Chapter 10

1. Which of the following industries most closely approximates pure competition?

2. Economists use the term imperfect competition to describe:

. An industry comprised of a very large number of sellers producing a standardized product is known as:

4. Which of the following statements applies to a purely competitive producer?

5. A purely competitive seller is:

6. The demand schedule or curve confronted by the individual purely competitive firm is:

7. Which of the following is characteristic of a purely competitive seller's demand curve?

8. Refer to the above information. For a purely competitive firm, total revenue graphs as a:

9. Refer to the above information. For a purely competitive firm, marginal revenue graphs as a:

10. Refer to the above information. For a purely competitive firm:

11. If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:

12. Price is constant or given to the individual firm selling in a purely competitive market because:

13. For a purely competitive seller, price equals:

14. For a purely competitive firm total revenue:

15. The marginal revenue curve of a purely competitive firm:

16. The demand curve in a purely competitive industry is _____, while the demand curve to a single firm in that industry is _____.

17. A perfectly elastic demand curve implies that the firm:

18. The fact that a purely competitive firm's total revenue curve is linear and upsloping to the right implies that:

19. Which of the following statements is correct?

20. Refer to the above diagram,

21. Refer to the above diagram, which pertains to a purely competitive firm. Curve C represents:

22. Marginal revenue is the:

23. Firms seek to maximize:

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

25. In the short run a purely competitive firm that seeks to maximize profit will produce: A. where the demand and

26. Refer to the above short-run data. The profit-maximizing output for this firm is:

27. Refer to the above short-run data. Which of the following is correct? A. This firm will maximize its profit at 440 units of output.

28. A competitive firm will maximize profits at that output at which:

29. A firm reaches a break-even point (normal profit position) where:

30. The MR = MC rule applies:

31. When a firm is maximizing profit it will necessarily be:

32. The MR = MC rule can be restated for a purely competitive seller as P = MC because:

33. In the short run the individual competitive firm's supply curve is that segment of the:

B. marginal cost curve lying above the average variable cost curve.

35. Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation:

36. A purely competitive firm's short-run supply curve is:

37. Suppose you find that the price of your product is less than minimum AVC. You should:

. If a purely competitive firm shuts down in the short run:

39. A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its:

40. In the short run a purely competitive firm will always make an economic profit if:

41. Suppose that at 500 units of output marginal revenue is equal to marginal cost. The firm is selling its output at $5 per unit and average total cost at 500 units of output is $6. On the basis of this information we:

42. If a firm is confronted with economic losses in the short run, it will decide whether or not to produce by comparing:

43. A firm finds that at its MR = MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should:

44. The lowest point on a purely competitive firm's short-run supply curve corresponds to:

45. Refer to the above diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is:

46. Refer to the above diagram for a purely competitive producer. The firm will produce at a loss at all prices:

47. Refer to the above diagram for a purely competitive producer. If product price is P3:

48. Refer to the above diagram for a purely competitive producer. The firm's short-run supply curve is:

49. The short-run supply curve of a purely competitive producer is based primarily on its:

50. On a per unit basis economic profit can be determined as the difference between:

51. In the short run a purely competitive seller will shut down if:

52. Refer to the above diagram. To maximize profit or minimize losses this firm will produce:

53. Refer to the above diagram. At the profit-maximizing output, total revenue will be:

54. Refer to the above diagram. At the profit-maximizing output, total fixed cost is equal to:

55. Refer to the above diagram. At the profit-maximizing output, total variable cost is equal to:

56. Refer to the above diagram. At the profit-maximizing output, the firm will realize:

57. If a purely competitive firm is producing at some level less than the profit-maximizing output, then:

58. If at the MC = MR output, AVC exceeds price:

59. Refer to the above diagram. The profit-maximizing output:

60. Refer to the above diagram. At the profit-maximizing output, total profit is:

61. Refer to the above diagram. The short-run supply curve for this firm is the:

62. Refer to the above diagram. This firm is selling its product in a(n):

63. In the short run, a purely competitive seller will shut down if product price:

64. The short-run supply curve for a purely competitive industry can be found by:

65. Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16. This firm will:

C. minimize its losses by producing in the short run.

67. If a purely competitive firm is producing at the P = MC output and realizing an economic profit, at that output:

68. If a profit-seeking competitive firm is producing its profit-maximizing output and its total fixed costs fall by 25 percent, the firm should:

69. Refer to the above diagram. At P2, this firm will:

70. Refer to the above diagram. At P1, this firm will produce:

71. Refer to the above diagram. At P4, this firm will:

72. Refer to the above diagram. At P3, this firm will:

73. The Ajax Manufacturing Company is selling in a purely competitive market. Its output is 100 units which sell at $4 each. At this level of output total cost is $600, total fixed cost is $100, and marginal cost is $4. The firm should:

74. If a purely competitive firm is maximizing economic profit: A. it is necessarily maximizing per-unit profit.

75. Refer to the above data. If product price is $60, the firm will:

76. Refer to the above data. If product price is $45, the firm will:

77. Refer to the above data. If product price is $25, the firm will:

78. Assume a purely competitive firm is selling 200 units of output at $3 each. At this output its total fixed cost is $100 and its total variable cost is $350. This firm:

79. Refer to the above diagram. This firm will earn only a normal profit if product price is:

80. Refer to the above diagram. The firm will realize an economic profit if price is:

81. Refer to the above diagram. The firm will produce at a loss if price is:

82. Refer to the above diagram. The firm will shut down at any price less than:

83. Refer to the above diagram. The firm's supply curve is the segment of the:

84. A purely competitive seller should produce (rather than shut down) in the short run:

85. In the short run, a purely competitive firm will earn a normal profit when:

86. Refer to the above table. The equilibrium price in this purely competitive market is:

87. Refer to the above table. At the equilibrium price, each of the 100 firms in this industry will produce:

88. Refer to the above table. For each of the 100 firms in this industry, marginal revenue and total revenue will be:

89. Refer to the above table. If each of the 100 firms in the industry is maximizing its profit, each must have a marginal cost of:

90. Refer to the above table. If each of the 100 firms in the industry is maximizing its profit and earning only a normal profit, each must have a total cost of:

91. Refer to the above table. If each of the 100 firms in the industry is maximizing its profit and earning only a normal profit, each must have an average total cost of:

92. (Consider This) An unprofitable motel will stay open in the short-run if:

93. (Last Word) Oil wells and seasonal resorts will often shut down temporarily because:

94. (Last Word) Temporary shutdowns of firms are most widespread when: