1、405Chapter 13Firms in Competitive MarketsMULTIPLE CHOICE1. A market is competitive if(i) firms have the flexibility to price their own product.(ii) each buyer is small compared to the market.(iii) each seller is small compared to the market.a. (i) and (ii) onlyb. (i) and (iii) onlyc. (ii) and (iii)
2、onlyd. All of the above are correct.ANSWER: c. (ii) and (iii) onlyTYPE: M DIFFICULTY: 2 SECTION: 14.12. When a firm has little ability to influence market prices it is said to be in what kind of a market?a. a competitive marketb. a strategic marketc. a thin marketd. a power marketANSWER: a. a compet
3、itive marketTYPE: M DIFFICULTY: 1 SECTION: 14.13. In a competitive market, the actions of any single buyer or seller willa. have a negligible impact on the market price.b. have little effect on overall production but will ultimately change final product price.c. cause a noticeable change in overall
4、production and a change in final product price.d. adversely affect the profitability of more than one firm in the market.ANSWER: a. have a negligible impact on the market price.TYPE: M DIFFICULTY: 2 SECTION: 14.1Use the information in the table below to answer questions 4 through 7.Quantity Price1 1
5、32 133 134 135 136 137 138 139 134. The price and quantity relationship in the table is most likely that faced by a firm in aa. monopoly.b. concentrated market.c. competitive market.d. strategic market.ANSWER: c. competitive market.TYPE: M DIFFICULTY: 1 SECTION: 14.1406 Chapter 14/Firms in Competiti
6、ve Markets5. Over which range of output is average revenue equal to price?a. 1 to 5b. 3 to 7c. 5 to 9d. Average revenue is equal to price over the whole range of output.ANSWER: d. Average revenue is equal to price over the whole range of output.TYPE: M DIFFICULTY: 1 SECTION: 14.16. Over what range o
7、f output is marginal revenue declining?a. 1 to 6b. 3 to 7c. 7 to 9d. None; marginal revenue is constant over the whole range of output.ANSWER: d. None; marginal revenue is constant over the whole range of output.TYPE: M DIFFICULTY: 2 SECTION: 14.17. If the firm doubles its output from 3 to 6 units,
8、total revenue willa. increase by less than $39.b. increase by exactly $39.c. increase by more than $39.d. It cannot be determined from the information provided.ANSWER: b. increase by exactly $39.TYPE: M DIFFICULTY: 1 SECTION: 14.18. For a firm in a perfectly competitive market, the price of the good
9、 is alwaysa. equal to marginal revenue.b. equal to total revenue.c. greater than average revenue.d. All of the above are correct.ANSWER: a. equal to marginal revenue.TYPE: M DIFFICULTY: 1 SECTION: 14.19. If a firm in a perfectly competitive market triples the number of units of output sold, then tot
10、al revenue willa. more than triple.b. less than triple.c. exactly triple.d. All of the above are potentially true.ANSWER: c. exactly triple.TYPE: M DIFFICULTY: 1 SECTION: 14.110. Because the goods offered for sale in a competitive market are largely the same,a. there will be few sellers in the marke
11、t.b. there will be few buyers in the market.c. buyers will have market power.d. sellers will have little reason to charge less than the going market price.ANSWER: d. sellers will have little reason to charge less than the going market price.TYPE: M DIFFICULTY: 1 SECTION: 14.111. Which of the followi
12、ng is NOT a characteristic of a perfectly competitive market?a. Firms are price takers.b. Firms have difficulty entering the market.c. There are many sellers in the market.d. Goods offered for sale are largely the same.ANSWER: b. Firms have difficulty entering the market.TYPE: M DIFFICULTY: 1 SECTIO
13、N: 14.1Chapter 14/Firms in Competitive Markets 40712. When buyers in a competitive market take the selling price as given, they are said to bea. market entrants.b. monopolists.c. free riders.d. price takers.ANSWER: d. price takers.TYPE: M DIFFICULTY: 1 SECTION: 14.113. When firms are said to be pric
14、e takers, it implies that if a firm raises its price,a. buyers will go elsewhere.b. buyers will pay the higher price in the short run.c. competitors will also raise their prices.d. firms in the industry will exercise market power.ANSWER: a. buyers will go elsewhere.TYPE: M DIFFICULTY: 1 SECTION: 14.
