Refer to Figure 14-3. If the Market Price Is $6, What Is the Firmã¢â‚¬â„¢s Short-run Economic Profit?

Proper name: __________________________� Date: _____________

i.	If a perfectly competitive firm can sell 200 computers at $700 each, in order to sell one more figurer, the firm:
A)	Must lower its price.
B)	Can heighten its price.
C)	Can sell the 201st computer at $700.
D)	Cannot sell an boosted computer at whatever price because the market is at equilibrium.

2.	If a perfectly competitive house is producing a charge per unit of output for which MC exceeds price, then the business firm:
A)	Must have an economical loss.
B)	Can increase its turn a profit by increasing output.
C)	Tin can increase its profit by decreasing output.
D)	Is maximizing profit.

3.	A business firm that can sell all of its output at the prevailing market cost:
A)	Is a competitive house.
B)	Receives less than its marginal cost.
C)	Faces a downward-sloping need bend.
D)	Has substantial market power.

four.	Suppose the cost of fertilizer (a variable input) decreases for peach farmers. In order to maximize profits, ceteris paribus, peach farmers should:
A)	Subtract output.
B)	Keep output the aforementioned since the market place price did non change.
C)	Increase output.
D)	Increment prices.

five.	Profit is:
A)	TR - FC.
B)	Q � (P - AVC).
C)	(P � Q) - TC.
D)	All of the higher up.

6.	Short-run profits are maximized, for a perfectly competitive firm, at the rate of output where:
A)	Marginal Acquirement is equal to marginal cost.
B)	Total revenue is maximized.
C)	Marginal acquirement is zero.
D)	Average total costs are maximized.

vii.	Which of the following is true about the demand curve confronting a competitive firm?
A)	Horizontal, as is market place need.
B)	Horizontal, while marketplace need is downward-sloping.
C)	Downward-sloping, while market demand is flat.
D)	Downwardly-sloping every bit in marketplace need.

viii.	Which of the following represents the change in total revenue that results from a 1-unit of measurement increment in the quantity sold?
A)	Marginal cost.
B)	Total acquirement.
C)	Marginal profit.
D)	Marginal revenue.

9.	One In the News commodity reports EToys will stop to operate. In the long run, a producer:
A)	Decides whether to enter or get out an industry.
B)	Makes an investment decision.
C)	Can alter both stock-still and variable inputs.
D)	All of the above.

10.	The difference betwixt the total acquirement and total price curves at a given output is equal to:
A)	Total profit.
B)	Profit per unit.
C)	Average revenue.
D)	Average total cost.

11.	A house experiencing economic losses will still continue to produce output in the brusk run equally long as:
A)	Revenues are greater than full fixed price.
B)	Price is higher up average variable cost.
C)	MR = MC.
D)	All of the above.

12.	A competitive firm is i:
A)	That has a large ad upkeep.
B)	Whose output is so pocket-sized relative to the market place supply that it has no result on market price.
C)	That tin can alter the market price of the expert(s) it produces.
D)	That can enhance price to increment profit.

13.	A firm that makes naught economic profits:
A)	Must eventually become bankrupt.
B)	Does not cover its variable costs and should shut down.
C)	Incurs an accounting loss.
D)	Covers all its costs, including a provision for normal profit.

Figure vii.iv

14.	Refer to Effigy 7.four for a perfectly competitive business firm. At the profit-maximizing output, total revenues would exist equal to:
A)	OAHE.
B)	OBGE.
C)	BAHG.
D)	CAHF.

fifteen.	For perfectly competitive firms, price:
A)	Is greater than marginal acquirement.
B)	Is less than marginal acquirement.
C)	Is equal to marginal revenue.
D)	And marginal acquirement are not related.

sixteen.	The market equilibrium price occurs where:
A)	Price equals the minimum of short-run average variable cost.
B)	Market supply crosses market place demand.
C)	A firm's marginal revenue equals short-run marginal toll.
D)	A house's brusk-run marginal price equals average total cost.

17.	When the short-run marginal toll curve is upward-sloping:
A)	The average total cost curve is upward-sloping.
B)	The boilerplate total toll curve is to a higher place the marginal cost bend.
C)	Diminishing returns occur with greater output.
D)	There are diseconomies of scale.

In Effigy 8.1, diagram "a" presents the price curves that are relevant to a firm'southward production decision, and diagram "b" shows the market demand and supply curves for the market place.� Use both diagrams to answer the indicated questions.

Figure eight.1

eighteen.	In Effigy 8.1, at a price of p 2 in the long run:
A)	Firms will enter the market.
B)	Firms will leave the market.
C)	Economic profits equal zero.
D)	P = AVC.

19.	Other things existence equal, as more firms enter a market, the marketplace supply curve:
A)	Becomes more inelastic.
B)	Shifts to the left.
C)	Shifts to the right.
D)	Intersects the need curve at a higher price.

twenty.	Examples of barriers to entry include:
A)	Regime regulation.
B)	Lack of control over resource prices.
C)	Diseconomies of scale.
D)	Rising marginal cost.

21.	If long-run economical losses are being experienced in a competitive market:
A)	More firms volition enter the market place.
B)	The market supply curve will shift to the right.
C)	Equilibrium price will rise equally firms exit.
D)	All of the above.

22.	The entry of firms into a market place:
A)	Reduces the equilibrium cost.
B)	Reduces the profits of existing firms in the market place.
C)	Shifts the market supply curve to the right.
D)	All of the above.

