Micro Ch.12 Exam

question

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating

answer

marginal revenue and marginal cost.

question

Which of the following is not a characteristic of a perfectly competitive market structure?

answer

There are restrictions on exit of firms.

question

Which of the following is not a characteristic of a monopolistically competitive market structure?

answer

Each firm must react to actions of other firms.

question

Which of the following is a characteristic of an oligopolistic market structure?

answer

There are few dominant sellers.

question

Which of the following is a characteristic of a monopoly?

answer

There is only one seller in the market.

question

Perfect competition is characterized by all of the following except

answer

heavy advertising by individual sellers.

question

The price of a seller's product in perfect competition is determined by

answer

market demand and market supply.

question

Both individual buyers and sellers in perfect competition

answer

have to take the market price as a given.

question

Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21. Which of the following will happen?

answer

The firm will not sell any output.

question

The delivery of first-class mail by the U.S. Postal Service is an example of

answer

a monopoly.

question

A perfectly competitive firm faces a demand curve that is

answer

horizontal.

question

Refer to Figure 12-1. If the firm is producing 700 units, what is the amount of its profit or loss?

answer

There is insufficient information to answer the question.

question

Refer to Figure 12-1. If the firm is producing 200 units

answer

it should increase its output to maximize profit.

question

Refer to Figure 12-1. If the firm is producing 500 units

answer

it should maintain its output to maximize profit.

question

Refer to Figure 12-1. If the firm is charging a price of $12 per unit

answer

it is not selling any output.

question

A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The price of each good is $10. Calculate the firm's short-run profit or loss.

answer

loss of $6,000

question

Refer to Figure 12-2. What is the amount of profit if the firm produces Q2 units?

answer

It is equal to the vertical distance c to g.

question

Refer to Figure 12-2. The firm breaks even at an output level of

answer

Q4 units.

question

For a perfectly competitive firm, average revenue is equal to

answer

the market price.

question

Marginal revenue is

answer

the change in total revenue divided by the change in the quantity of output.

question

In a graph that illustrates a perfectly competitive firm, the marginal revenue curve is

answer

the same as the firm's demand curve.

question

Refer to Table 12-2. What is Margie's total revenue if she sells 250 pounds of apples?

answer

$750

question

What is always true at the quantity where a firm's average total cost equals average revenue?

answer

The firm breaks even.

question

Profit is the difference between

answer

total revenue and total cost.

question

If a firm shuts down in the short run it will

answer

suffer a loss equal to its fixed costs.

question

A perfectly competitive firm's short-run supply curve is

answer

upward sloping and is the portion of the marginal cost curve that lies above the average variable cost curve.

question

The minimum point on the average variable cost curve is called

answer

the shutdown point.

question

Refer to Figure 12-10. Total revenue at the profit-maximizing level of output is

answer

$6,000.

question

Refer to Figure 12-10. The total cost at the profit-maximizing output level equals

answer

$3,300.

question

Refer to Figure 12-11. Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In the long-run equilibrium, the firm represented in the diagram

answer

will reduce its output to 1,100 units.

question

Refer to Figure 12-12. Consider a typical firm in a perfectly competitive industry that makes short-run profits. Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?

answer

Panel B

question

Refer to Figure 12-14. Consider a typical firm in a perfectly competitive industry which is incurring short-run losses. Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?

answer

Panel A

question

The long-run supply curve for a perfectly competitive, constant-cost industry

answer

is horizontal.

question

Hogrocket, which developed the Tiny Invaders game for the iPhone, found that to maintain sales in a profitable competitive market, the price of a product

answer

will usually fall.

question

What characteristic of a competitive market has made the "long run pretty short" in the market for iPhone apps?

answer

ease of entry

question

Which of the following describes a situation in which a good or service is produced at the lowest possible cost?

answer

productive efficiency

question

What is productive efficiency?

answer

a situation in which resources are allocated such that goods can be produced at their lowest possible average cost

question

Which of the following describes a situation in which every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it?

answer

allocative efficiency

question

What is allocative efficiency?

answer

It refers to a situation in which resources are allocated such that the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it.

question

In the long run, the entry of new firms in an industry

answer

benefits consumers by forcing prices down to the level of average cost.

question

When plasma television sets were first introduced prices were high and few firms were in the market. Later, economic profits attracted new firms and the price of plasma televisions fell. This example illustrates

answer

that consumers receive this new technology "free of charge" in the sense that they only have to pay a price for plasma televisions equal to the lowest production cost.