15、114. Which of the following statements best reflects a price-taking firm?a. If the firm were to charge more than the going price, it would sell none of its goods.b. The firm has no incentive to charge less than the going price.c. The firm can sell as much as it wants to sell at the going price.d. Al
16、l of the above are correct.ANSWER: d. All of the above are correct.TYPE: M DIFFICULTY: 2 SECTION: 14.115. In a competitive market, no single producer can influence the market price becausea. many other sellers are offering a product that is essentially identical.b. consumers have more influence over
17、 the market price than producers do.c. government intervention prevents firms from influencing price.d. producers agree not to change the price.ANSWER: a. many other sellers are offering a product that is essentially identical.TYPE: M DIFFICULTY: 2 SECTION: 14.116. A competitive firm might choose to
18、 set its price below the market price, becausea. this would result in higher average revenue.b. this would result in higher profits.c. this would result in lower total costs.d. None of the above are correct.ANSWER: d. None of the above are correct. TYPE: M DIFFICULTY: 2 SECTION: 14.117. Of the follo
19、wing characteristics of competitive markets, which are necessary for firms to be price takers?(i) There are many sellers.(ii) Firms can freely enter or exit the market.(iii) Goods offered for sale are largely the same.a. (i) and (ii) onlyb. (i) and (iii) onlyc. (ii) onlyd. All are necessary.ANSWER:
20、b. (i) and (iii) onlyTYPE: M DIFFICULTY: 2 SECTION: 14.118. When a firm in a competitive market produces 10 units of output, it has a marginal revenue of $8.00. What would be the firms total revenue when it produces 6 units of output?a. $4.80b. $6.00c. $48.00d. $60.00ANSWER: c. $48.00TYPE: M DIFFICU
21、LTY: 2 SECTION: 14.1408 Chapter 14/Firms in Competitive Markets19. When a firm in a competitive market receives $500 in total revenue, it has a marginal revenue of $10. What is the average revenue, and how many units were sold?a. $5 and 100b. $10 and 50c. $10 and 100d. The answer cannot be determine
22、d from the information given.ANSWER: b. $10 and 50TYPE: M DIFFICULTY: 2 SECTION: 14.120. Starting from a situation in which a firm in a competitive market produces and sells 500 door knobs for a price of $10 per doorknob, which of the following events would decrease the firms average revenue?a. The
23、firm increases its output above 500 doorknobs.b. The firm decreases its output below 500 doorknobs.c. The market price of doorknobs rises above $10.d. The market price of doorknobs falls below $10.ANSWER: d. The market price of door knobs falls below $10.TYPE: M DIFFICULTY: 1 SECTION: 14.221. Whenev
24、er a perfectly competitive firm chooses to change its level of output, holding the price of the product constant, its marginal revenuea. increases if MR ATC.b. does not change.c. increases.d. decreases.ANSWER: b. does not change.TYPE: M DIFFICULTY: 1 SECTION: 14.122. If a firm in a competitive marke
25、t reduces its output by 20 percent, then as a result the price of its output is likely toa. increase.b. remain unchanged.c. decrease by less than 20 percent.d. decrease by more than 20 percent.ANSWER: b. remain unchanged.TYPE: M DIFFICULTY: 1 SECTION: 14.123. Changes in the output of a perfectly com
26、petitive firm, without any change in the price of the product, will change the firmsa. total revenue.b. marginal revenue.c. average revenue.d. All of the above are correct.ANSWER: a. total revenue.TYPE: M DIFFICULTY: 2 SECTION: 14.124. When a profit-maximizing firm in a competitive market has zero e
27、conomic profit, accounting profita. is negative (accounting losses).b. is positive.c. is also zero.d. could be positive, negative or zero.ANSWER: b. is positive.TYPE: M DIFFICULTY: 2 SECTION: 14.125. As a general rule, when accountants calculate profit they account for explicit costs but usually ign
28、orea. certain outlays of money by the firm.b. implicit costs.c. operating costs.d. fixed costs.ANSWER: b. implicit costs.TYPE: M DIFFICULTY: 1 SECTION: 14.1Chapter 14/Firms in Competitive Markets 40926. In calculating accounting profit, accountants typically dont includea. long-run costs.b. sunk cos
29、ts.c. explicit costs of production.d. opportunity costs that do not involve an outflow of money.ANSWER: d. opportunity costs that do not involve an outflow of money.TYPE: M DIFFICULTY: 1 SECTION: 14.1Use the following information to answer questions 27 through 29.As part of an estate settlement Mary
30、 received $1 million. She decided to use the money to purchase a small business in Anywhere, USA. If Mary would have invested the $1 million in a risk-free bond fund she could have made $100,000 each year. She also quit her job with Lucky.Com Inc. to devote all of her time to her new business; her s
31、alary at Lucky.Com Inc. was $75,000 per year.27. At the end of the first year of operating her new business, Marys accountant reported an accounting profit of $150,000. What was Marys economic profit?a. $25,000 lossb. $50,000 lossc. $25,000 profitd. $150,000 profitANSWER: a. $25,000 lossTYPE: M DIFF
32、ICULTY: 2 SECTION: 14.128. What are Marys opportunity costs of operating her new business?a. $25,000b. $75,000c. $100,000d. $175,000ANSWER: d. $175,000TYPE: M DIFFICULTY: 2 SECTION: 14.129. How large would Marys accounting profits need to be to allow her to attain zero economic profit?a. $100,000b.
