Economics Chapter 12 Question Answer Points The Short run Individual Supply

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Microeconom ics, 3e

Test Canvas: Self-Test Quiz – Chapter 12

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1. Multiple Choice: Gabriel operates a tree-trimming busi...

Question Gabriel operates a tree-trimming business in Maine. He charges the perfectly

competitive price of $47 per hour. The marginal cost of working the 36th hour each

week is $42; the marginal cost of working the 37th hour is $44; the 38th hour is

$46; and the 39th hour is $48. How many hours should he work each week?

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Points: 1

2. Multiple Choice: Nadia operates a frame shop and charg...

Question Nadia operates a frame shop and charges the perfectly competitive price of $65 for

custom framing of a standard size picture. She is a price-taking producer. To

maximize her profit, Nadia will:

3. Multiple Choice: Which of the following is NOT a chara…

Question Which of the following is NOT a characteristic of a perfectly competitive industry?

4. Multiple Choice: For the perfectly competitive firm, e…

Question For the perfectly competitive firm, economic profit equals:

Answer (price – marginal cost) x quantity.

Points: 1

5. Multiple Choice: Tara sells her organic carrots in a p...

Question Tara sells her organic carrots in a perfectly competitive market for a price that is

just higher than her minimum average variable cost of production, but lower than

her minimum average total cost of production. Which of the following statements is

then true?

6. Multiple Choice: Luis operates a cherry orchard in Nor...

Question Luis operates a cherry orchard in Northern Oregon and sells the cherries in a

perfectly competitive market at a price of $1.70 per pound. Last month Luis sold

2,000 pounds of cherries. His fixed cost of production was $800 and his average

variable cost was $1.00 per pound. What was his profit?

Points: 1

7. Multiple Choice: In maximizing net gains, the perfectl…

Question In maximizing net gains, the perfectly competitive firm will seek to:

Answer

minimize average variable cost.

8. Multiple Choice: The existence of profit in a perfectl...

Question The existence of profit in a perfectly competitive industry means that:

9. Multiple Choice: A perfectly competitive firm earns an...

Question A perfectly competitive firm earns an economic profit when:

Points: 1

10. Multiple Choice: A firm will choose to shut down in th...

Question A firm will choose to shut down in the short run when:

11. Multiple Choice: The short-run individual supply curve…

Question The short-run individual supply curve of the perfectly competitive firm is:

12. Multiple Choice: The quantity supplied by a perfectly ...

Question The quantity supplied by a perfectly competitive firm at a given market price is

determined by the:

Points: 1

13. Multiple Choice: A perfectly competitive firm charges ...

Question A perfectly competitive firm charges the market price of $18 to sell its product. The

firm produces and sells the profit–maximizing quantity of 50 units at this price. Its

average total cost is $17 and its average variable cost is $15. Which of the

following statements is then true?

14. Multiple Choice: Suppose that the long-run industry su...

Question Suppose that the long-run industry supply in the production of synthetic fabrics is

perfectly elastic. Which of the following statements is then true?

Correct

Points: 1

15. Multiple Choice: How does the long run differ from the...

Question How does the long run differ from the short run in perfect competition?

16. Multiple Choice: Which of the following is not a chara...

Question Which of the following is not a characteristic of the long-run equilibrium in perfect

competition

Answer

Each firm is producing an efficient quantity.

17. Multiple Choice: Why does economic theory predict that...

Question Why does economic theory predict that a perfectly competitive firm will produce at

the point where price equals marginal cost?

Answer This point provides an efficient allocation of society‘s resources.

Points: 1

18. Multiple Choice: How does the long-run industry supply…

Question How does the long-run industry supply curve compare to the short-run industry

supply curve?

19. Multiple Choice: Suppose that firms in the perfectly c...

Question Suppose that firms in the perfectly competitive potato-growing industry are earning

economic profits. According to economic theory, what is likely to happen?

Points: 1

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20. Multiple Choice: A perfectly competitive ebook publish...

Question A perfectly competitive ebook publishing firm currently sells its ebook at the market

price of $6. Its average total cost is $5.50. In this case:

OK

Points: 1