Transcript Ch15

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Perfect Competition
15
CLICKER QUESTIONS
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Checkpoint 15.1
Checkpoint 15.2
Checkpoint 15.3
Question 1
Question 5
Question 8
Question 2
Question 6
Question 9
Question 3
Question 7
Question 10
Question 4
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CHECKPOINT 15.1
Question 1
A perfectly competitive firm is a price taker because _____.
A.
B.
C.
D.
E.
many other firms produce the same product
only one firm produces the product
many firms produce a slightly differentiated product
a few firms compete
there are no barriers to entry
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CHECKPOINT 15.1
Question 2
A perfectly competitive firm maximizes its profit by producing
at the output at which _______.
A.
B.
C.
D.
E.
total revenue equals total cost
marginal revenue is equal to marginal cost
total revenue is equal to marginal revenue
total cost is at its minimum
total revenue is at its maximum
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CHECKPOINT 15.1
Question 3
The figure shows cost curves
for a perfectly competitive
dry cleaner. If the price of dry
cleaning a shirt is $10 per
shirt, the firm will dry clean
____ shirts an hour.
A.
B.
C.
D.
E.
0
between 1 and 49
50
60
61 or more
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CHECKPOINT 15.1
Question 4
If the market price is below the perfectly competitive firm’s
average total cost, the firm will _________.
A. immediately shut down
B. continue to produce if the price exceeds the average
fixed cost
C. continue to produce if the price exceeds the average
variable cost
D. shut down if the price exceeds the average fixed cost
E. shut down if the price is less than the average fixed cost
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CHECKPOINT 15.2
Question 5
A perfectly competitive firm makes a positive economic profit
in the short run if the market price of the good produced is
_____ of producing it.
A.
B.
C.
D.
E.
equal to marginal cost
equal to average total cost
greater than average total cost
greater than marginal cost
greater than average variable cost
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CHECKPOINT 15.2
Question 6
Juan’s Software Service Company is a perfectly competitive
firm. Juan’s total fixed cost is $25,000, its average variable
cost for 1,000 service calls is $45, and its marginal revenue
is $75. Juan’s makes 1,000 service calls a month. Juan’s
makes an economic profit of ______ a month.
A.
B.
C.
D.
E.
$5,000
$25,000
$45,000
$75,000
$50,000
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CHECKPOINT 15.2
Question 7
A perfectly competitive firm is producing the output at which
marginal cost is $12 a unit and its average total cost is $8 a
unit. If the market price is $10 a unit, the firm ________.
A.
B.
C.
D.
E.
is maximizing its profit
will increase its profit if it produces a larger output
will increase its profit if it raises its price to $12 a unit
will increase its profit if it produces a smaller output
is making zero economic profit
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CHECKPOINT 15.3
Question 8
As a result of firms leaving the perfectly competitive frozen
yogurt market in the early 2000s, the market _________.
A. supply of frozen yogurt decreased
B. supply of frozen yogurt did not change, but the market
demand for frozen yogurt did
C. demand for frozen yogurt increased
D. supply of frozen yogurt increased
E. demand for frozen yogurt increased
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CHECKPOINT 15.3
Question 9
In the long run, new firms will enter a perfectly competitive
market when firms in the market are _______.
A.
B.
C.
D.
E.
making zero economic profit
increasing output in order to maximize profit
incurring economic losses
making positive economic profits
shutting down temporarily to reduce their economic
losses
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CHECKPOINT 15.3
Question 10
Firms in a competitive market are incurring economic losses.
In the long run, firms exit the market and as they do, the
economic losses of the remaining firms ______.
A. increase because the market demand for the good
decreases
B. decrease until the remaining firms break even
C. decrease until the remaining firms make economic profits
D. do not change
E. increase because the market demand for the good does
not change
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