Question 1

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0, the: 0, the:   A) firm shown in the graph will produce q0, but all the firms in the market will produce a total of Q0. B) firm shown in the graph will produce q1, but all the firms in the market will produce a total of Q1. C) output of the firm shown in the graph is the same as quantity supplied in the market. D) firm is not producing at the output where profit is maximized." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  firm shown in the graph will produce q0, but all the firms in the market will produce a total of Q0.
B)  firm shown in the graph will produce q1, but all the firms in the market will produce a total of Q1.
C)  output of the firm shown in the graph is the same as quantity supplied in the market.
D)  firm is not producing at the output where profit is maximized.E) B) and C)
F) B) and D)

Question 2

Because only competitive firms are price takers, only competitive firms have supply curves.

Accepted Answer

A) True 
 B)False

Question 3

Each firm in perfect competition:

Accepted Answer

A)  sets quantity based on market price.
B)  follows the pricing decisions of other firms.
C)  follows the output of other firms.
D)  follows the reactions of competitors.E) A) and B)
F) A) and C)

Question 4

Refer to the graph shown, which depicts a perfectly competitive firm. If the price of the product is $3:

Accepted Answer

A)  new firms will enter the industry.
B)  the firm will just cover its opportunity cost of production.
C)  the industry will be in long-run equilibrium.
D)  the firm may continue to operate in the short run but will exit the industry in the long run.E) C) and D)
F) A) and D)

Question 5

Refer to the graph shown. If the firm increases output from 40 to 50, total revenue will increase:

Accepted Answer

A)  more than total cost, and so profit will increase.
B)  more than total cost, and so profit will decrease.
C)  less than total cost, and so profit will increase.
D)  less than total cost, and so profit will decrease.E) B) and D)
F) B) and C)

Question 6

Assume the smart watch industry is a perfectly competitive industry that uses a specialized input. If this industry experiences an increase in demand, we might expect that in the long run:

Accepted Answer

A)  both input and output prices will increase.
B)  only input prices will increase.
C)  only output prices will increase.
D)  neither input nor output prices will increase.E) A) and B)
F) A) and C)

Question 7

The American Widget Corporation (AWC)is a profit-maximizing and perfectly competitive firm that is currently experiencing a loss.However,the market price of widgets is expected to increase in the near future.The company's vice-president,Alan R.("Big Tuna")Burns,has recommended against increasing output in response to a higher price for widgets.His argument is that the marginal cost of the additional units of output will increase,and these higher costs will worsen AWC's losses.Evaluate this argument using an appropriate picture.

Accepted Answer

The argument is incorrect.Initially pric...

Question 8

In a perfectly competitive market:

Accepted Answer

A)  price does more of the adjusting in the long run and quantity does more of the adjusting in the short run.
B)  price does more of the adjusting in the short run and quantity does more of the adjusting in the long run.
C)  only price adjusts in both the short run and the long run.
D)  only quantity adjusts in both the short run and the long run.E) A) and B)
F) All of the above

Question 9

In a perfectly competitive long-run constant-cost industry, an increase in market demand causes:

Accepted Answer

A)  an increase in quantity, a decrease in price, and no change in profit in the long run.
B)  an increase in price, quantity, and profit in the long run.
C)  an increase in quantity, no change in price, and no change in profit in the long run.
D)  a decrease in price, a decrease in quantity, and a decrease in profit in the long run.E) None of the above
F) A) and B)

Question 10

Perfectly competitive firms:

Accepted Answer

A)  are price takers, since they are not large enough to influence the market price.
B)  are individually able to influence the market price.
C)  will succeed by charging a price higher than that charged by the rest of the market.
D)  can influence the prices of other firms in the same industry by altering their own prices.E) A) and B)
F) B) and C)

Exam 13: Perfect Competition

Perfectly competitive firms:

Correct Answer
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Each firm in perfect competition:

Correct Answer
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In a perfectly competitive market:

Correct Answer
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Assume the smart watch industry is a perfectly competitive industry that uses a specialized input. If this industry experiences an increase in demand, we might expect that in the long run:

Correct Answer
verified

In a perfectly competitive long-run constant-cost industry, an increase in market demand causes:

Correct Answer
verified

Correct Answer
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The argument is incorrect.Initially pric...
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Because only competitive firms are price takers, only competitive firms have supply curves.

Correct Answer
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Refer to the graph shown. If the firm increases output from 40 to 50, total revenue will increase:

Correct Answer
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Refer to the graph shown, which depicts a perfectly competitive firm. If the price of the product is $3:

Correct Answer
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Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀, the:

Correct Answer
verified

Exam 13: Perfect Competition

Perfectly competitive firms:

Correct AnswerverifiedShow Answer

Each firm in perfect competition:

Correct AnswerverifiedShow Answer

In a perfectly competitive market:

Correct AnswerverifiedShow Answer

Assume the smart watch industry is a perfectly competitive industry that uses a specialized input. If this industry experiences an increase in demand, we might expect that in the long run:

Correct AnswerverifiedShow Answer

In a perfectly competitive long-run constant-cost industry, an increase in market demand causes:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe argument is incorrect.Initially pric...View AnswerShow Answer

Because only competitive firms are price takers, only competitive firms have supply curves.

Correct AnswerverifiedShow Answer

Refer to the graph shown. If the firm increases output from 40 to 50, total revenue will increase:

Correct AnswerverifiedShow Answer

Refer to the graph shown, which depicts a perfectly competitive firm. If the price of the product is $3:

Correct AnswerverifiedShow Answer

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0, the:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The argument is incorrect.Initially pric...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀, the:

Correct Answer
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