Question 1: There are many sellers in a perfectly competitive market.So many that

A. there is tremendous rivalry between firms.

B. if any one of them produced more or less, there would be a change in market price.

C. one producer may have a large market share.

D. each one is a price taker.

Question 2: In a perfectly competitive market,

A. there are many buyers and many sellers.

B. the goods for sale from one producer are perfect substitutes for those produced by another.

C. there is free entry into and exit from the industry.

D. all of the above

Question 3: Perfectly competitive firms produce where

A. profit is maximized

B. MR=MC

C. P= MC

D. all of the above

Question 4: The marginal revenue curve of a perfectly competitive firm is

A. equal to the marginal cost curve.

B. below the marginal cost curve.

C. above the marginal cost curve.

D. perfectly elastic at the market price.

Question 5: Which of the following goods are standardized products or commodities?

A. Automobiles

B. Corn

C.. Computers

D. DVD players

Question 6: In the perfectly competitive market for tomatoes in the long run, the typical tomato farm will

A. break even

B. earn an economic loss

C. earn an economic profit

D. earn an economic loss but continue to produce

Question 7: If Bob, who is operating a perfectly competitive firm, knows that his minimum average total cost is $2, minimum average variable cost is $1.50, and marginal revenue is $3

A. Bob will earn an economic profit.

B. Bob will break even.

C. Bob will earn an economic loss but continue to produce in the short run.

D. Bob will earn an economic loss and shut down in the short run.

Question 8: Tom, who is operating a firm in the perfectly competitive gizmo industry, is hoping to break even.But given the market price of $10 he is incurring a loss.Tom should

A. continue to produce in the short run as long as his average total cost is more than $10.

B. continue to produce in the short run as long as his average variable cost is more than $10.

C. continue to produce in the short run as long as his average variable cost is less than $10.

D. Shut down

Question 9: Julie also is operating a firm in the perfectly competitive gizmo industry.The market price is P = $10 and she produces Q = 12 gizmos a day.Given that Julie's average total cost is ATC = $12 and her total fixed cost is TFC = $24, we know that Julie's

A. average fixed cost is $1.50.

B. average profit is $4.00.

C. average variable cost is $10.

D. marginal revenue is $12.

Question 10: Julie is operating at a loss when

A. P=MC

B. P

C. P>ATC

D. ATC=MC

Question 11: Julie's competitive supply curve is the

A. marginal revenue curve.

B. marginal cost curve.

C. average variable cost curve above the market price.

D. marginal cost curve above the minimum point on the average variable cost curve.

Question 12: If the firms in the perfectly competitive gizmo industry are incurring losses but continue to produce, in the long run

A. firms will enter the industry and prices will fall.

B. firms will exit the industry and prices will rise.

C. firms will enter the industry and prices will rise.

D. firms will exit the industry and prices will fall.

Question 13: As firms enter a perfectly competitive industry in the long run, the short run industry supply curve will shift to the _______ and the market price will ______ until the typical firm __________________________.

A. Left Rise Breaks even

B. Right Fall earns an economic profit

C. Right Fall Breaks even

D. Left Rise incurs an economic profit

Question 14: In the perfectly competitive market for corn, long-run market equilibrium is disturbed by an increase in demand for bio-fuel.In the short run, farmers will ______ output and earn (incur) a _______

A. Reduce Profit

B. Increase Profit

C. Reduce Loss

D. Increase Loss

Question 15: Jack and Jill run a bed-and-breakfast in Booth Bay Harbor, Maine.During the summer business is great, but the winter is another story.Although they get some tourists who enjoy the winter scene in coastal Maine, business is very slow.Jack and Jill are trying to decide whether to shut down during the winter months.They should shut down if

A. total revenue exceeds fixed cost.

B. total revenue exceeds variable cost.

C. total revenue is less than total cost.

D. price is less than average variable cost.