Economics Test Bank Chapter 14

Chapter 14 Firms in agonistic Markets Multiple election 1. A FIRM HAS MARKET force out IF IT CAN a. maximise sugar. b. slighten follows. c. determine the food mart place placeplaceplace betoken of the good it transfers. d. rent as some(prenominal) workers as it ask at the prevailing wage rate. autonomic nervous systemCPTS1DIF1REF14-0 NATAnalyticLOC better tilt shed light onMarket lawsuit disseminated sclerosisDefinitional 2. A book store that has merchandise power plunder a. becharm the merchandise footing for the books it shops. b. minimize scathes much efficiently than its competitors. c. reduce its advertising budget to a great extent than than so than its competitors. d. ignore increasing strategies when coterieting the terms for its books. autonomic nervous systemAPTS1DIF1REF14-0 NATAnalyticLOC improve competition fadeMarket power samarium applicatory 3. The analysis of warlike households sheds light on the decisions that lie beh ind the a. pray warp. b. show curve. c. way inviolables realise pricing decisions in the non-for- shekels sector of the economy. d. way financial commercialise placeplaces set interest grade. autonomic nervous systemBPTS1DIF1REF14-0 NATAnalyticLOC fault little competitionTOP combative food food merchandises twofold sclerosis informative 4. For exclusively belligerent food trade, the supply curve is closely connect to the a. preferences of consumers who purchase intersection points in that grocery store. b. income tax rates of consumers in that grocery. c. faithfuls follow of crossroadion in that grocery place. d. interest rates on political relation bonds. autonomic nervous systemCPTS1DIF1REF14-0 NATAnalyticLOC stain little competitionTOP competitory grocery stores disseminated multiple sclerosisinterpretive 5. enounce a libertine in each of the two commercialises listed under were to extend its expenditure by 20 percent. In which ji be would the family in the first grocery store listed experience a dramatic pedigree in exchanges, scarcely when the strong in the second foodstuff listed would non? a. corn and sojas b. gasoline and restaurants c. piddle and cable telly d. spiral nonebooks and college textbooks autonomic nervous systemDPTS1DIF2REF14-0 NATAnalyticLOC immaculate competitionTOP warlike markets disseminated multiple sclerosisapplicative 6. guess a true in each of the two markets listed below were to growth its outlay by 30 percent.In which pair would the debauched in the first market listed experience a dramatic decline in sales, but the tighten in the second market listed would not? a. inunct and natural gas b. cable television and gasoline c. restaurants and MP3 shams d. movie theaters and ballpoint pens autonomic nervous systemBPTS1DIF2REF14-0NATAnalyticLOC sin little competitionTOP warring markets atomic number 62applicative What is a competitory Market? 1. A KEY CHARACTERISTIC OF A emulous MARKET IS THAT a. g everywherening antitrust laws amaze competition. b. averrs sell nearly identical harvests. c. strongs minimize chalk up outlays. d. immobiles eat scathe backdrop power. autonomic nervous systemBPTS1DIF1REF14-1 NATAnalyticLOC meliorate competitionTOP emulous markets disseminated sclerosisDefinitional 2. Which of the pastime is not a typical of a agonistical market? a. Buyers and sellers ar toll takers. b. distributively stanch sells a virtually identical crossway. c. Entry is limited. d. Each solid contracts an create train that increases earnings. autonomic nervous systemCPTS1DIF2REF14-1 NATAnalyticLOC undefiled competitionTOP war-ridden markets atomic number 62Definitional 3. Which of the next is a typical of a rivalrous market? a. there be m some(prenominal) a(prenominal) emptors but few sellers. b. Firms sell secern products. c. There ar umteen barriers to score door. d. Buyers a nd sellers be set takers. autonomic nervous systemDPTS1DIF2REF14-1 NATAnalyticLOC arrant(a) competitionTOP warring markets manuscriptDefinitional 4. Who is a bell taker in a rivalrous market? a. purchasers wholly b. sellers provided c. both buyers and sellers d. neither buyers nor sellers autonomic nervous systemCPTS1DIF1REF14-1 NATAnalyticLOC arrant(a) competitionTOP emulous markets disseminated multiple sclerosisDefinitional 5. free- put onprise(a) markets ar characterized by a. a bittie number of buyers and sellers. b. unique products. c. the interdependence of warms. d. exculpate adit and exit by trustys. autonomic nervous systemDPTS1DIF1REF14-1 NATAnalyticLOCperfective aspect competitionTOP combative markets samariumDefinitional 6. A market is warlike if (i) unwaverings collapse the flexibleness to value their own product. (ii) each buyer is downhearted comp bed to the market. (iii) each seller is slender comp atomic number 18d to the mark et. a. (i) and (ii) solely b. (i) and (iii) provided c. (ii) and (iii) besides d. (i), (ii), and (iii) autonomic nervous systemCPTS1DIF2REF14-1 NATAnalyticLOC utter(a) competitionTOP agonistical markets samarium instructive 7. A hearty that has little energy to incline market wrongs operates in a a. warring market. b. strategic market. c. thin market. d. power market. autonomic nervous systemAPTS1DIF1REF14-1 NATAnalyticLOC staring(a) competitionTOP agonistical markets samariumDefinitional 8. In a agonistical market, the actions of any single buyer or seller ordain a. shake a trifling impact on the market price. b. have little effect on market offset amount of money but provide come to market equilibrium price. c. relate peripheral receipts and modal(a) tax but not price. d. adversely affect the bring inability of much than one warm in the market. autonomic nervous systemAPTS1DIF2REF14-1 NATAnalyticLOC staring(a) competitionTOP hawkish markets samarium instructive 9. In a agonistic market, the actions of any single buyer or seller depart a. dissuade