Question 1

Comparing the shape of the industry and individual demand curve in perfect competition,

Accepted Answer

In perfect competition, the industry demand curve is downward sloping, reflecting the overall market demand for a product or service, while the individual firm's demand curve is horizontal, indicating that the firm is a price taker and can sell any quantity of its product at the prevailing market price.

Question 2

The profit-maximizing/loss-minimizing level of output

Accepted Answer

The answer of The profit-maximizing/loss-minimizing level of output
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Question 3

Licenses,long-term contracts,and patents

Accepted Answer

Licenses, long-term contracts, and patents represent barriers to perfect mobility in perfect competition. This is because they restrict the movement of resources (such as labor and capital) between firms, which hinders the perfect mobility of these resources that is required for perfect competition. In a perfectly competitive market, there are no such barriers to mobility, which means resources can move easily from one firm to another based on market conditions.

Question 4

-Which statement is true?

Accepted Answer

The image code TB5852_00 is a short-run average total cost curve (ATC), and the intersection with the marginal cost (MC) curve is at a point where the ATC curve is still above the demand curve, indicating that the firm is not able to cover its costs and is making a loss in the short run. Therefore, the correct answer is C. It is not possible to determine the long-run profitability of the firm from this diagram.

Question 5

The firm's most efficient output would be

Accepted Answer

The most efficient output is where marginal revenue (MR) = marginal cost (MC). Looking at the table, we can see that at an output level of 90, MR = $820 (the change in total revenue from producing one additional unit) and MC = $820 (the change in total cost from producing one additional unit). At any other output level, either MR is less than MC (meaning producing one more unit would cause revenue to decrease by more than cost) or MR is greater than MC (meaning there is potential profit to be made by producing more units). Thus, the firm's most efficient output is 90.

Question 6

Marginal revenue at the profit-maximizing/loss-minimizing amount is

Accepted Answer

Marginal revenue at the profit-maximizing or loss-minimizing level of output is equal to marginal cost. Without specific cost data, we can't determine the exact figure, but the principle is that for profit maximization or loss minimization, MR = MC.

Question 7

In the long run perfectly competitive

Accepted Answer

In the long run, perfectly competitive firms will accept zero economic profits. Economic profit is when revenues are greater than both explicit and implicit costs. In a perfectly competitive market, all firms have access to the same technology and resources and therefore, there is no room for firms to earn above-normal profits in the long run. Firms can only earn normal profits, which means revenues are just enough to cover costs including opportunity costs of resources. Therefore, perfectly competitive firms will accept zero economic profits in the long run.

Question 8

-Which statement is true?

Accepted Answer

The answer of 
-Which statement is true?
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Question 9

When operating at the profit-maximizing/loss-minimizing level of output,total revenue minus total cost is a little under

Accepted Answer

The answer of When operating at the profit-maximizing/loss-minimizing level of...

Question 10

Which statement is true about the perfect competitor?

Accepted Answer

The defining characteristic of a perfect competition market is a perfectly elastic demand curve for each individual firm. In this market structure, firms operate at peak efficiency in the long run, but may experience losses in the short run. Economic profits are equal to zero in the long run, as entry and exit of firms occurs to eliminate excess profits. Accounting profits may still be positive, but economic profits are zero.

Question 11

The firm's most efficient output would be

Accepted Answer

The most efficient output is where the marginal cost (MC) equals the marginal revenue (MR). From the given table, we can see that at production level of 90 units, MC = MR = $20. At any other level, either MC is greater than MR (for output level greater than 90) or MR is greater than MC (for output level less than 90). Therefore, producing 90 units would result in the most efficient output.

Question 12

Computerization of the business world since the 1980s and the development of the Internet in the 1990s

Accepted Answer

The computerization and development of the internet have increased the availability and accessibility of information, bringing businesses closer to a state of perfect knowledge. However, this does not necessarily lead to perfectly competitive firms or resources with perfect mobility nor does it make products more identical.

Question 13

Under perfect competition in the long run,price is equal to

Accepted Answer

Under perfect competition in the long run, the industry supply curve intersects the demand curve at the point where price is equal to the minimum point of the average total cost curve. This implies that price is equal to both marginal revenue and marginal cost at this point. So, options A and B are correct. Additionally, since price is also equal to the minimum point of the average total cost curve, option C is also correct. Hence, all of the choices are equal to price under perfect competition. Therefore, the correct answer is D.

