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Ben's Peanut Shoppe suffers a short-run loss.Ben will not choose to shut down if


A) his Shoppe's total revenue exceeds his fixed cost.
B) his Shoppe's total revenue exceeds his variable cost.
C) his Shoppe's total revenue exceeds his implicit costs.
D) his Shoppe's total revenue exceeds his capital costs.

E) C) and D)
F) B) and C)

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Being a price-taker,a perfectly competitive firm cannot receive a producer surplus in the short run.

A) True
B) False

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Figure 8-8 Figure 8-8 -Refer to Figure 8-8.At the profit-maximising output level,the firm earns A) zero economic profit. B) a profit of $600. C) a profit of $1200. D) a profit of $2700. -Refer to Figure 8-8.At the profit-maximising output level,the firm earns


A) zero economic profit.
B) a profit of $600.
C) a profit of $1200.
D) a profit of $2700.

E) B) and D)
F) A) and B)

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A perfectly competitive firm's horizontal demand curve implies that the firm does not have to lower its price to sell more output.

A) True
B) False

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If,for the last bushel of apples produced and sold by an apple farm,marginal revenue exceeds marginal cost,then in producing that bushel the farm


A) added more to total cost than it added to total revenue.
B) added an equal amount to both total revenue and total cost.
C) added more to total revenue than it added to total cost.
D) maximised its profits or minimised its losses.

E) All of the above
F) A) and B)

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


A) few firms in the market
B) identical products
C) ease of entry
D) blocked entry

E) A) and B)
F) None of the above

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Table 8-3 Table 8-3 Arnie sells basketballs in a perfectly competitive market.Table 8-3 summarises Arnie's output per day (Q) ,total cost (TC) ,average total cost (ATC) and marginal cost (MC) . -Refer to Table 8-3.What will Arnie's output be and how much profit will he earn if the market price of basketballs is $5.00? A) Q = 1;profit = -$10. B) Q = 3;profit = -$7.50 C) Q = 0;profit = -$10.00 D) Price and profit cannot be determined from the information given. Arnie sells basketballs in a perfectly competitive market.Table 8-3 summarises Arnie's output per day (Q) ,total cost (TC) ,average total cost (ATC) and marginal cost (MC) . -Refer to Table 8-3.What will Arnie's output be and how much profit will he earn if the market price of basketballs is $5.00?


A) Q = 1;profit = -$10.
B) Q = 3;profit = -$7.50
C) Q = 0;profit = -$10.00
D) Price and profit cannot be determined from the information given.

E) B) and C)
F) None of the above

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Figure 8-2 Figure 8-2 -Refer to Figure 8-2.What happens if the firm produces more than Q<sub>4 </sub>units? A) Its profit increases. B) It incurs a loss. C) Its total revenue is increasing faster than its total cost. D) It could make a profit or a loss depending on what happens to demand. -Refer to Figure 8-2.What happens if the firm produces more than Q4 units?


A) Its profit increases.
B) It incurs a loss.
C) Its total revenue is increasing faster than its total cost.
D) It could make a profit or a loss depending on what happens to demand.

E) B) and D)
F) A) and D)

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Figure 8-7 Figure 8-7 Figure 8-7 shows cost and demand curves facing a profit-maximising,perfectly competitive firm. -Refer to Figure 8-7.Identify the short-run shut down point for the firm. A) a B) b C) c D) d Figure 8-7 shows cost and demand curves facing a profit-maximising,perfectly competitive firm. -Refer to Figure 8-7.Identify the short-run shut down point for the firm.


A) a
B) b
C) c
D) d

E) C) and D)
F) None of the above

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In the short run,if a firm shuts down its maximum loss equals the amount of its fixed cost.

A) True
B) False

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Assuming a market price of $4,fill in the columns in the following table.What is the profit-maximising level of production? What are the two ways to determine the profit-maximising level of production? Assuming a market price of $4,fill in the columns in the following table.What is the profit-maximising level of production? What are the two ways to determine the profit-maximising level of production?

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blured image The profit-maximising level of producti...

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Figure 8-8 Figure 8-8 -Refer to Figure 8-8.The total cost at the profit-maximising output level equals A) $4800. B) $3300. C) $2500. D) $1800. -Refer to Figure 8-8.The total cost at the profit-maximising output level equals


A) $4800.
B) $3300.
C) $2500.
D) $1800.

E) A) and C)
F) B) and D)

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At the profit-maximising level of output for a perfectly competitive firm,price equals marginal cost.Which of the following is also true?


A) The difference between total revenue and total cost is the greatest.
B) Total revenue equals total cost.
C) Average revenue equals average total cost.
D) Marginal profit equals marginal cost.

E) A) and C)
F) A) and D)

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Of the following industries,which are perfectly competitive? For those that are not perfectly competitive,explain why. a.Restaurants b.Corn c.University education d.Local radio and television

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a.Restaurants are not perfectly competit...

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Which of the following describes a difference between allocative efficiency and productive efficiency in a perfectly competitive market?


A) Allocative efficiency is achieved only in the long run.Productive efficiency is achieved only in the short run.
B) Allocative efficiency is achieved only in the long run.Productive efficiency is achieved in the short run and the long run.
C) Allocative efficiency is achieved only in the short run.Productive efficiency is achieved only in the long run.
D) Allocative efficiency is achieved in the short run and the long run.Productive efficiency is achieved only in the long run.

E) A) and D)
F) A) and C)

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


A) There is a very large number of firms that are small compared to the market.
B) All firms sell identical products.
C) There are no restrictions to entry by new firms.
D) There are restrictions on exit of firms.

E) C) and D)
F) All of the above

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A wheat farmer and a firm in a perfectly competitive market are similar in that


A) both face vertical demand curves.
B) both have to lower their prices if a rival firm lowers its price.
C) both face horizontal demand curves.
D) both will earn an economic profit if their total revenue equals their total cost.

E) B) and C)
F) C) and D)

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Letters are used to represent the terms used to answer this question: price (P) ,quantity of output (Q) ,total cost (TC) and average total cost (ATC) .Which of the following equations is equal to a firm's average profit?


A) P - ATC
B) (P - ATC) × Q
C) (P × Q) - TC
D) P - TC

E) B) and C)
F) A) and B)

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If price is equal to average variable cost,a perfectly competitive firm breaks even.

A) True
B) False

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If a typical firm in a perfectly competitive industry is earning profits,then


A) all firms will continue to earn profits.
B) new firms will enter in the long run causing market supply to decrease,market price to rise and profits to increase.
C) new firms will enter in the long run causing market supply to increase,market price to fall and profits to decrease.
D) the number of firms in the industry will remain constant in the long run.

E) All of the above
F) B) and D)

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