1 of 41

question

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating

answer

marginal revenue and marginal cost.

question

Which of the following is not a characteristic of a perfectly competitive market structure?

answer

There are restrictions on exit of firms.

question

Which of the following is not a characteristic of a monopolistically competitive market structure?

answer

Each firm must react to actions of other firms.

question

Which of the following is a characteristic of an oligopolistic market structure?

answer

There are few dominant sellers.

question

Which of the following is a characteristic of a monopoly?

answer

There is only one seller in the market.

question

Perfect competition is characterized by all of the following except

answer

heavy advertising by individual sellers.

question

The price of a seller's product in perfect competition is determined by

answer

market demand and market supply.

question

Both individual buyers and sellers in perfect competition

answer

have to take the market price as a given.

question

Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21. Which of the following will happen?

answer

The firm will not sell any output.

question

The delivery of first-class mail by the U.S. Postal Service is an example of

answer

a monopoly.

question

A perfectly competitive firm faces a demand curve that is

answer

horizontal.

question

Refer to Figure 12-1. If the firm is producing 700 units, what is the amount of its profit or loss?

answer

There is insufficient information to answer the question.

question

Refer to Figure 12-1. If the firm is producing 200 units

answer

it should increase its output to maximize profit.

question

Refer to Figure 12-1. If the firm is producing 500 units

answer

it should maintain its output to maximize profit.

question

Refer to Figure 12-1. If the firm is charging a price of $12 per unit

answer

it is not selling any output.

question

A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The price of each good is $10. Calculate the firm's short-run profit or loss.

answer

loss of $6,000

question

Refer to Figure 12-2. What is the amount of profit if the firm produces Q2 units?

answer

It is equal to the vertical distance c to g.

question

Refer to Figure 12-2. The firm breaks even at an output level of

answer

Q4 units.

question

For a perfectly competitive firm, average revenue is equal to

answer

the market price.

question

Marginal revenue is

answer

the change in total revenue divided by the change in the quantity of output.

question

In a graph that illustrates a perfectly competitive firm, the marginal revenue curve is

answer

the same as the firm's demand curve.

question

Refer to Table 12-2. What is Margie's total revenue if she sells 250 pounds of apples?

answer

$750

question

What is always true at the quantity where a firm's average total cost equals average revenue?

answer

The firm breaks even.

question

Profit is the difference between

answer

total revenue and total cost.

question

If a firm shuts down in the short run it will

answer

suffer a loss equal to its fixed costs.

question

A perfectly competitive firm's short-run supply curve is

answer

upward sloping and is the portion of the marginal cost curve that lies above the average variable cost curve.

question

The minimum point on the average variable cost curve is called

answer

the shutdown point.

question

Refer to Figure 12-10. Total revenue at the profit-maximizing level of output is

answer

$6,000.

question

Refer to Figure 12-10. The total cost at the profit-maximizing output level equals

answer

$3,300.

question

Refer to Figure 12-11. Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In the long-run equilibrium, the firm represented in the diagram

answer

will reduce its output to 1,100 units.

question

answer

Panel B

question

answer

Panel A

question

The long-run supply curve for a perfectly competitive, constant-cost industry

answer

is horizontal.

question

Hogrocket, which developed the Tiny Invaders game for the iPhone, found that to maintain sales in a profitable competitive market, the price of a product

answer

will usually fall.

question

What characteristic of a competitive market has made the "long run pretty short" in the market for iPhone apps?

answer

ease of entry

question

Which of the following describes a situation in which a good or service is produced at the lowest possible cost?

answer

productive efficiency

question

What is productive efficiency?

answer

a situation in which resources are allocated such that goods can be produced at their lowest possible average cost

question

answer

allocative efficiency

question

What is allocative efficiency?

answer

It refers to a situation in which resources are allocated such that the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it.

question

In the long run, the entry of new firms in an industry

answer

benefits consumers by forcing prices down to the level of average cost.

question

answer

that consumers receive this new technology "free of charge" in the sense that they only have to pay a price for plasma televisions equal to the lowest production cost.

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Micro Ch.12 Exam

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