Home

Chapter 8

Chapter Quiz

Chapter Quiz


This activity contains 15 questions.

	In a competitive equilibrium:   firms are making negative profits. all consumers are maximizing utility. marginal cost is greater than price. supply exceeds demand. there is no Walrasian auctioneer.

	In a constant cost competitive industry, the long-run supply curve is:   undefined. downward sloping. a vertical straight line. a horizontal straight line. upward sloping.

	In a constant cost competitive industry, when an excise tax is imposed, the long-run equilibrium price:   will fall. is stable. will not change. will rise by an amount equal to the tax. will rise by an amount greater than the tax.

	In short-run competitive equilibrium:   P = q. P = LAC. P = SMC. P = SAC. P = SAVC.

	In long-run equilibrium:   the Walrasian auctioneer ceases to exist. firms are not happy. firms make zero profit. SAC > P. supply exceeds cost.

	In perfect competition:   P = TR. P = MR. P > MR. P < SAC. P < MR.

	Profit-maximizing firms under perfect competition will choose the quantity at which:   P < AVC. AFC = 0. MR = MC. P = MR. P < MC.

	An implication of Walras’ law is that:   firms should shut down in the short run if they are making losses. no consumer can influence the price. firms always make positive profits. the Walrasian auctioneer is necessary. if there are N markets, we only need to focus on N-1 markets.

	In an increasing cost competitive industry, the long-run supply curve is:   a horizontal straight line. a vertical straight line. downward sloping. undefined. upward sloping.

	As firms enter an increasing cost industry:   input prices fall. input prices rise. fixed costs fall. input prices remain unchanged. marginal cost is extremely high.

	As firms leave an increasing cost industry:   marginal cost is extremely high. fixed costs fall. input prices fall. the total costs of production of the firms that remain will fall. input prices remain unchanged.

	One of the important conditions for perfect competition is that:   the demand curve facing a firm is perfectly inelastic. there are no barriers to entry and exit. managers in the same industry discuss strategies with each other to perfect their pricing in the market. products are heterogenous. there are never any economic profits earned by the firms in the industry.

	Suppose a firm is operating in a competitive industry, along with 99 other identical firms. Total costs (in $) for each firm, per day, are given by TC = 300 + 3qI2, for i = 1, 2, ..., 100. Marginal costs are then MC = 6qi and the inverse demand function, for sales per day, is P = 160 - 0.1Q where Q = q1 + q2+ ... + q100 and P is measured in $/unit. Assume the industry is in long run equilibrium. The profit-maximizing quantity for the firm is:   26.23 units per day. zero; the firm should shut down. 100 units per day. 25.81 units per day. 10 units per day.

	Suppose a firm is operating in a competitive industry, along with 99 other identical firms. Total costs (in $) for each firm, per day, are given by TC = 200 + 2qiM/sub>2, for I = 1, 2, ..., 100. Marginal costs are then MC = 4qI, and the inverse demand function for sales per day is P = 160 - 0.1Q where Q = q1 + q2+ ... + q100 and P is measured in $/unit. The profit-maximizing quantity for the firm is:   10 units per day. 38.10 units per day. zero; the firm should shut down. 11.43 units per day. 39.01 units per day.

	Suppose a firm is operating in a competitive industry, along with N other identical firms. Total costs (in $) for each firm, per day, are given by TC = 200 + 2qI2, for i = 1, 2, ..., N. Marginal costs are then MC = 4qi, and the inverse demand function for sales per day is P = 160 - 0.1Q where Q = q1 + q2+ ... + qN and P is measured in $/unit. The number of firms, N, in the long run is:   10. 120. 12. zero; all firms should shut down. 100.

Answer choices in this exercise appear in a different order each time the page is loaded.

Copyright © 1995-2008, Pearson Education, Inc. Legal and Privacy Terms