut down in the short run? A) Yes, because he is incurring an economic loss. B) Yes, because he cannot cover all of his fixed costs. C) No, because is making positive economic profit. D) No, because he can cover all of his variable costs.

Paul runs a shop that sells printers. Paul is a perfect competitor and can sell each printer for a price of $300. The marginal cost of selling one printer a day is $200; the marginal cost of selling a second printer is $250; and the marginal cost of selling a third printer is $350. To maximize his profit, Paul should sell A) one printer a day. B) two printers a day. C) three printers a day. D) more than three printers a day.

Because of a decrease in the wage rate it must pay, a perfectly competitive firm's marginal costs decrease but its demand curve stays the same. As a result, the firm A) decreases the amount of output it produces and raises its price. B) increases the amount of output it produces and lowers it price. C) increases the amount of output it produces and does not change its price. D) decreases the amount of output it produces and lowers its price.

For prices above the minimum average variable cost, a perfectly competitive firm's supply curve is A) horizontal at the market price. B) vertical at zero output. C) the same as its marginal cost curve. D) the same as its average variable cost curve.

A perfectly competitive firm is definitely making an economic profit when A) MR < MC. B) P > ATC. C) P < ATC. D) P > AVC.

-In the figure above, a firm is operating at point A on the graph. At point A, the firm's average cost curve A) has negative slope. B) has positive slope. C) is horizontal. D) is vertical.

-Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure above. To increase her profit, Carol should A) increase her output. B) decrease her output. C) maintain the current level of output because it gives her the maximum profit. D) Not enough information is given to determine if Carol should increase, decrease, or not change her level of output.

3 Output, Price, and Profit in the Short Run -If there are 1,000 rutabaga farms, all perfectly competitive, an increase in the price of fertilizer used for growing rutabagas will A) have no effect on the total quantity of rutabagas supplied, because no farm has enough market power to raise the price. B) have no effect on the total quantity of rutabagas supplied, because each farm's supply curve is a vertical line. C) decrease the total quantity of rutabagas supplied, because each farm's supply curve shifts leftward. D) reduce the total quantity of rutabagas supplied, because each farm's supply curve is a horizontal line and will shift upward.

The short-run market supply curve for a perfectly competitive market is obtained by summing the part of each firm's A) AVC curve that lies above its MC curve. B) MC curve that lies above its AVC curve. C) AVC curve that lies below the MC curve. D) MC curve that lies below the AVC curve.

In a perfectly competitive market, the market supply curve is the sum of the A) supply curves of all the individual firms. B) average variable cost curves of all the individual firms. C) average total cost curves of all the individual firms. D) average fixed cost curves of all the individual firms.

In the short run, a perfectly competitive firm's economic profits A) must equal zero, that is, the firm earns a normal profit. B) must be positive. C) might be positive, negative (an economic loss), or zero (a normal profit). D) must be negative, that is the firm must incur an economic loss.

In the short run, a perfectly competitive firm A) can either make an economic profit, incur an economic loss, or make zero economic profit. B) never incurs an economic loss larger than its average fixed costs. C) produces at any price. D) always makes an economic profit.

In the short run, a perfectly competitive firm A) cannot shut down. B) must make zero economic profit. C) can make an economic profit, incur an economic loss, or make zero economic profit. D) will not incur an economic loss if it shuts down.

In the short run, a perfectly competitive firm A) might incur an economic loss B) will always make an economic profit. C) chooses its optimal plant size. D) is in equilibrium only when its economic profit is zero.

In the short run, a perfectly competitive firm will make an economic profit as long as A) it maximizes its profit. B) P > AVC. C) P > AFC. D) P > ATC.

In the short run, the firm makes zero economic profit when the price is ________ minimum average total cost, makes an economic profit when the price is ________ minimum average total cost, and incurs an economic loss when the price is ________ minimum average total cost. A) equal to; higher than; lower than B) equal to; lower than; higher than C) higher than; equal to; lower than D) lower than; equal to; higher than

A perfectly competitive firm is making an economic profit when A) its total revenue is greater than its total cost. B) the price is greater than the minimum of its average total cost. C) the price is greater than the minimum of its average variable cost. D) Both answers A and B are correct.

