Microeconomics 14/15

1 When a firm has little ability to influence market prices it is said to be in O A a competitive market. O B a strategic market. O C a thin market. O D a power market. Which of the following is NOT a characteristic of a perfectly competitive market? O A Firms are price takers. O B Firms have difficulty entering the market. O C There are many sellers in the market. O D Goods offered for sale are largely the same. 3 Changes in the output of a perfectly competitive firm, without any change in the price of the product, will change the firm's O A total revenue. O B marginal revenue. O C average revenue. O D Al of the above are correct.4 Total profit for a firm is calculated as O A (marginal revenue) minus (average cost). O B (average revenue) minus (average cost). O C (marginal revenue) minus (marginal cost). O D (price minus average cost) times (quantity of output). 5 The Wheeler Wheat Farm sells wheat to a grain broker in Seattle, Washington. Since the market for wheat is generally considered to be competitive, the Wheeler Wheat Farm maximizes its profit by choosing O A to produce the quantity at which average variable cost is minimized. O B to produce the quantity at which average fixed cost is minimized. O C to sell its wheat at a price where marginal cost is equal to average total cost. O D the quantity at which market price is equal to the farm's marginal cost of production. 6 The competitive firm's short-run supply curve O A is its marginal revenue curve, but only the portion where marginal revenue exceeds marginal cost. O B is its marginal cost curve. O C is its marginal cost curve, but only the portion above the minimum of average total cost. O D is its marginal cost curve, but only the portion above the minimum of average variable cost.Which of the following could be used to calculate the profit for a firm? O A Profit = MR - MC O B Profit = MR - TC O C Profit = (P - MC)Q O D Profit = (P - ACJQ 8 Which of the following represents the firm's short-run condition for shutting down? O A Shut down if TR