Other
Econ 2100 Chapter 14 Practice Questions
- Course
- ECON 2100
- Institution
- Kennesaw State University
This is a comprehensive and detailed practice material that contains multiple choice questions and correct answers. *Essential!!
[Show more]
Content preview
Chapter 14 Practice QuestionsMultiple Choice
1. A seller in a competitive market
a. can sell all he wants at the going price, so he has little reason to charge less.
b. will lose all his customers to other sellers if he raises his price.
c. considers the market price to be a “take it or leave it” price.
d. All of the above are correct.
ANS: D
2. Which of the following statements regarding a competitive firm is correct?
a. Because demand is downward sloping, if a firm increases its level of output, the firm will
have to charge a lower price to sell the additional output.
b. If a firm raises its price, the firm may be able to increase its total revenue even though it will
sell fewer units.
c. By lowering its price below the market price, the firm will benefit from selling more units at
the lower price than it could have sold by charging the market price.
d. For all firms, average revenue equals the price of the good.
ANS: D
3. For a competitive firm,
a. total revenue equals average revenue.
b. total revenue equals marginal revenue.
c. total cost equals marginal revenue.
d. average revenue equals marginal revenue. ANS: D
4. If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal
revenue, then
a. average revenue exceeds marginal cost.
b. the firm is earning a positive profit.
c. decreasing output would increase the firm's profit.
d. All of the above are correct.
, ANS: C
5. Max sells maps. The map industry is competitive. Max hires a business consultant to analyze his
company’s financial records. The consultant recommends that Max increase his production. The
consultant must have concluded that Max’s
a. total revenues exceed his total accounting costs.
b. marginal revenue exceeds his total cost.
c. marginal revenue exceeds his marginal cost.
d. marginal cost exceeds his marginal revenue.
ANS: C
6. Profit-maximizing firms in a competitive market produce an output level where
a. marginal cost equals marginal revenue.
b. marginal cost equals average total cost.
c. marginal revenue is increasing.
d. price is less than marginal revenue.
ANS: A
7. Mrs. Smith operates a business in a competitive market. The current market price is $8.50. At her
profitmaximizing level of production, the average variable cost is $8.00, and the average total cost is
$8.25. Mrs.
Smith should
a. shut down her business in the short run but continue to operate in the long run.
b. continue to operate in the short run but shut down in the long run.
c. continue to operate in both the short run and long run.
d. shut down in both the short run and long run.
ANS: C
8. Winona's Fudge Shoppe is maximizing profits by producing 1,000 pounds of fudge per day. If Winona's
fixed costs unexpectedly increase and the market price remains constant, then the short run profit-
maximizing level of output
a. is less than 1,000 pounds.
b. is still 1,000 pounds.
c. is more than 1,000 pounds.
d. becomes zero.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller anyiamgeorge19. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
78252 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now