entry by competitors. b. enamour the lollys of other crockeds in the market. c. have a negligible impact on the market price. d. None of the in a high(prenominal)(prenominal) place is turn. autonomic nervous systemCPTS1DIF2REF14-1 NATAnalyticLOC perfect(a) competitionTOP belligerent markets atomic number 62 interpretative 10. Because the goods offered for sale in a warring market argon largely the same, a. thither pull up stakes be few sellers in the market. b. there impart be few buyers in the market. c. whole a few buyers will have market power. d. sellers will have little reason to charge slight than the vent market price. autonomic nervous systemDPTS1DIF2REF14-1 NATAnalyticLOC complete(a) competitionTOP combative markets disseminated multiple sclerosisinterpretive 11. Which of the chase is not a characteristic of a short agonistic market? a. Firms argon price takers. b. Firms have difficulty incoming the market. c. There are many sellers in the market. d. Goods offered for sale are largely the same. autonomic nervous systemBPTS1DIF2REF14-1 NATAnalyticLOC complete(a) competitionTOP free-enterprise(a) markets disseminated sclerosis interpretative 12. Which of the sideline is not a characteristic of a absolutely belligerent market? a. Firms are price takers. b. Firms can tolerantly estimate the market. c. Many debaucheds have market power. d. Goods offered for sale are largely the same. autonomic nervous systemCPTS1DIF2REF14-1 NATAnalyticLOC sinless(prenominal) competitionTOP free-enterprise(a) markets samarium instructive 3. Free entry means that a. the government rights any entry approachs for single(a) stanchs. b. no legal barriers prevent a soused from entering an industry. c. a firms bare(a) live is zero. d. a firm has no fixed greets in the ill-judged-circuit run. autonomic nervous syste mBPTS1DIF2REF14-1 NATAnalyticLOC ideal competitionTOP hawkish markets manuscript instructive 14. Which of the side by side(p) industries is around possible to exhibit the characteristic of free entry? a. nuclear power b. municipal water and sewer c. dairy farming d. drome security autonomic nervous systemCPTS1DIF2REF14-1 NATAnalyticLOC perfect competitionTOPCompetitive markets disseminated multiple sclerosis applicatory 15. Which of the undermentioned industries is near belike to exhibit the characteristic of free entry? a. cable television b. major planet radio c. mineral mining d. jersey silkscreening autonomic nervous systemDPTS1DIF2REF14-1 NATAnalyticLOC stainless competitionTOPCompetitive markets manuscript practical 16. Which of the following industries is least probable to exhibit the characteristic of free entry? a. restaurants b. municipal water and sewer c. soybean farming d. merchandising running lop autonomic nervous systemBPTS1DIF2REF14-1NA TAnalyticLOC consummate competitionTOPCompetitive markets disseminated multiple sclerosis practical 17. Which of the following industries is least presumable to exhibit the characteristic of free entry? a. exchange running apparel b. straw farming c. yoga studios d. satellite radio autonomic nervous systemDPTS1DIF2REF14-1 NATAnalyticLOC arrant(a) competitionTOPCompetitive markets multiple sclerosis practical 8. When buyers in a private-enterprise(a) market take the selling price as given, they are tell to be a. market entrants. b. monopolists. c. free riders. d. price takers. autonomic nervous systemDPTS1DIF1REF14-1 NATAnalyticLOC holy competitionTOPCompetitive markets manuscriptDefinitional 19. When firms are said to be price takers, it implies that if a firm raises its price, a. buyers will go elsewhere. b. buyers will pay the high price in the short run. c. competitors will also raise their prices. d. firms in the industry will exercise market power. autono mic nervous systemAPTS1DIF2REF14-1NATAnalyticLOC gross(a) competitionTOPCompetitive markets samariuminterpretive 20. Which of the following statements best reflects a price-taking firm? a. If the firm were to charge to a greater extent than the going price, it would sell none of its goods. b. The firm has an incentive to charge slight than the market price to earn higher taxation. c. The firm can sell only a limited amount of baffle at the market price before the market price will fall. d. toll-taking firms increase profits by charging a price supra peripheral fit. autonomic nervous systemAPTS1DIF2REF14-1 NATAnalyticLOC undefiled competitionTOPCompetitive markets disseminated sclerosisinterpretive 1. Why does a firm in a free-enterprise(a) industry charge the market price? a. If a firm charges little than the market price, it loses potential gross. b. If a firm charges much than the market price, it loses all its customers to other firms. c. The firm can sell as many wholes of turnout as it wants to at the market price. d. solely of the supra are coiffe. autonomic nervous systemDPTS1DIF2REF14-1 NATAnalyticLOC pure(a) competitionTOPCompetitive markets MSCinterpretive 22. In a private-enterprise(a) market, no single gor can influence the market price because a. many other sellers are offering a product that is ssentially identical. b. consumers have much influence over the market price than producers do. c. government handling prevents firms from influencing price. d. producers agree not to change the price. autonomic nervous systemAPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSC informative 23. A agonistical firm would gain ground from charging a price below the market price because the firm would achieve (i) higher clean taxation. (ii) higher profits. (iii) reject natural bells. a. (i) only b. (ii) and (iii) only c. (i), (ii), and (iii) d. None of the to a higher place is decline. a utonomic nervous systemDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 24. Which of the following characteristics of warring markets is incumbent for firms