33、$125,000c. $175,000d. $225,000ANSWER: c. $175,000TYPE: M DIFFICULTY: 2 SECTION: 14.130. The Wheeler Wheat Farm sells wheat to a grain broker in Seattle, Washington. Since the market for wheat is generally considered to be competitive, the Wheeler Farm does nota. choose the quantity of wheat to produ
34、ce.b. choose the price at which it sells its wheat.c. have any fixed costs of production.d. All of the above are correct.ANSWER: b. choose the price at which it sells its wheat.TYPE: M DIFFICULTY: 1 SECTION: 14.131. In a competitive market,a. no single buyer or seller can influence the price of the
35、product.b. there is a small number of sellers.c. the goods offered by the different sellers are markedly different.d. All of the above are correct.ANSWER: a. no single buyer or seller can influence the price of the product.TYPE: M DIFFICULTY: 1 SECTION: 14.1410 Chapter 14/Firms in Competitive Market
36、s32. In a competitive market,a. each seller can sell all he wants to sell at the going price.b. buyers and sellers are price takers.c. the goods offered by the different sellers are largely the same.d. All of the above are correct.ANSWER: d. All of the above are correct.TYPE: M DIFFICULTY: 1 SECTION
37、: 14.133. If ABC Company sells its product in a competitive market, thena. the price of that product depends on the quantity of the product that ABC Company produces and sells.b. ABC Companys total revenue is proportional to its quantity of output.c. ABC Companys total cost is proportional to its qu
38、antity of output.d. ABC Companys total revenue is equal to its average revenue.ANSWER: b. ABC Companys total revenue is proportional to its quantity of output.TYPE: M DIFFICULTY: 2 SECTION: 1.4134. Which of the following expressions is correct for a competitive firm?a. Profit = Total revenue Total c
39、ost.b. Marginal revenue = (Change in total revenue)/(Change in quantity of output).c. Average revenue = Total revenue/Quantity of output.d. All of the above are correct.ANSWER: d. All of the above are correct.TYPE: M DIFFICULTY: 2 SECTION: 14.135. For a competitive firm,a. Total revenue = Average re
40、venue.b. Total revenue = Marginal revenue.c. Total cost = Marginal revenue.d. Average revenue = Marginal revenue.ANSWER: d. Average revenue = Marginal revenue.TYPE: M DIFFICULTY: 1 SECTION: 14.136. For a competitive firm,a. average revenue equals the price of the good, but marginal revenue is differ
41、ent.b. marginal revenue equals the price of the good, but average revenue is different.c. average revenue equals marginal revenue, but the price of the good is different.d. average revenue, marginal revenue, and the price of the good are all equal to one another.ANSWER: d. average revenue, marginal
42、revenue, and the price of the good are all equal to one another.TYPE: M DIFFICULTY: 2 SECTION: 14.137. If a competitive firm is (i) selling 1,000 units of its product at a price of $9 per unit and (ii) earning a positive profit, thena. its total cost is less than $9,000.b. its marginal revenue is le
43、ss than $9.c. its average revenue is greater than $9.d. All of the above are correct.ANSWER: a. its total cost is less than $9,000.TYPE: M DIFFICULTY: 2 SECTION: 14.138. When a competitive firm triples the amount of output it sells,a. its total revenue triples.b. its average revenue triples.c. its m
44、arginal revenue triples.d. All of the above are correct.ANSWER: a. its total revenue triples.TYPE: M DIFFICULTY: 2 SECTION: 14.1Chapter 14/Firms in Competitive Markets 41139. Total profit for a firm is calculated bya. marginal revenue minus average cost.b. average revenue minus average cost.c. margi
45、nal revenue minus marginal cost.d. total revenue minus total cost.ANSWER: d. total revenue minus total cost.TYPE: M DIFFICULTY: 1 SECTION: 14.2Use the information for a competitive firm in the table below to answer questions 40 through 45.Quantity Total Revenue Total Cost0 $ 0 $ 101 9 142 18 193 27
46、254 36 325 45 406 54 497 63 598 72 709 81 8240. At a production level of 4 units which of the following is true?a. Marginal cost is $6.b. Total revenue is greater than variable cost.c. Marginal revenue is less than marginal cost.d. All of the above are correct.ANSWER: b. Total revenue is greater tha
47、n variable cost.TYPE: M DIFFICULTY: 2 SECTION: 14.241. At which quantity of output is marginal revenue equal to marginal cost?a. 3b. 6c. 8d. All of the above are correct.ANSWER: b. 6TYPE: M DIFFICULTY: 2 SECTION: 14.242. If this firm chooses to maximize profit it will choose a level of output where
48、marginal cost is equal toa. 6.b. 7.c. 8.d. 9.ANSWER: d. 9.TYPE: M DIFFICULTY: 2 SECTION: 14.243. The maximum profit available to this firm isa. $5.b. $4.c. $3.d. $2.ANSWER: a. $5.TYPE: M DIFFICULTY: 1 SECTION: 14.2412 Chapter 14/Firms in Competitive Markets44. If the firm finds that its marginal cos
49、t is $11, it shoulda. increase production to maximize profit.b. increase the price of the product to maximize profit.c. advertise to attract additional buyers to maximize profit.d. None of the above are correct.ANSWER: d. None of the above are correct.TYPE: M DIFFICULTY: 2 SECTION: 14.245. If the firm finds that its marginal cost is $5, it shoulda. reduce fixed costs by lowering production.b. increase production to maximize profit.c. decrease production to maximize profit.d. maintain its current level of production to maximize profit.ANSWER: b. increase production