Figure 8.3

23.	Refer to Figure 8.3. At an output of G and a price of B, which of the following is equal to variable costs?
A)	ABED.
B)	ACFD.
C)	COGF.
D)	AOGD.

Figure eight.4

24.	Refer to Figure 8.4 for a perfectly competitive market and business firm. Which of the following is most likely to occur, ceteris paribus?
A)	The firm will leave in the long run.
B)	The firm will shutdown in the brusk run.
C)	The business firm will increase output.
D)	The business firm will heighten its toll.

25.	For a competitive market in the long run:
A)	Economic losses induce firms to shut downward.
B)	Economic profits induce firms to enter until profits are normal.
C)	Bookkeeping profit is zippo.
D)	All of the above.

26.	A barrier to entry is:
A)	A police established by the authorities to protect new industries.
B)	A commitment on the part of big business to allow smaller companies to compete.
C)	An obstacle that prevents additional workers from entering an industry, such as a union.
D)	An obstacle that makes it hard for new firms to enter a market.

27.	Suppose a monopoly firm produces tables and tin can sell 10 tables per month at a toll of $500 per table. In guild to increase sales by 1 table per month, the monopolist must lower the price of its tables past $30 to $470 per table. The marginal acquirement of the eleventh tabular array is:
A)	$170.
B)	$-30.
C)	$70.
D)	$5170.

28.	Which of the following is true for a monopolist?
A)	It faces a down-sloping demand curve.
B)	It must lower its price on all of its units in order to sell whatsoever additional units.
C)	Its marginal revenue curve is beneath its demand curve.
D)	All of the in a higher place.

Figure 9.vi

29.	Refer to Figure 9.6 for a monopolist in the curt run. The profit-maximizing monopolist will produce:
A)	58 units and accuse a cost of $fifteen.
B)	58 units and accuse a toll of $xl.
C)	68 units and accuse a price of $36.
D)	68 units and charge a price of $30.

30.	At the long-run profit-maximizing equilibrium in a monopoly:
A)	Economic profits are zilch.
B)	Price equals the minimum average total cost.
C)	Both a and b are correct.
D)	Marginal acquirement equals marginal cost.

31.	The demand curve faced by a monopoly house is:
A)	Perfectly inelastic reflecting the firm'due south dominance of the marketplace.
B)	Perfectly rubberband reflecting the fact that the monopolist can sell equally much as it wants equally the cost information technology sets.
C)	The same as the market need for the production.
D)	Below its marginal acquirement curve.

Figure 9.two

32.	In Effigy ix.2, the profit-maximizing level of output is:
A)	12 units.
B)	xx units.
C)	22 units.
D)	28 units.

33.	Which of the following contributes to a business firm maintaining a monopoly?
A)	Exclusive command of an important input.
B)	A large number of firms in the manufacture.
C)	The existence of substitute appurtenances.
D)	All of the above.

34.	Which of the post-obit rules will ever be satisfied when any house (i.e. perfectly competitive or monopoly) has maximized profits?
A)	Toll� = lowest level of ATC.
B)	Cost � = MC.
C)	MR = MC.
D)	Total revenues are likewise maximized.

Figure 9.2

35.	In Figure 9.2, full profit for the monopolist is represented by the surface area:
A)	CDLK.
B)	CDHG.
C)	ABDLK.
D)	GHLK.

In Figure viii.1, diagram "a" presents the cost curves that are relevant to a firm's production decision, and diagram "b" shows the market demand and supply curves for the market.� Use both diagrams to reply the indicated questions.

Effigy 8.i

36.	In Effigy 8.1, if market demand is at Dane, the business firm should:
A)	Leave the market.
B)	Produce qone.
C)	Shutdown.
D)	Do any of the above depending on the position of the AVC and the length of the time catamenia.

37.	In Figure 8.ane, the price at which a firm makes zero economical profits is:
A)	p 1.
B)	p 2.
C)	p 3.
D)	p 4.

38.	If a competitive industry in� long-run equilibrium experiences an increase in fixed costs, the curt-run response of individuals firms will exist:���
A)	To heighten their price to showtime the higher costs.
B)	To increment price, subtract output, and earn lower profits.
C)	To keep output and toll constant but earn lower profits.
D)	To lower price, raise output, and earn college profits.

39.	Assume at that place exists a monopoly firm earning economic profits.� If the need for this firm'south production increases, the firm volition.������������
A)	Raise price, raise output, and earn higher profits.
B)	Lower cost, lower output, and earn higher profits.
C)	Lower price, heighten output, amd earn higher profits.��������������������
D)	Go on cost and output constant while earning higher profits.

40.	If a monopoly industry is characterized past having positive economics profits, in the long-run economists expect
A)	Price to subtract as new firms enter the industry.
B)	Profits to somewhen fall to naught due to higher competition.
C)	Profits to continue if pregnant barriers to entry exist.
D)	The business firm will decrease it's price to treat customers 'adequately'

Answer Key

ane.	C
2.	C
three.	A
4.	C
v.	C
half dozen.	A
vii.	B
8.	D
9.	D
10.	A
eleven.	B
12.	B
13.	D
14.	A
xv.	C
16.	B
17.	C
18.	C
xix.	C
20.	A
21.	C
22.	D
23.	C
24.	A
25.	B
26.	D
27.	A
28.	D
29.	B
30.	D
31.	C
32.	B
33.	A
34.	C
35.	B
36.	D
37.	B
38.	C
39.	A
xl.	C

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Source: https://www2.ic.edu/klein/econ%20102/sample%20exams/exam%203-web.htm

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