Economics Chapter 12 Question Answer Points Table Total Cost And

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217. Multiple Choice: Suppose that the market for haircuts ...

Question Suppose that the market for haircuts in a community is perfectly competitive and

that the market is initially in long–run equilibrium. Subsequently, an increase in

population increases the demand for haircuts. In the short run, we expect that the

market price will ________ and the output of a typical firm will ________.

218. Multiple Choice: Suppose that the market for haircuts ...

Question Suppose that the market for haircuts in a community is perfectly competitive and

that the market is initially in long-run equilibrium. Subsequently, an increase in

population increases the demand for haircuts. In the short run, we expect that the

typical firm is likely to begin:

219. Multiple Choice: Suppose that the market for haircuts ...

Question Suppose that the market for haircuts in a community is a perfectly competitive

constant-cost industry and that the market is initially in long-run equilibrium.

Subsequently, an increase in population increases the demand for haircuts. In the

long run, we expect that:

Points: 0

220. Multiple Choice: A decrease in production costs for fi...

Question A decrease in production costs for firms in a perfectly competitive market will

cause a(n):

221. Multiple Choice: In perfect competition, a change in f…

Question In perfect competition, a change in fixed cost:

222. Multiple Choice: In a perfectly competitive market, wh...

Question In a perfectly competitive market, which of the following statements is true?

223. Multiple Choice: A curve that shows the quantity of a ...

Question

Points: 0

A curve that shows the quantity of a good or service supplied at various prices after

all long-run adjustments to a price change have been completed is a long-run:

224. Multiple Choice: Which of the following is true?

Question Which of the following is true?

225. Multiple Choice: Lilly is the price-taking owner of an…

Question Lilly is the price-taking owner of an apple orchard. The price of apples is high

enough that Lilly is earning positive economic profits. In the long run, Lilly should

expect:

226. Multiple Choice: Which of the following is most likely…

Question Which of the following is most likely to cause firms to exit a perfectly competitive

industry?

Points: 0

227. Multiple Choice: Reference: Ref 12-18 (Table: Lilly‘s...

Question

Reference: Ref 12-18

(Table: Lilly‘s Apple Orchard) Look at the table Lilly‘s Apple Orchard. Lilly is the

price-taking owner of an apple orchard; the orchard’s variable costs are given in the

table. Her orchard has fixed costs of $30. If the price of a bushel of apples is $85,

we would expect:

228. Multiple Choice: Figure: The Perfectly Competitive Fir...

Question

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Figure: The Perfectly Competitive Firm

Reference: Ref 12-19

(Figure: The Perfectly Competitive Firm) Look at the figure The Perfectly

Competitive Firm. The firm faces demand curve d, has the cost curves shown, and

maximizes profit. In a long-run equilibrium, this firm will produce ________ units of

output and sell its output at a price of ________.

229. Multiple Choice: Figure: The Perfectly Competitive Fir...

Question

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Figure: The Perfectly Competitive Firm

Reference: Ref 12-19

(Figure: The Perfectly Competitive Firm) Look at the figure The Perfectly

Competitive Firm. The figure shows a perfectly competitive firm that faces demand

curve d, has the cost curves shown, and maximizes profit. The firm‘s economic

profit in the long run will be:

230. Multiple Choice: If some firms in a perfectly competit…

Question If some firms in a perfectly competitive industry are earning positive economic

profits, then in the long run, the:

231. Multiple Choice: Suppose that some firms in a perfectl…

Question Suppose that some firms in a perfectly competitive industry are earning positive

economic profits. In the long run, the:

Answer industry is in long-run equilibrium.

Points: 0

232. Multiple Choice: Suppose that the market for haircuts ...

Question Suppose that the market for haircuts in a community is perfectly competitive and

that the market is initially in long-run equilibrium. Subsequently, a decrease in

population decreases the demand for haircuts. In the short run, we expect that the

market price will ________ and the output of a typical firm will ________.

233. Multiple Choice: In perfectly competitive long-run equ...

Question In perfectly competitive long-run equilibrium:

Answer all firms make positive economic profits.

234. Multiple Choice: When economic profits in an industry …

Question When economic profits in an industry are zero:

Answer firms are really doing badly.