to be price takers? (i) There are many sellers. (ii) Firms can freely enter or exit the market. (iii) Goods offered for sale are largely the same. a. (i) and (ii) only b. (i) and (iii) only c. (ii) only d. (i), (ii), and (iii) autonomic nervous systemBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 25. Suppose a firm in a hawkish market reduces its turnout by 20 percent. As a result, the price of its outturn is likely to a. sum up. b. remain unchanged. c. hang by less than 20 percent. d. decrease by more than 20 percent. autonomic nervous systemBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSC uninflected 26. The Doris Dairy parent sells milk to a dairy ingredient in Prairie du Chien, Wisconsin. Becau se the market for milk is broadly speaking considered to be militant, the Doris Dairy elevate does not a. choose the measuring stick of milk to produce. b. choose the price at which it sells its milk. c. have any fixed address of intersection. d. set peripheral receipts pit to peripheral follow to maximise profit. autonomic nervous systemBPTS1DIF2REF14-1NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 27. The Doris Dairy Farm sells milk to a dairy gene in Prairie du Chien, Wisconsin. Because the market for milk is mainly considered to be war-ridden, the Doris Dairy Farm does not choose the a. metre of milk to produce. b. price at which it sells its milk. c. profits it earns. d. only of the supra are correct. autonomic nervous systemBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 28. In a hawkish market, a. no single buyer or seller can influence the price of the product. b. there are only a sma ll number of sellers. c. the goods offered by the different sellers are unique. d. accounting profit is driven to zero as firms freely enter and exit the market. autonomic nervous systemAPTS1DIF1REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 29. Which of the following statements regarding a competitive market is not correct? a. There are many buyers and many sellers in the market. b. Because of firm attitude or product differences, some firms can charge a higher price than other firms and still swan their sales volume. c. determine and just tax income are complete. d. Price and bare(a) receipts enhancement are equal. autonomic nervous systemBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 30. Which of the following statements regarding a competitive market is not correct? a. There are many buyers and many sellers in the market. b. Firms can freely enter or exit the market. c. Price equals ordinary tax taxation enhancement. d. Price lapses b line of battleline tax tax receipts. autonomic nervous systemDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 31. One of the delineate characteristics of a utterly competitive market is a. a small number of sellers. b. a large number of buyers and a small number of sellers. c. a similar product. d. large advertising by firms to promote their products. autonomic nervous systemCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCDefinitional 32. Which of the following firms is the close to being a dead competitive firm? a. a sizzling dog vendor in freshly York b. Microsoft Corporation c. Ford Motor connection d. the campus bookstore autonomic nervous systemAPTS1DIF1REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCapplicative 33. Which of the following firms is the closest to being a perfectly competitive firm? a. the New York Yankees b. Apple, Inc. c. DeBeers diamond wholesalers d. a wheat sodbuster in Kansas ANSDPTS1DIF1REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSC applicatory 34. Firms that operate in perfectly competitive markets try to a. maximize taxations. b. maximize profits. c. equate fringy taxation with fairish compulsive cost. d. both of the above are correct. ANSBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 35. A seller in a competitive market can a. sell all he wants at the going price, so he has little reason to charge less. b. influence the market price by adjusting his issue. c. influence the profits realize by competing firms by adjusting his take. d. on the whole of the above are correct. ANSAPTS1DIF1REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 36. A seller in a competitive market a. can sell all he wants at the going price, so he has little reason to charge less. b. will lose all his customers to other sellers if he raises his price. c. considers the market price to be a take it or leave it price. d. All of the above are correct. ANSDPTS1DIF1REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 7. In a perfectly competitive market, a. no one seller can influence the price of the product. b. price deceases peripheral tax enhancement for each whole exchange. c. median(a) tax tax gross enhancement exceeds fringy receipts for each whole change. d. All of the above are correct. ANSAPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 38. For a firm in a competitive market, an ontogenesis in the criterion produced by the firm will result in a. a decrease in the products market price. b. an gain in the products market price. c. no change in the products market price. d. either an increment or no change in the products market price depending on the number of firm s in the market. ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive 39. If Cathys Coffee department store sells its product in a competitive market, thuslyce a. the price of that product depends on the measuring rod of the product that Cathys Coffee Emporium produces and sells because Cathys Coffee Emporiums pick up curve is downward sloping. b. Cathys Coffee Emporiums bring taxation moldiness be proportional to its cadence of product. c. Cathys Coffee Emporiums marrow cost must be a constant multiple of its quantity of rig. d. Cathys Coffee Emporiums thoroughgoing tax income must be equal to its mean(a) taxation enhancement. ANSBPTS1DIF3REF14-1 NATAnalyticLOCPerfect competitionTOP summate taxation MSC analytic 40. Changes in the getup of a perfectly competitive firm, without any change in the price of the product, will change the firms a. intact receipts. b. fringy tax tax. c. second-rate tax taxation. d. All of the above are correct. ANSAPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOP inwardness tax enhancement MSC uninflected 41.If a firm in a perfectly competitive market triples the quantity of action sold, then full(a) gross will a. more than triple. b. less than triple. c. exactly triple. d. Any of the above whitethorn be true depending on the firms labor productivity. ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOP be taxation MSCanalytical 42. When a competitive firm doubles the quantity of outturn it sells, its a. come tax income doubles. b. average receipts doubles. c. peripheral tax income doubles. d. profits must emergence. ANSAPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOP fit receiptsMSC uninflected 43. If a firm in a competitive market doubles its number of units sold, resume taxation for the firm will a. more than double. b. double. c. increment but by less than double. d. may ontogeny or decrease depending on the price e rifleicity of hold. ANSBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPTotal revenue MSCanalytical tabularise 14-1 bar Price 0 $5 1 $5 2 $5 3 $5 4 $5 5 $5 6 $5 7 $5 8 $5 9 $5 44. bring up to skirt 14-1. The price and quantity relationship in the table is most likely a demand curve faced by a firm in a a. monopoly. b. concentrated market. c. competitive market. d. strategic market. ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCAnalytical 45. elevate to put back 14-1. all over which extend of rig is average revenue equal to price? a. 1 to 5 units b. 3 to 7 units c. 5 to 9 units d. add up revenue is equal to price over the entire range of rig. ANSDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOP clean revenue MSCAnalytical 46. attend to display board 14-1. Over what range of output is b assignline revenue declining? a. 1 to 6 units b. 3 to 7 units c. 7 to 9 units d. fringy revenue is constant o ver the entire range of output. ANSDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOP peripheral revenue MSCAnalytical 47. doctor to delay 14-1. If the firm doubles its output from 3 to 6 units, come in revenue will a. improver by less than $15. b. summation by exactly $15. c. add by more than $15. d. Total revenue cannot be persistent from the knowledge provided. ANSBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPTotal revenue MSCapplicative display panel 14-2 The table represents a demand curve faced by a firm in a competitive market. Price amount $4 0 $4 1 $4 2 $4 3 $4 4 $4 5 48. Refer to instrument panel 14-2. A firm operational in a competitive market maximizes heart and soul revenue by producing a. 2 units. b. 3 units. c. 4 units. d. as many units as possible. ANSDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPTotal revenue MSCapplicative 49. Refer to mesa 14-2. For a firm direct in a competitive market, the average revenue from selling 3 units is a. $12. b. $4. c. $3. d. $1. 25. ANSBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOP clean revenue MSC practical 50. Refer to tabularize 14-2. For a firm operating in a competitive market, the b readyline revenue from selling the tertiary unit is a. $12. b. $4. c. $3. d. $1. 25. ANSBPTS1DIF3REF14-1NATAnalyticLOCPerfect competitionTOP b orderlinessline revenue MSC practical accede 14-3 meter Total tax income 0 $0 1 $7 2 $14 3 $21 4 $28 51. Refer to fudge 14-3. For a firm operating in a competitive market, the price is a. $0. b. $7. c. $14. d. $21. ANSBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSC applicatory 52.Refer to confuse 14-3. For a firm operating in a competitive market, the fringy revenue is a. $0. b. $7. c. $14. d. $21. ANSBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOP borderline revenue MSC practical 53. Refer to defer 14-3. For a firm operating in a competitive market, the average revenu e is a. $21. b. $14. c. $7. d. $0. ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPAverage revenue MSCApplicative tabularise 14-4 Quantity Total Revenue 0 $0 1 $15 2 $30 3 $45 4 $60 54. Refer to Table 14-4. For a firm operating in a competitive market, the price is a. $45. b. $30. c. $15. d. $0. ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCApplicative 55. Refer to Table 14-4. For a firm operating in a competitive market, the bare(a) revenue is a. $45. b. $30. c. $15. d. $0. ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPMarginal revenue MSCApplicative 56.Refer to Table 14-4. For a firm operating in a competitive market, the average revenue is a. $45. b. $30. c. $15. d. $0. ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPAverage revenue MSCApplicative Table 14-5 Quantity Total Revenue 12 $132 13 $143 14 $154 15 $165 16 $176 57. Refer to Table 14-5.The price of the product is a. $9. b. $11. c. $ 13. d. $15. ANSBPTS1DIF1REF14-1 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCApplicative 58. Refer to Table 14-5. The average revenue when 14 units are produced and sold is a. $9. b. $11. c. $13. d. $15. ANSBPTS1DIF1REF14-1 NATAnalyticLOCPerfect competitionTOPAverage revenue MSCAnalytical 59. Refer to Table 14-5. The peripheral revenue of the 12th unit is a. $9. b. $10. c. $11 d. The bare(a) revenue cannot be determined without penetrative the issue forth revenue when 11 units are sold. ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPMarginal revenue MSCAnalytical Table 14-6 The following table presents cost and revenue discipline for a firm operating in a competitive industry. be revenueS Quantity Total Marginal Quantity Price Total Marginal Produced damage constitute Demanded Revenue Revenue 0 $ degree Celsius 0 $ one hundred twenty 1 $ one hundred fifty 1 $long hundred 2 $202 2 $ cxx 3 $257 3 $120 4 $317 4 $120 5 $385 5 $120 6 $465 6 $120 7 $562 7 $120 8 $682 8 $120 60. Refer to Table 14-6. What is the get along revenue from selling 7 units? a. $120 b. $490 c. $562 d. $840 ANSDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPTotal revenue MSCApplicative 61. Refer to Table 14-6. What is the aggregate revenue from selling 4 units? a. $120 b. $257 c. $317 d. $480 ANSDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPTotal revenue MSCApplicative 62. Refer to Table 14-6. What is the fringy revenue from selling the third unit? a. $55 b. $120 c. $137 d. $ cxl ANSBPTS1DIF2REF14-1NATAnalyticLOCPerfect competitionTOPMarginal revenue MSCApplicative 63. Refer to Table 14-6. What is the average revenue when 4 units are sold? a. $60 b. $120 c. $cxxv d. $197 ANSBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPAverage revenue MSCApplicative 64. Which of the following statements is correct? a. For all firms, peripheral revenue equals the price of the g ood. b. Only for competitive firms does average revenue equal the price of the good. c. Marginal revenue can be calculated as natural revenue divided by the quantity sold. d. Only for competitive firms does average revenue equal fringy revenue. ANSDPTS1DIF3REF14-1 NATAnalyticLOCPerfect competition TOPAverage revenue Marginal revenueMSCInterpretive 65. Suppose a firm in a competitive market earned $1,000 in impart revenue and had a marginal revenue of $10 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold? a. $5 and 50 units b. $5 and carbon units c. $10 and 50 units d. $10 and c units ANSDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPAverage revenue MSCApplicative 66. Which of the following statements regarding a competitive firm is correct? a. Because demand is downward sloping, if a firm increases its direct of output, the firm will have to charge a lower price to sell the additional output. b. If a f irm raises its price, the firm may be able to increase its center revenue even though it will sell few units. c. By lowering its price below the market price, the firm will benefit from selling more units at the lower price than it could have sold by charging the market price. d. For all firms, average revenue equals the price of the good. ANSDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPAverage revenue MSCAnalytical 67. Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales. If the firm increases its output to 200 units, the average revenue of the two-hundredth unit will be a. less than $12. b. more than $12. c. $12. d. Any of the above may be correct depending on the price elasticity of demand for the product. ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPAverage revenue MSCAnalytical 68. Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales. If the firm increases its output to 200 units, total revenue will be a. $2,000. b. $2,400. c. $4,200. d. We do not have overflowing information to dish out the question. ANSBPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPTotal revenue MSCAnalytical 69.Firms operating in competitive markets produce output trains where marginal revenue equals a. price. b. average revenue. c. total revenue divided by output. d. All of the above are correct. ANSDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competition TOPMarginal revenue Average revenueMSCApplicative 70. For a competitive firm, a. total revenue equals average revenue. b. total revenue equals marginal revenue. c. total cost equals marginal revenue. d. average revenue equals marginal revenue. ANSDPTS1DIF1REF14-1 NATAnalyticLOCPerfect competition TOPMarginal revenue Average revenueMSCDefinitional 71.Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its t otal revenues from the sale are $500. Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5. a. (i) only b. (iii) only c. (i) and (ii) only d. (i), (ii), and (iii) ANSDPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPMarginal revenue Average revenueMSCAnalytical 72. Suppose that a firm operating in perfectly competitive market sells 200 units of output at a price of $3 each. Which of the following statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $600. (iii) Average revenue exceeds marginal revenue, but we dont know by how much. a. (i) only b. (iii) only c. (i) and (ii) only d. (i), (ii), and (iii) ANSAPTS1DIF2REF14-1 NATAnalyticLOCPerfect competition TOPMarginal revenue Average revenueMSCAnalytical 73. Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is c orrect? (i) Marginal revenue equals $3. (ii) Average revenue equals $100. (iii) Total revenue equals $300. a. (i) only b. (iii) only c. (i) and (ii) only d. (i), (ii), and (iii) ANSAPTS1DIF2REF14-1 NATAnalyticLOCPerfect competition TOPMarginal revenue Average revenueMSCAnalytical 74. Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each. Which of the following statements is correct? (i) Marginal revenue equals $4. (ii) Average revenue equals $100. (iii) Total revenue equals $1,600. a. (i) only b. (iii) only c. (i) and (iii) only d. (i), (ii), and (iii) ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competition TOPMarginal revenue Average revenueMSCAnalytical 75. For a firm operating in a competitive industry, which of the following statements is not correct? a. Price equals average revenue. b. Price equals marginal revenue. c. Total revenue is constant. d. Marginal revenue is constant. ANSCPTS1DIF2REF14-1 N ATAnalyticLOCPerfect competitionTOPMarginal revenue Average revenueMSCInterpretive 76. For a firm in a perfectly competitive market, the price of the good is always a. equal to marginal revenue. b. equal to total revenue. c. greater than average revenue. d. equal to the firms efficient scale of output. ANSAPTS1DIF1REF14-1 NATAnalyticLOCPerfect competitionTOPMarginal revenue MSCInterpretive 77. Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8. 00. What would be the firms total revenue if it or else produced and sold 4 units of output? a. $4 b. $8 c. $32 d. $64 ANSCPTS1DIF2REF14-1 NATAnalyticLOCPerfect competitionTOPMarginal revenue MSCApplicative 78. Whenever a perfectly competitive firm chooses to change its level of output, its marginal revenue a. increases if MR ATC and decreases if MR ATC. b. does not change. c. increases. d. decreases. ANSBPTS1DIF1REF14-1 NATAnalyticLOCPerfect competitionTOPMarginal rev enue MSCInterpretive 79. Suppose that in a competitive market the equilibrium price is $2. 50.What is marginal revenue for the last unit sold by the typical firm in this market? a. less than $2. 50 b. more than $2. 50 c. exactly $2. 50 d. The marginal revenue cannot be determined without knowing the actual quantity sold by the typical firm. ANSCPTS1DIF1REF14-1 NATAnalyticLOCPerfect competitionTOPMarginal revenue MSCInterpretive 80. For an singular firm operating in a competitive market, marginal revenue equals a. average revenue and the price for all levels of output. b. average revenue, which is greater than the price for all levels of output. c. average revenue, the price, and marginal cost for all levels of output. d. marginal cost, which is greater than average revenue for all levels of output. ANSAPTS1DIF2REF14-1 NATAnalyticLOCPerfect competition TOPMarginal revenue Average revenueMSCInterpretive 81. If the market elasticity of demand for potatoes is -0. 3 in a perfe ctly competitive market, then the individual farmers elasticity of demand a. will also be -0. 3. b. depends on how large a crop the farmer produces. c. will range between -0. 3 and -1. 0. d. will be infinite. ANSDPTS1DIF3REF14-1 NATAnalyticLOCPerfect competitionTOPElasticity MSCAnalytical usefulness Maximization and the Competitive Firms Supply Curve 1. IF A hawkish FIRM IS CURRENTLY PRODUCING A level OF OUTPUT AT WHICH MARGINAL REVENUE EXCEEDS MARGINAL COST, THEN a. a one-unit increase in output will increase the firms profit. b. a one-unit decrease in output will increase the firms profit. c. total revenue exceeds total cost. d. total cost exceeds total revenue. ANSAPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 2. If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then a. a one-unit increase in output will increase the firms profit. b. a one-unit decrease in output will in crease the firms profit. c. total revenue exceeds total cost. d. total cost exceeds total revenue. ANSBPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 3. If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then a. average revenue exceeds marginal cost. b. the firm is earning a positive profit. c. decreasing output would increase the firms profit. d. All of the above are correct. ANSCPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 4. Comparing marginal revenue to marginal cost (i) reveals the contribution of the last unit of production to total profit. (ii) is useful in make profit- increase production decisions. (iii) tells a firm whether its fixed be are too high. a. (i) only b. (i) and (ii) only c. (ii) and (iii) only d. (i) and (iii) only ANSBPTS1DIF2REF14-2NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCInterpretive 5. At the profit- maximize level of output, a. marginal revenue equals average total cost. b. marginal revenue equals average variable cost. c. marginal revenue equals marginal cost. d. average revenue equals average total cost. ANSCPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCInterpretive 6. The intersection of a firms marginal revenue and marginal cost curves determines the level of output at which a. total revenue is equal to variable cost. b. total revenue is equal to fixed cost. c. total revenue is equal to total cost. d. profit is maximized. ANSDPTS1DIF2REF14-2NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCInterpretive 7. For a certain firm, the centesimal unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $7. It follows that the a. production of the hundredth unit of output increases the firms profit by $3. b. production of the 100th unit of output increases the firms average total cost by $ 7. c. firms profit-maximizing level of output is less than 100 units. d. production of the 99th unit of output must increase the firms profit by less than $3. ANSAPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 8.For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $11. It follows that the a. production of the 100th unit of output increases the firms profit by $1. b. production of the 100th unit of output increases the firms average total cost by $1. c. firms profit-maximizing level of output is less than 100 units. d. production of the 110th unit of output must increase the firms profit but by less than $1. ANSCPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 9. A certain competitive firm sells its output for $20 per unit. The fiftieth unit of output that the firm produces has a marginal cost of $22.Production of the 50th unit of output d oes not necessarily a. increase the firms total revenue by $20. b. increase the firms total cost by $22. c. decrease the firms profit by $2. d. increase the firms average variable cost by $0. 44. ANSDPTS1DIF3REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 10. Sam sells soybeans to a broker in Chicago, Illinois. Because the market for soybeans is in the main considered to be competitive, Sam maximizes his profit by choosing a. to produce the quantity at which average variable cost is minimized. b. to produce the quantity at which average fixed cost is minimized. c. to sell at a price where marginal cost is equal to average total cost. d. the quantity at which market price is equal to Sams marginal cost of production. ANSDPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 11. If a competitive firm is selling 1,000 units of its product at a price of $9 per unit and earning a positive profit, then a. its total cost is less than $9,000. b. its marginal revenue is less than $9. c. its average revenue is greater than $9. d. the firm cannot be a competitive firm because competitive firms cannot earn positive profits. ANSAPTS1DIF2REF14-2NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 12. If a competitive firm is selling 1,000 units of its product at a price of $8 per unit and earning a positive profit, then a. its average revenue is greater than $8. b. its marginal revenue is less than $8. c. its total cost is less than $8,000. d. All of the above are correct. ANSCPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 13. Max sells social functions. The map industry is competitive. Max hires a line of work advisor to analyze his companys financial records. The adviser recommends that Max increase his production. The consultant must have reason that Maxs a. total revenues exceed his total accounting costs. b. marginal revenue exceeds his tota l cost. c. marginal revenue exceeds his marginal cost. d. marginal cost exceeds his marginal revenue. ANSCPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCInterpretive 14. Christopher is a professional tennis player who gives tennis lessons. The industry is competitive. Christopher hires a clientele consultant to analyze his financial records. The consultant recommends that Christopher give fewer tennis lessons. The consultant must have concluded that Christophers a. total revenues exceed his total accounting costs. b. marginal revenue exceeds his total cost. c. marginal revenue exceeds his marginal cost. d. marginal cost exceeds his marginal revenue. ANSDPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCInterpretive 15. Laura is a bon vivant chef who runs a small provide descent in a competitive industry. Laura specializes in making conjugal union cakes. Laura sells 20 hook up with cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a hook up with cake is $300. In order to maximize profits, Laura should a. make more than 20 nuptials party cakes per month. b. make fewer than 20 wedding cakes per month. c. play along to make 20 wedding cakes per month. d. We do not have enough information with which to answer the question. ANSBPTS1DIF3REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 16. Laura is a gourmet chef who runs a small catering credit line in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $200. In order to maximize profits, Laura should a. make more than 20 wedding cakes per month. b. make fewer than 20 wedding cakes per month. c. outride to make 20 wedding cakes per month. d. We do not have enough information with which to answer the question. ANSAPTS1DIF3REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 17. Marcia is a look architect who runs a small fit out business in a competitive industry. Marcia specializes in making designer sices. Marcia sells 10 dresses per month. Her monthly total revenue is $5,000. The marginal cost of making a dress is $400. In order to maximize profits, Marcia should a. make more than 10 dresses per month. b. make fewer than 10 dresses per month. c. continue to make 10 dresses per month. d. We do not have enough information with which to answer the question. ANSAPTS1DIF3REF14-2NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 18. Marcia is a fashion designer who runs a small clothing business in a competitive industry. Marcia specializes in making designer dresses. Marcia sells 10 dresses per month. Her monthly total revenue is $5,000. The marginal cost of making a dress is $500. In order to maximize profits, Marcia should a. make more than 10 dresses per month. b. make fewer than 10 dresses per month. c. continue to make 10 dresses per month. d. We do not have enough information with which to answer the question. ANSCPTS1DIF3REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 19.Marcia is a fashion designer who runs a small clothing business in a competitive industry. Marcia specializes in making designer dresses. Marcia sells 10 dresses per month. Her monthly total revenue is $5,000. The marginal cost of making a dress is $600. In order to maximize profits, Marcia should a. make more than 10 dresses per month. b. make fewer than 10 dresses per month. c. continue to make 10 dresses per month. d. We do not have enough information with which to answer the question. ANSBPTS1DIF3REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 20. A competitive firm has been selling its output for $20 per unit and has been maximizing its profit, which is positive.Then, the price rises to $25, and the firm makes whatever adjustments are needful to maximize its profit at the now-higher price. once the firm has adjusted, its a. quantity of output is higher than it was previously. b. average total cost is higher than it was previously. c. marginal revenue is higher than it was previously. d. All of the above are correct. ANSDPTS1DIF3REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCInterpretive 21. A competitive firm has been selling its output for $20 per unit and has been maximizing its profit, which is positive. Then, the price falls to $18, and the firm makes whatever adjustments are necessary to maximize its profit at the now-lower price. Once the firm has adjusted, its a. quantity of output is lower than it was previously. b. average total cost is lower than it was previously. c. marginal cost is higher than it was previously. d. All of the above are correct. ANSAPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCInterpretive 22. A competitive firm h as been selling its output for $10 per unit and has been maximizing its profit. Then, the price rises to $14, and the firm makes whatever adjustments are necessary to maximize its profit at the now-higher price. Once the firm has adjusted, its a. marginal revenue is lower than it was previously. b. marginal cost is lower than it was previously. c. quantity of output is higher than it was previously. d. All of the above are correct. ANSCPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCInterpretive 23. When profit-maximizing firms in competitive markets are earning profits, a. market demand must exceed market supply at the market equilibrium price. b. market supply must exceed market demand at the market equilibrium price. c. new firms will enter the market. d. the most inefficient firms will be encouraged to leave the market. ANSCPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive markets MSCInterpretive Table 14-7Suppose that a firm in a c ompetitive market faces the following revenues and costs Marginal Marginal Quantity greet Revenue 12 $5 $9 13 $6 $9 14 $7 $9 15 $8 $9 16 $9 $9 17 $10 $9 24. Refer to Table 14-7. If the firm is currently producing 14 units, what would you advise the owners? a. decrease quantity to 13 units b. increase quantity to 17 units c. continue to operate at 14 units d. increase quantity to 16 units ANSDPTS1DIF1REF14-2 NATAnalyticLOCPerfect competitionTOPProfit maximisation MSCApplicative 25. Refer to Table 14-7. If the firm is maximizing profit, how much profit is it earning? a. $0 b. $1 c. $10 d. There is insufficient information to determine the firms profit. ANSDPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPProfit MSCApplicative Table 14-8Suppose that a firm in a competitive market faces the following revenues and costs Quantity Total Revenue Total Cost 0 $0 $3 1 $7 $5 2 $14 $8 3 $21 $12 4 $28 $17 5 $35 $23 6 $42 $30 7 $49 $38 26. Refer to Table 14-8.The firm will not produce an output level beyond a. 4 units. b. 5 units. c. 6 units. d. 7 units. ANSCPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPProfit maximisation MSCApplicative 27. Refer to Table 14-8. The firm will produce a quantity greater than 4 because at 4 units of output, marginal cost a. is less than marginal revenue. b. equals marginal revenue. c. is greater than marginal revenue. d. is minimized. ANSAPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPProfit maximization MSCApplicative 28. Refer to Table 14-8. In order to maximize profits, the firm will produce a. 1 unit of output because marginal cost is minimized. b. 4 units of output because marginal revenue exceeds marginal cost. c. 6 units of output because marginal revenue equals marginal cost. d. 8 units of output because total revenue is maximized. ANSCPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPProfit maximization MSCApplicative Table 14-9 Suppose that a firm in a competitive market fac es the following revenues and costs Quantity Total Revenue Total Cost 0 $0 $10 1 $9 $14 2 $18 $19 3 $27 $25 4 $36 $32 5 $45 $40 6 $54 $49 7 $63 $59 8 $72 $70 9 $81 $82 29. Refer to Table 14-9. If the firm produces 4 units of output, a. marginal cost is $4. b. total revenue is greater than variable cost. c. marginal revenue is less than marginal cost. d. the firm is maximizing profit. ANSBPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPCompetitive firms MSCAnalytical 30. Refer to Table 14-9. At which quantity of output is marginal revenue equal to marginal cost? a. 3 units b. 6 units c. 8 units d. 9 units ANSBPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPProfit maximization MSCApplicative 31. Refer to Table 14-9. In order to maximize profit, the firm will produce a level of output where marginal revenue is equal to a. $6. b. $7. c. $8. d. $9. ANSDPTS1DIF2REF14-2NATAnalyticLOCPerfect competitionTOPProfit maximization MSCApplicative 32. Ref er to Table 14-9. In order to maximize profit, the firm will produce a level of output where marginal cost is equal to a. $5. b. $7. c. $9. d. $10. ANSCPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPProfit maximization MSCApplicative 33. Refer to Table 14-9. The maximum profit available to the firm is a. $2. b. $3. c. $4. d. $5. ANSDPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPProfit maximization MSCApplicative 34. Refer to Table 14-9. If the firms marginal cost is $11, it should a. increase production to maximize profit. b. increase the price of the product to maximize profit. c. advertise to attract additional buyers to maximize profit. d. reduce production to increase profit. ANSDPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPProfit maximization MSCAnalytical 35. Refer to Table 14-9. If the firms marginal cost is $5, it should a. reduce fixed costs by lowering production. b. increase production to maximize profit. c. decrease production to maximize profit. d. maintain its current level of production to maximize profit. ANSBPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPProfit maximization MSCAnalytical Table 14-10Suppose that a firm in a competitive market faces the following revenues and costs Quantity Total Revenue Total Cost 0 $0 $3 1 $7 $5 2 $14 $9 3 $21 $15 4 $28 $23 5 $35 $33 6 $42 $45 7 $49 $59 36. Refer to Table 14-10. The marginal cost of producing the 4th unit is a. $7. b. $8. c. $10. d. $23. ANSBPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPMarginal cost MSCApplicative 37. Refer to Table 14-10. At which level of production will the firm maximize profit? a. 3 units b. 4 units c. 5 units d. 6 units ANSAPTS1DIF2REF14-2 NATAnalyticLOCPerfect competitionTOPProfit maximization MSCApplicative 38. Refer to Table 14-10. If the firm produces the profit-maximizing level of production, how much profit will the firm earn? a. $2 b. $4 c. $6 d. $8 ANSCPTS1DIF2REF14-2