A perfectly competitive firm will have an economic profit of zero if, at its profit-maximizing output, its marginal revenue equals its A) average total cost. B) marginal cost. C) average variable cost. D) average fixed cost.

In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run? A) a decrease in market demand B) an increase in market demand C) an increase in labor costs D) an increase in the number of firms

In a perfectly competitive market in the short run, as the market demand increases, the firms ________ their output and their economic profit ________. A) increase; increases B) increase; decreases C) decrease; decreases D) decrease; increases

In the short run, an increase in demand for a good that is sold in a perfectly competitive market A) increases the number of firms in the market. B) increases the economic profits of existing firms in the market. C) has no effect on the price. D) causes more firms to shut down.

Which of the following statements is TRUE? A) The presence of positive economic profit in a perfectly competitive market is consistent with the characteristics of a long-run competitive equilibrium. B) When firms in a perfectly competitive market incur economic losses, some will exit in the long run, thereby shifting the industry supply curve rightward. C) If a profit-maximizing firm in a perfectly competitive market is making an economic profit, then it must be producing at a level of output where price is greater than average total cost. D) If a profit-maximizing firm in a perfectly competitive market is incurring an economic loss, then it must be producing at a level of output where price is greater than average total cost.

-Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $17.50, what is the firm's economic profit? A) zero B) $2.50 per hour C) $12.50 per hour D) -$10.00 per hour

-The above table shows the per day total cost for Kiley's Baseball Glove Company. Each glove is priced at $50 and Kiley's Baseball Glove Company is a perfectly competitive firm. At which of the following amounts of output is the economic profit maximized for Kiley's Baseball Glove Company? A) 0 B) 2 C) 5 D) 8

-The above table shows the per day total cost for Kiley's Baseball Glove Company. Each glove is priced at $50 and Kiley's Baseball Glove Company is a perfectly competitive firm. Between which two amounts of output does Kiley's Baseball Glove Company make an economic profit? A) 0 and 8 B) 1 and 8 C) 2 and 7 D) 3 and 6

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make? A) $0 B) $30 C) -$10 D) -$15

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $20, how much economic profit does the firm make? A) $0 B) $12 C) -$20 D) -$10

-In the above figure, if the price is P₁, the firm is A) making an economic profit. B) incurring an economic loss. C) making zero economic profit. D) earning enough revenue to pay all of its opportunity costs.

-If the price is $12 per pizza, the perfectly competitive firm in the above figure is A) making an economic profit. B) making zero economic profit. C) incurring an economic loss. D) More information about the firm's total cost is needed to determine if the firm has a positive economic profit, zero economic profit, or an economic loss.

-The figure above shows Mollie's Mugs' costs of producing mugs. The mug market is perfectly competitive. If the market price of a mug falls to $5 and Mollie's shuts down temporarily, its total variable cost is ________ an hour and it incurs an economic loss of ________ an hour. A) $160; $280 B) $8; $14 C) $0; $120 D) $0; $6

-The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces ________ frames each week, makes ________ of total revenue, and makes zero ________ profit. A) 200; $4,000; economic B) 300; $9,000; normal C) 200; $4,000; normal D) 300; $9,000; economic

-The figure above shows a perfectly competitive firm. The firm is operating; that is, the firm has not shut down. The firm is A) making an economic profit of $200. B) incurring a economic loss of $200. C) incurring an economic loss of $600. D) making zero economic profit.

-The figure above shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces A) 20 units of output and makes zero economic profit. B) 20 units of output and incurs an economic loss. C) 10 units of output and makes zero economic profit. D) 10 units of output and incurs an economic loss.

-The figure above shows the costs for a grower in the perfectly competitive turnip market. If the price is $1,000 for a ton of turnips, the firm is A) making an economic profit. B) making zero economic profit. C) incurring an economic loss. D) More information is needed to determine if the firm is making a positive economic profit, zero economic profit, or incurring an economic loss.