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235. Multiple Choice: When a perfectly competitive firm is …

Question When a perfectly competitive firm is in long-run equilibrium, the firm is producing at:

Answer maximum average total cost.

236. Multiple Choice: Provided that there are no external b...

Question Provided that there are no external benefits or costs, resources are efficiently

allocated when:

Answer P = MR.

237. Multiple Choice: In a long-run equilibrium, economic p...

Question In a long-run equilibrium, economic profits in a perfectly competitive industry are:

Answer positive.

238. Multiple Choice: When a perfectly competitive industry…

Question When a perfectly competitive industry is in long-run equilibrium, its firms:

Answer earn more than zero economic profits.

Points: 0

239. Multiple Choice: A perfectly competitive industry is i...

Question A perfectly competitive industry is in a state of long-run equilibrium. Which of the

following must be true?

Answer P = MR = MC > ATC.

240. Multiple Choice: A perfectly competitive industry is s...

Question A perfectly competitive industry is said to be efficient because the:

Answer marginal cost of production of the last unit of output is minimized.

241. Multiple Choice: Perfect competition is a model of the…

Question Perfect competition is a model of the market that assumes all of the following

except:

Answer a large number of firms.

242. Multiple Choice: When perfect competition prevails, wh…

Question When perfect competition prevails, which of the following characteristics of firms

are we likely to observe?

Points: 0

Answer None of them ever experiences diminishing marginal returns.

243. Multiple Choice: Which of the following is not an assu...

Question Which of the following is not an assumption that economists make when using the

model of perfect competition?

Answer Firms seek to maximize profits.

244. Multiple Choice: Reference: Ref 12-20 (Table: Total C…

Question

Reference: Ref 12-20

(Table: Total Cost and Output) Look at the table Total Cost and Output. The table

describes Sergei‘s costs for his perfectly competitive all-natural ice cream firm. If

the market price of a tub of ice cream is $67.50, how many tubs of ice cream will

Sergei’s firm produce?

Answer 1

Points: 0

245. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. If the market price of a tub of ice

cream is $67.50, how much is Sergei‘s total revenue at the profit-maximizing

output?

246. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. If the market price of a tub of ice

cream is $67.50, how much is Sergei‘s total cost at the profit–maximizing output?

Answer $270

247. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. If the market price of a tub of ice

cream is $67.50, how much is Sergei‘s profit at the profit–maximizing output?

Answer $680

248. Multiple Choice: (Table: Total Cost and Output) The ta...

Question

Points: 0

(Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. If the market price of a tub of ice

cream is $50, what quantity will Sergei produce in order to maximize profit?

Answer 2

249. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. If the market price of a tub of ice

cream is $50, how much is Sergei‘s profit at the profit-maximizing output?

Answer $680

250. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. If the market price of a tub of ice

cream is $35, how many tubs of ice cream will Sergei produce in the short run?

Answer 1

251. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. If the market price of a tub of ice

cream is $35, how much is Sergei‘s profit or loss at the optimal short-run output

Points: 0

252. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. If the market price of a tub of ice

cream is $20, how many tubs of ice cream will Sergei produce in the short run?

253. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. If the market price of a tub of ice

cream is $20, how much is Sergei‘s profit or loss at the optimal short-run output?

Answer $100

254. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. What is the minimum price that

Sergei needs to receive for a tub of ice cream in order to stay in business in the

short run?

Points: 0

255. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. What is the minimum price that

Sergei needs to receive for a tub of ice cream in order to stay in business in the

long run?

Answer $10

256. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. How many tubs of ice cream will

Sergei produce in the long run?

Answer 1

257. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. Where does Sergei’s short–run

supply curve begin?

Answer P = $0; Q = 0.

258. Multiple Choice: (Table: Total Cost and Output) The ta...

Points: 0

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all-natural ice cream firm. Which of the following is a point on

Sergei’s short–run supply curve?

Answer P = $10; Q = 0.

259. Multiple Choice: (Table: Total Cost and Output) The ta...

Question (Table: Total Cost and Output) The table describes Sergei’s total costs for his

perfectly competitive all natural ice cream firm. If there are 100 firms in the all-

natural ice cream industry, which of the following is a point on the industry short–

run supply curve?

Answer P = $10; Q = 0.