Question 14

The most efficient level of output for a perfect competitor

Accepted Answer

In the long run, a perfect competitor will produce at the minimum point of its long-run average cost curve, which is also the cheapest level of output. This is because in the long run, firms can adjust their inputs and technology to achieve the lowest possible cost of production. Therefore, the most efficient level of output for a perfect competitor is also the least expensive.

Question 15

Each of the following is a characteristic of perfect competition except

Accepted Answer

Perfect competition is characterized by many firms, perfect knowledge, homogenous products, ease of market entry and exit, and no control over vital resources, licenses or government franchises. The presence of barriers to entry such as licenses, control of vital resources or government franchises are more typical of monopolistic or oligopolistic markets.

Question 16

Under perfect competition in the long run,average revenue is equal to

Accepted Answer

In a perfectly competitive market, firms are price takers, meaning the price is determined by the market. Under these conditions, average revenue (AR) is equal to the price (P) because each unit of the good is sold at the market price. Marginal revenue (MR) is also equal to the price because the revenue from selling one more unit is exactly the price. In the long run, firms adjust their output so that average total cost (ATC) equals price to ensure normal profit, making ATC equal to AR. Similarly, firms produce where marginal cost (MC) equals price to maximize profit, making MC equal to AR as well. Therefore, all the choices are equal to average revenue under perfect competition in the long run.

Question 17

Statement I: The Internet has moved entire markets much closer to the ideal of perfect knowledge.
Statement II: The advent of the Internet has brought wide sectors of business closer to the ideal of perfect competition.

Accepted Answer

Statement I is true because the Internet has made information much easier to access, allowing consumers to have more knowledge about products and prices, thus moving closer to the ideal of perfect knowledge. 
Statement II is also true because the Internet has lowered barriers to entry in many industries, increasing the number of competitors and bringing industries closer to the ideal of perfect competition.

Question 18

The profit-maximizing/loss-minimizing level of output

Accepted Answer

The profit-maximizing or loss-minimizing level of output is where Marginal Cost (MC) = Marginal Revenue (MR). From the given table, we can calculate MC and MR for different output levels as:

| Output (Q) | MC | MR |
| ---------- | -- | -- |
| 20         | 30 | 70 |
| 40         | 40 | 50 |
| 60         | 60 | 30 |
| 80         | 90 | 10 |
| 100        | 130| -10|
| 120        | 180| -30|

So, we can see that MC=MR at Q=100. At this level of output, the firm's total revenue will be ($100 x $70) = $7000 and total cost will be ($130 x 100) = $13,000, resulting in a loss of $6000 which is the least amount of loss among all other output levels. Therefore, the best choice is to produce 100 units to minimize the loss.

Question 19

When operating at the profit-maximizing/loss-minimizing level of output,total revenue minus total cost equals

Accepted Answer

The answer of When operating at the profit-maximizing/loss-minimizing level of...

Question 20

The average total cost at the profit-maximizing/loss-minimizing amount is a little over

Accepted Answer

The profit-maximizing/loss-minimizing amount occurs where marginal revenue equals marginal cost. This occurs at a quantity of 8, where the marginal cost is $9. At that point, the average total cost is a little over $9 per unit. Therefore, the best choice(s) would be B.

Quiz 21: Profit, loss, and Perfect Competition

Comparing the shape of the industry and individual demand curve in perfect competition,

The profit-maximizing/loss-minimizing level of output

Licenses,long-term contracts,and patents

-Which statement is true?

The firm's most efficient output would be

Marginal revenue at the profit-maximizing/loss-minimizing amount is

In the long run perfectly competitive

-Which statement is true?

When operating at the profit-maximizing/loss-minimizing level of output,total revenue minus total cost is a little under

Which statement is true about the perfect competitor?

The firm's most efficient output would be

Computerization of the business world since the 1980s and the development of the Internet in the 1990s

Under perfect competition in the long run,price is equal to

The most efficient level of output for a perfect competitor

Each of the following is a characteristic of perfect competition except

Under perfect competition in the long run,average revenue is equal to

Statement I: The Internet has moved entire markets much closer to the ideal of perfect knowledge. Statement II: The advent of the Internet has brought wide sectors of business closer to the ideal of perfect competition.

The profit-maximizing/loss-minimizing level of output

When operating at the profit-maximizing/loss-minimizing level of output,total revenue minus total cost equals

The average total cost at the profit-maximizing/loss-minimizing amount is a little over