-The figure above shows the costs for a grower in the perfectly competitive turnip market. If the price is $1,200 for a ton of turnips, the firm is A) making an economic profit. B) making zero economic profit. C) incurring an economic loss. D) More information is needed to determine if the firm is making a positive economic profit, zero economic profit, or incurring an economic loss.

-The figure above shows the costs for a grower in the perfectly competitive turnip industry. If the price is $1,400 for a ton of turnips, the firm is A) making an economic profit. B) making zero economic profit. C) incurring an economic loss. D) More information is needed to determine if the firm is making a positive economic profit, zero economic profit, or incurring an economic loss.

-In the above figure, at a price of $8, a perfectly competitive firm produces ________ and it ________. A) 0; incurs an economic loss B) 0; makes zero economic profit C) some output; makes zero economic profit D) some output; makes an economic profit

-In the above figure, at a price of $6, a perfectly competitive firm produces ________ and it ________. A) some output; incurs an economic loss B) 0; incurs an economic loss C) 0; does not incur an economic loss or make an economic profit D) 0; makes an economic profit

-In the above figure, at what price does a perfectly competitive firm make zero economic profit? A) $4 per unit B) $8 per unit C) $12 per unit D) $16 per unit

-In the above figure, if the price is $16 per unit, a profit maximizing perfectly competitive firm will A) shut down. B) incur an economic loss but continue to operate. C) make zero economic profit. D) make an economic profit.

-The figure above shows a perfectly competitive firm. To maximize its profit, the firm will produce ________ units of output and the price will be ________ for a unit. A) 30; $40 B) 30; $30 C) 20; $40 D) 20; $30

-The figure above shows a perfectly competitive firm. When the firm maximizes its profit, its total revenue is A) $1,200. B) $900. C) $600. D) unable to be determined without more information.

-The figure above shows a perfectly competitive firm. When the firm maximizes its profit, its total cost is A) $1,200. B) less than $1,200 but more than zero. C) more than $1,200. D) zero.

-The figure above shows a perfectly competitive firm. When the firm maximizes its profit, its economic profit A) is more than $300. B) is $300. C) is less than $300. D) The premise of the question is wrong because the firm is incurring an economic loss.

-The figure above shows a perfectly competitive firm. The figure shows a firm A) in the short run. B) in the long run. C) at its shutdown point. D) Both answers A and C are correct.

-In the above figure, if the price is P₁ and the firm produces Q_2, it is A) making an economic profit. B) incurring an economic loss. C) breaking even. D) More information is needed to determine if the firm is earning a positive economic profit, zero economic profit, or is incurring an economic loss.

-In the above figure, if the price is P₁ and the firm produced Q₁, the firm's economic profit is ________ than if it produced Q₂ and ________ than if it produced Q₃. A) less; less B) less; more C) more; less D) more; more

-In the above figure, if the price is P₁ and the firm produced Q₃, the firm's economic profit is ________ than if it produced Q₁ and ________ than if it produced Q₂. A) less; less B) less; more C) more; less D) more; more

-Consider the perfectly competitive firm in the figure above. At the profit maximizing level of output, the firm will A) make an economic profit equal to the area ABCD. B) incur an economic loss equal to the area ABCD. C) make zero economic profit. D) make an economic profit equal to the area AECD.

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. The firm's profit is maximized when the firm produces A) 90 units of output. B) 130 units of output. C) 170 units of output. D) 210 units of output.

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. When the firm produces 170 units A) marginal cost is less than marginal revenue. B) marginal revenue equals marginal cost. C) total revenue is less than total cost. D) total revenue equals total cost.

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. The marginal cost of the last unit produced is A) $4 per unit. B) $8 per unit. C) $16 per unit. D) None of the above answers is correct.

-The figure above shows depicts the marginal revenue and costs of a perfectly competitive firm. The price the firm charges is A) $4 per unit. B) $8 per unit. C) $16 per unit. D) None of the above answers is correct.

-The figure above shows the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the A) firm has total revenue of $2,720. B) firm's total costs are less than $2,720. C) firm is making an economic profit. D) All of the above are true.

-The figure above shows depicts the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the firm A) would definitely shut down. B) would incur an economic loss. C) would increase its price. D) has total costs less than $2,720.

The short-run market supply curve is A) the sum of the quantities supplied by all the firms. B) undefined because the number of firms is constant in the short run. C) vertical at the total level of output being produced by all firms. D) horizontal at the current market price.

In the short run, a perfectly competitive firm can A) only make an economic profit. B) only make zero economic profit. C) only incur an economic loss. D) make an economic profit, zero economic profit, or incur an economic loss.

A perfectly competitive firm is definitely making an economic profit when A) MR = MC. B) P = ATC. C) P < ATC. D) P > ATC.

If firms in a perfectly competitive industry are making zero economic profit, then A) some of those firms will leave the industry, because firms cannot persistently go without making economic profit. B) new firms will enter the industry, because the new entrants would be ensured of doing as well as in their best foregone alternative. C) there is no incentive for either entry or exit. D) some of the firms will temporarily shut down.

Today, firms in a perfectly competitive market are making an economic profit. In the long run, firms will ________ the market until all firms in the market are ________. A) exit; covering only their total fixed costs B) enter; making zero economic profit C) exit; producing at the minimum point on their long-run average cost curve D) enter; making zero normal profit

Which of the following statements regarding the long-term equilibrium is TRUE? A) As new firms enter a market, each existing firm increases the quantity it produces. B) Firms leave a market if they are making zero economic profit. C) Entry and exit stop when firms are making an economic profit. D) Entry and exit stop when firms make zero economic profit.

The firms in a perfectly competitive are making an economic profit when new firms enter. The entry shifts the short-run market supply curve ________, the market price ________, and each firm's economic profit ________. A) leftward; rises; decreases B) rightward; rises; increases C) rightward; falls; decreases D) leftward; falls; decreases

Suppose firms in a perfectly competitive industry are making economic profits. As a result I. new firms enter the industry. II) the market price falls. III) the economic profits of the existing firms decrease. A) I, II and III B) I and II C) II and III D) I and III

Economic profit sends a signal to entrepreneurs by telling them where A) price exceeds marginal cost. B) there are many buyers and many sellers. C) the shutdown point is. D) an above normal return on investment can be earned.

In the long run, for a perfectly competitive market, if economic profit is A) less than zero, then some firms will exit the market and the market supply curve will shift leftward. B) greater than zero, then some firms will enter the market and the market supply curve will shift rightward. C) equal to zero, then there is no entry or exit of firms into or out of the market. D) All of the above answers are correct.

Entry in a perfectly competitive market A) shifts the market supply curve rightward. B) decreases the market price. C) shifts the market supply curve leftward. D) Both answers A and B are correct.

Suppose firms in a perfectly competitive market are earning an economic profit. As new firms enter, the price ________ and the economic profit of each existing firm ________. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, the firm will A) shut down. B) leave the market in the long run. C) stay in the market in the long run. D) make an economic profit.

-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $22, the firm will A) shut down. B) leave the market in the long run. C) stay in the market in the long run. D) incur an economic loss.

-Sue's Sea Shells by the Sea Shore is a perfectly competitive firm selling sea shells at the market price of $2 per dozen. Sue's Sea Shells by the Sea Shore has fixed costs of $40 per day and a variable cost schedule in the table above. The profit-maximizing level of output for Sue's Sea Shells by the Sea Shore is A) 202 dozen sea shells by the sea shore per day. B) 204 dozen sea shells by the sea shore per day. C) 205 dozen sea shells by the sea shore per day. D) 206 dozen sea shells by the sea shore per day.

-Sue's Sea Shells by the Sea Shore is a perfectly competitive firm selling sea shells at the market price of $2 per dozen. Sue's Sea Shells by the Sea Shore has fixed costs of $40 per day and a variable cost schedule in the table above. The maximum profit attainable by Sue's Sea Shells by the Sea Shore is A) $262.00 per day. B) $262.50 per day. C) $302.00 per day. D) $302.50 per day.