260. Multiple Choice: Reference: Ref 12-21 (Table: Variabl...

Question

Reference: Ref 12-21

(Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry. The table provided shows her variable costs for snow clearing

and number of lots cleared. Her only fixed cost is $1,000 for a snowplow. Her

variable costs include fuel, her time, and hot coffee. What is Alexa’s shut-down

price in the short run?

Answer $20

Points: 0

261. Multiple Choice: Reference: Ref 12-21 (Table: Variabl...

Question

Reference: Ref 12-21

(Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry. The table provided shows her variable costs for snow clearing

and number of lots cleared. Her only fixed cost is $1,000 for a snowplow. Her

variable costs include fuel, her time, and hot coffee. If the price per cleared lot is

$14, how many lots should Alexa clear?

262. Multiple Choice: (Table: Variable Costs for Lots) Loo…

Question (Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry. The table provided shows her variable costs for snow clearing

and number of lots cleared. Her only fixed cost is $1,000 for a snowplow. Her

variable costs include fuel, her time, and hot coffee. If the price to clear a lot is $60,

how many lots should Alexa clear?

Points: 0

263. Multiple Choice: (Table: Variable Costs for Lots) Loo…

Question (Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry. The table provided shows her variable costs for snow clearing

and number of lots cleared. Her only fixed cost is $1,000 for a snowplow. Her

variable costs include fuel, her time, and hot coffee. If the price to clear a lot is $60,

what is Alexa’s profit or loss at the optimal output?

Answer $3,000

264. Multiple Choice: (Table: Variable Costs for Lots) Loo…

Question (Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry. The table provided shows her variable costs for snow clearing

and number of lots cleared. Her only fixed cost is $1,000 for a snowplow. Her

variable costs include fuel, her time, and hot coffee. If the price to clear a lot is $60,

what is Alexa’s profit or loss per unit at the optimal output?

Answer $60

265. Multiple Choice: (Table: Variable Costs for Lots) Loo…

Question (Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry. The table provided shows her variable costs for snow clearing

and number of lots cleared. Her only fixed cost is $1,000 for a snowplow. Her

variable costs include fuel, her time, and hot coffee. If the price to clear a lot is $30,

how many lots should Alexa clear?

Answer 50

Points: 0

266. Multiple Choice: (Table: Variable Costs for Lots) Loo…

Question (Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry. The table provided shows her variable costs for snow clearing

and number of lots cleared. Her only fixed cost is $1,000 for a snowplow. Her

variable costs include fuel, her time, and hot coffee. If the price to clear a lot is $30,

what is Alexa’s profit or loss at the optimal output?

Answer $1,200

267. Multiple Choice: (Table: Variable Costs for Lots) Loo…

Question (Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry. The table provided shows her variable costs for snow clearing

and number of lots cleared. Her only fixed cost is $1,000 for a snowplow. Her

variable costs include fuel, her time, and hot coffee. If the price to clear a lot is $30,

what is Alexa’s profit or loss per unit at the optimal output?

268. Multiple Choice: (Table: Variable Costs for Lots) Loo…

Question (Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry. The table provided shows her variable costs for snow clearing

and number of lots cleared. Her only fixed cost is $1,000 for a snowplow. Her

variable costs include fuel, her time, and hot coffee. At what price does Alexa’ s

short-run supply curve start?

Answer $200

Points: 0

269. Multiple Choice: (Table: Variable Costs for Lots) Loo…

Question (Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry. The table provided shows her variable costs for snow clearing

and number of lots cleared. Her only fixed cost is $1,000 for a snowplow. Her

variable costs include fuel, her time, and hot coffee. Which of the following is a

point on Alexa‘s short–run supply curve?

Answer P = $40; Q = 10.

270. Multiple Choice: (Table: Variable Costs for Lots) Loo…

Question (Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During

the winter, Alexa runs a snow–clearing service, and snow clearing is a perfectly

competitive industry, which is made up of 50 identical firms. The table provided

shows her variable costs for snow clearing and number of lots cleared. Her only

fixed cost is $1,000 for a snowplow. Her variable costs include fuel, her time, and

hot coffee. Which of the following is a point on the industry short–run supply curve?

Answer P = $40; Q = 60.

271. Multiple Choice: Reference: Ref 12-22 (Table: Variabl...

Question

Points: 0