ch 8

question

If the market price is below minimum average variable cost in the short run:

answer

he firm will shut down production.

question

In the long run under perfect competition, if price is initially below average total cost:

answer

the quantity produced by the firm and the price it charges will both rise

question

In the short run, a perfectly competitive firm's producer surplus is equal to:

answer

total revenue minus variable cost

question

The curve that is most relevant to whether a firm makes a profit or loss in the short run is`

answer

the average total cost curve.

question

In perfectly competitive markets:

answer

price equals marginal revenue at all quantities

question

In long-run equilibrium under perfect competition, price is not equal to:

answer

the firms' minimum average fixed cost. See Section 8.4.

question

In the long run under perfect competition, if price is initially above average total cost:

answer

the quantity produced by the firm and the price it charges will both fall.

question

In a perfectly competitive constant-cost industry, the long-run market supply curve is:

answer

perfectly elastic.

question

A perfectly competitive constant-cost industry begins in long-run equilibrium, but demand subsequently decreases. After the market readjusts, relative to the original equilibrium:

answer

the price charged by the firms remains the same, the quantity produced by a firm remains the same, and the market quantity decreases.

question

The curve that is most relevant to the firm's decision to produce or shut down in the short run is:

answer

the average variable cost curve.

question

A perfectly competitive industry begins in long-run equilibrium, but a technological innovation lowers the firms' costs. After the market adjusts, relative to the original equilibrium:

answer

the price charged by the firms decreases, the quantity produced by a firm increases, and the market quantity increases.

question

If a perfectly competitive firm is making a loss in the short run, it should:

answer

produce where price equals marginal cost so long as the price is higher than minimum average variable cost

question

The biggest difference between perfectly competitive markets and monopolistically competitive markets is that:

answer

firms' products are differentiated under monopolistic competition but are identical under perfect competition.

question

A perfectly competitive firm's supply curve is:

answer

its marginal cost curve.

question

In perfect competition, the prices charged by firms:

answer

are determined by market supply and demand

question

In a perfectly competitive increasing-cost industry, the long-run market supply curve is

answer

Upward-sloping.

question

If the market price is above average total cost in the short run:

answer

Correct the firm is making an economic profit.

question

In perfectly competitive markets, demand for an individual firm's product is:

answer

perfectly elastic.

question

Economic rent is:

answer

equal to zero for the firm that has the highest cost.

question

Which of the following are not equal to a firm's profit under perfect competition?

answer

MR - MC

1 of 20

question

If the market price is below minimum average variable cost in the short run:

answer

he firm will shut down production.

question

In the long run under perfect competition, if price is initially below average total cost:

answer

the quantity produced by the firm and the price it charges will both rise

question

In the short run, a perfectly competitive firm's producer surplus is equal to:

answer

total revenue minus variable cost

question

The curve that is most relevant to whether a firm makes a profit or loss in the short run is`

answer

the average total cost curve.

question

In perfectly competitive markets:

answer

price equals marginal revenue at all quantities

question

In long-run equilibrium under perfect competition, price is not equal to:

answer

the firms' minimum average fixed cost. See Section 8.4.

question

In the long run under perfect competition, if price is initially above average total cost:

answer

the quantity produced by the firm and the price it charges will both fall.

question

In a perfectly competitive constant-cost industry, the long-run market supply curve is:

answer

perfectly elastic.

question

A perfectly competitive constant-cost industry begins in long-run equilibrium, but demand subsequently decreases. After the market readjusts, relative to the original equilibrium:

answer

the price charged by the firms remains the same, the quantity produced by a firm remains the same, and the market quantity decreases.

question

The curve that is most relevant to the firm's decision to produce or shut down in the short run is:

answer

the average variable cost curve.

question

A perfectly competitive industry begins in long-run equilibrium, but a technological innovation lowers the firms' costs. After the market adjusts, relative to the original equilibrium:

answer

the price charged by the firms decreases, the quantity produced by a firm increases, and the market quantity increases.

question

If a perfectly competitive firm is making a loss in the short run, it should:

answer

produce where price equals marginal cost so long as the price is higher than minimum average variable cost

question

The biggest difference between perfectly competitive markets and monopolistically competitive markets is that:

answer

firms' products are differentiated under monopolistic competition but are identical under perfect competition.

question

A perfectly competitive firm's supply curve is:

answer

its marginal cost curve.

question

In perfect competition, the prices charged by firms:

answer

are determined by market supply and demand

question

In a perfectly competitive increasing-cost industry, the long-run market supply curve is

answer

Upward-sloping.

question

If the market price is above average total cost in the short run:

answer

Correct the firm is making an economic profit.

question

In perfectly competitive markets, demand for an individual firm's product is:

answer

perfectly elastic.

question

Economic rent is:

answer

equal to zero for the firm that has the highest cost.

question

Which of the following are not equal to a firm's profit under perfect competition?

answer

MR - MC

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