Download ECON 201 QUIZ 4 WEEK 16 Assist.Prof. Fatma Nur Karaman

ECON 201
Assist.Prof. Fatma Nur Karaman
QUIZ 4
WEEK 16
Name___________________________________
Good luck!
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Suppose that marginal revenue for a perfectly competitive firm is $20 . When the firm produces 10
1)
units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17. Then
to maximize its profit in the short run, the firm
A) must increase its output to increase its profit.
B) should not change its production because it is already maximizing its profit and is making an
economic profit.
MR=P=$20 then TR= 20x10 =$200
C) should shut down.
TVC= 17x10 =$170. TR covers TVC. The firm will stay open.
D) must decrease its output to increase its profit.
OR we can say P > AVC then the firm will stay open.
E) should stay open and incur an economic loss of $20.
loss= TR-TC = (PxQ) - (ATC x Q) =200 -220 = -20
The figure above shows the cost curves and marginal revenue curve for a perfectly competitive firm.
2) Based on the figure above, what is the price of a can?
A) $5.14 per can
B) $3.00 per can
C) $0.
D) None of the above prices is correct.
E) More information is needed to determine the price of a can.
2)
3) The firm in the figure above is ________ that is equal to ________.
A) making an economic profit; ($5.14 - $3.00) × 7
B) making an economic profit; $3.00 × 7
C) making an economic profit; $5.14 × 7
D) incurring an economic loss; $5.14 × 7
E) incurring an economic loss; ($5.14 - $3.00) × 7
3)
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4) If Henry, a perfectly competitive lime grower in Southern California, can sell his limes at a price
greater than his average total cost, Henry will
A) incur an economic loss.
profit = TR-TC = (PxQ) - (ATC x Q)
B) make an economic profit.
C) have an incentive to shut down.
D) incur an accounting loss.
E) make zero economic profit.
4)
5) In the short run, a perfectly competitive firm
A) must make an economic profit.
B) must make zero economic profit.
C) None of the above answers is correct.
D) must incur an economic loss.
E) might make an economic profit, zero economic profit, or incur an economic loss.
5)
6) When new firms enter the perfectly competitive Miami bagel market, the market
A) supply curve shifts rightward.
B) demand curve shifts leftward.
C) supply curve does not change.
D) supply curve shifts leftward.
E) demand curve shifts rightward.
6)
7) To eliminate losses in a perfectly competitive market, firms exit the industry. This exit results in
A) an increase in market supply.
B) a decrease in both the market supply and the market demand.
C) a decrease in market demand.
D) a decrease in market supply.
E) an increase in market demand.
7)
8) In the long run, perfectly competitive firms produce at the output level that has the minimum
A) average total cost.
B) total revenue.
C) average fixed cost.
D) average variable cost.
E) marginal cost.
8)
9) In the long run, a perfectly competitive firm makes
A) zero accounting profit.
B) a positive economic profit.
C) either a positive economic profit or a normal profit.
D) zero economic profit.
E) negative economic profit, that is, an economic loss.
9)
10) The characteristics that describe a perfectly competitive industry include
A) one firm selling to many buyers.
B) a few firms selling to many buyers.
C) many firms selling an identical product.
D) many firms selling a slightly differentiated product.
E) None of the above answers is correct.
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