Chapter 9_2: Perfect Competition

Chapter 9_2: Perfect Competition; Time: 40 phút

Question 1 - 4

Question 1: In the above table, if the firm sells 5 units of output, its total revenue is
a. 30
b. 15
c. 75
d. 90

Question 2: In the above table, if the quantity sold by the firm rises from 5 to 6, its marginal revenue is
a. 15
b. 75
c. 90
d. 30

Question 3: In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is
a. 90
b. 30
c. 105
d. 15

Question 4: In perfect competition, the marginal revenue of an individual firm
a. equals the price of the product.
b. is positive but less than the price of the product.
c. exceeds the price of the product.
d. is zero.

Question 5: In the case of a perfectly competitive firm, the
a. firm's marginal revenue exceeds the price of the product.
b. change in the firm's total revenue equals the price of the product multiplied by the change in quantity sold.
c. firm's marginal revenue is less than average revenue.
d. price of the product falls sharply when the quantity the firm sells doubles.

Question 6: In perfect competition, the firm's marginal revenue curve
a. cuts its demand curve from above, going from left to right.
b. always lies below its demand curve.
c. cuts its demand curve from below, going from left to right.
d. is the same as its demand curve.

Question 7: At a firm's break-even point, definitely its
a. marginal revenue equals its average fixed cost.
b. marginal revenue equals its average variable cost.
c. total revenue equals its total opportunity cost.
d. marginal revenue exceeds its marginal cost.

Question 8: When Sidney's Sweaters, Inc. makes exactly zero economic profit, Sidney, the owner,
a. makes an income equal to his best alternative forgone income.
b. will boost output.
c. will shut down in the short run.
d. is taking a loss.

Question 9: The break-even point is defined as occurring at an output rate at which
a. total cost is minimized.
b. total revenue equals total opportunity cost.
c. economic profit is maximized.
d. marginal revenue equals marginal cost.

Question 10 - 12

Question 10: In the above table, the price of the product is
a. 30
b. 150
c. 147
d. 180

Question 11: In the above table, the firm
a. must be in a perfectly competitive industry, because its marginal revenue is constant.
b. cannot be in a perfectly competitive industry, because its short-run economic profits are greater than zero.
c. cannot be in a perfectly competitive industry, because its long-run economic profits are greater than zero.
d. must be in a perfectly competitive industry, because its marginal cost curve eventually rises.

Question 12: In the above table, the marginal revenue from the fourth unit of output is
a. 180
b. 147
c. 150
d. 30

Question 13 - 16

Question 13: In the above table, if the firm produces 2 units of output, it will make an economic
a. loss of $60.
b. profit of $60.
c. loss of $9.
d. profit of $9.

Question 14: In the above table, the firm's total fixed cost of production is
a. $29.00.
b. $4.00.
c. $3.00.
d. $7.00.

Question 15: In the above table, the average fixed cost at 4 units of output is
a. $4.80.
b. $4.70.
c. $1.00.
d. $4.50.

Question 16: In the above table, the average variable cost at 2 units of output is
a. $4.00.
b. $2.00.
c. $1.00.
d. $4.80.

Question 17 - 20

Question 17: In the above figure, by increasing its output from Q1 to Q2, the firm
a. increases its profit.
b. increases its marginal revenue.
c. reduces its marginal revenue.
d. decreases its profit.

Question 18: In the above figure, by increasing its output from Q2 to Q3, the firm
a. increases its marginal revenue.
b. reduces its marginal revenue.
c. decreases its profit.
d. increases its profit.

Question 19: The above figure illustrates a firm's total revenue and total cost curves. Which one of the following statements is FALSE?
a. At output Q1 the firm makes zero economic profit.
b. At an output above Q3 the firm incurs an economic loss.
c. Economic profit is the vertical distance between the total revenue curve and the total cost curve.
d. At output Q2 the firm incurs an economic loss.

Question 20: The feature of the above figure that indicates that the firm is a perfectly competitive firm is the
a. fact that the total cost and total revenue curves are farthest apart at output is Q2.
b. shape of the total revenue curve.
c. fact that the total cost and total revenue curves cross twice.
d. shape of the total cost curve.

Question 21 - 23

Question 21: In the above figure, the firm is making an economic loss at
a. point a.
b. points b and d.
c. points a, b, and d.
d. point c.

Question 22: In the above figure, the firm is breaking even at points
a. a and d.
b. b and d.
c. c and d.
d. a and c.

Question 23: In the above figure, when the firm produces output corresponding to point c, the firm's marginal cost
a. is less than its marginal revenue.
b. equals its average revenue.
c. exceeds its marginal revenue.
d. equals its marginal revenue.

Question 24: For a perfectly competitive firm, in a diagram with quantity on the horizontal axis and both total revenue and total cost on the vertical axis, the firm's ________ is a straight line ________.
a. total cost curve; through the origin
b. total revenue curve; with zero slope
c. total cost curve; with zero slope
d. total revenue curve; through the origin

Question 25: A perfectly competitive firm maximizes its profit by producing the output at which its marginal cost equals its
a. average variable cost.
b. marginal revenue.
c. average total cost.
d. average fixed cost.

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