Micro Ch.12 Exam - Custom Scholars
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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
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.

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