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Exam 14: Firms in Competitive Markets

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Question 81

Multiple Choice

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The firm will make the most profits if it produces the quantity of output at which

A) marginal cost equals average cost.
B) profit per unit is greatest.
C) marginal revenue equals total revenue.
D) marginal revenue equals marginal cost.

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

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Question 82

Multiple Choice

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In the long-run equilibrium of a market with free entry and exit, if all firms have the same cost structure, then

A) marginal cost exceeds average total cost.
B) the price of the good exceeds average total cost.
C) average total cost exceeds the price of the good.
D) firms are operating at their efficient scale.

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

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Question 83

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Because the goods offered for sale in a competitive market are largely the same,

Table 14-14 The following table presents cost and revenue information for Bob's bakery production and sales. -Refer to Table 14-14. At what quantity will Bob maximize his profit?

When the process of entry and exit has ended in a competitive market, are firms' profits positive, negative, or zero?

When entry and exit behavior of firms in an industry does not affect a firm's cost structure,

Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 14-6. What is the average revenue when 4 units are sold?

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3. If the market price is $6, what is the firm's short-run economic profit?

Scenario 14-4 The information below applies to a competitive firm that sells its output for $40 per unit. • When the firm produces and sells 150 units of output, its average total cost is $24.50. • When the firm produces and sells 151 units of output, its average total cost is $24.55. -Refer to Scenario 14-4. How does the firm's marginal revenue (MR) compare to its marginal cost (MC) when it increases its output from 150 units to 151 units?

A competitive firm's short-run supply curve is part of which of the following curves?

Firms operating in perfectly competitive markets produce an output level where marginal revenue equals marginal cost.

Table 14-15 -Refer to Table 14-15. What is the lowest price at which this firm would operate in the short run?

​Table 14-17 The table below shows the price and cost information for a firm that operates in a perfectly competitive market. -​Refer to Table 14-17. The marginal cost of the fourth unit is

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8. What would be the firm's total revenue if it instead produced and sold 4 units of output?

Who is a price taker in a competitive market?

A popular resort restaurant will maximize profits if it chooses to stay open during the less-crowded "off season" when its total revenues exceed its variable costs.

For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $11 and a marginal cost of $10. It follows that the

Figure 14-1 Suppose that a firm in a competitive market has the following cost curves: -Refer to Figure 14-1. If the market price is $5.00, the firm will earn

Which of the following expressions is correct for a competitive firm?

In a shopping mall in a large city, the Rudolph the Reindeer store sells only merchandise for the Christmas holiday season. Most of the store's revenue and profit are attributable to the months of October, November, and December. However, the store is open throughout the year. If the owner of the store is rational, what criterion does he or she use in deciding to keep the store open year-round?