Question : 15.2 Output, Price, and Profit in the Short Run 1) The : 1238762

15.2 Output, Price, and Profit in the Short Run

1) The market supply in the short run for the perfectly competitive industry is

A) the same as each producer’s supply.

B) the sum of the supply schedules of all firms.

C) divided up according to each firm’s selling price.

D) set at the maximum price a buyer will pay for one unit.

E) equal to the average of each firm’s supply schedule.

2) If there are 1,000 identical rice farmers who are each willing to supply 200 bushels of rice at $2 per bushel, what price and quantity combination is a point on the market supply curve for rice?

A) $2 and 200 bushels

B) $2 and 200,000 bushels

C) $2,000 and 200,000 bushels

D) $2,000 and 1,000 bushels

E) $2 and 1,000 farmers

3) In the short run, a perfectly competitive firm ________ make an economic profit and ________ incur an economic loss.

A) might; will never

B) will never; might

C) might; might

D) will never; will never

E) will definitely; will never

4) In the short run, a perfectly competitive firm

A) can make only zero economic profit.

B) can possibly make an economic profit or possibly incur an economic loss.

C) produces the level of output that sets the average total cost equal to the market price.

D) can vary all its inputs.

E) can change only its fixed inputs.

5) In the short run, a perfectly competitive firm can experience which of the following?

i.an economic profit

ii.an economic loss but it continues to stay open

iii.an economic loss equal to its total fixed cost when it shuts down

A) only i

B) i and ii

C) i and iii

D) ii and iii

E) i, ii, and iii

6) If a perfectly competitive seller is maximizing profit and is making zero economic profit, which of the following will this seller do?

A) go to work in the next-best earning opportunity

B) shut down, with a loss equal to total fixed cost

C) continue at the current output, making zero economic profit

D) increase production in order to make an economic profit

E) remain open but decrease production in order to make an economic profit

7) If a perfectly competitive firm finds that the price exceeds its ATC, then the firm

A) will raise its price to increase its economic profit.

B) will lower its price to increase its economic profit.

C) is making an economic profit.

D) is incurring an economic loss.

E) is making zero economic profit.

8) For a perfectly competitive sugar producer in Haiti, a short-run economic profit will occur if the price of each ton of sugar sold is

A) greater than the average total cost of producing sugar.

B) equal to the average total cost of producing sugar.

C) less than the average total cost of producing sugar.

D) rising as more sugar is sold.

E) greater than the marginal revenue of each ton of sugar.

9) 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.

B) incur an accounting loss.

C) have an incentive to shut down.

D) make an economic profit.

E) make zero economic profit.

10) If a perfectly competitive firm’s average total cost is less than the price, then the firm

A) incurs an economic loss.

B) makes an economic profit.

C) makes zero economic profit.

D) makes either zero economic profit or an economic profit depending on whether the marginal revenue is equal to or greater than the price.

E) None of the above answers is correct because the relationship between the price and average total cost has nothing to do with the firm’s profit.

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July 1, 2023

61.When there is a shortage in a market, prices are likely to:

A. Fall because buyers do not wish to buy as much as sellers want to sell.

B. Rise because some buyers will offer to pay a higher price.

C. Fall because sellers are likely to reduce their production if prices rise.

D. Rise because the government will put a price ceiling in place.

62.If a market shortage exists:

A. The invisible hand will work to reduce the price.

B. The only solution is for the government to raise the price.

C. Producers will compete for customers by reducing prices.

D. Consumers will compete for the product by offering to pay more.

63.A market surplus occurs when:

A. People cannot buy the amount of goods and services that they are willing and able to buy.

B. The price is less than the equilibrium price.

C. The quantity supplied exceeds the quantity demanded at a given price.

D. There is a price ceiling.

64.When there is a surplus in a market, prices are likely to fall because:

A. Buyers do not wish to buy as much as sellers want to sell.

B. Some buyers will offer to pay a higher price, initiating a move up the supply curve.

C. Sellers are likely to increase their production.

D. Buyers will wait for the government to establish a price floor.

65.If a market surplus exists:

A. The only resolution is for the government to set the price.

B. Consumers will compete for the product buy offering to pay more.

C. Producers will compete for customers by reducing prices.

D. The equilibrium price is equal to the price ceiling.

66.If demand is constant, a decrease in the supply of gasoline will cause the equilibrium price:

A. To rise and quantity to fall.

B. And quantity both to rise.

C. To fall and quantity to rise.

D. And quantity both to fall.

67.If demand is constant, a leftward shift in the supply curve will result in:

A. A decrease in equilibrium quantity and a lower equilibrium price.

B. An increase in equilibrium quantity and a lower equilibrium price.

C. A decrease in equilibrium quantity and a higher equilibrium price.

D. An increase in equilibrium quantity and a higher equilibrium price.

68.The price of chocolate candy bars rises. This could be due to:

A. A decrease in the wage rate paid to workers in the candy bar factories.

B. A decrease in the cost of chocolate, which is used to produce candy bars.

C. A subsidy by the federal government for the producers of chocolate candy bars.

D. A decrease in the number of chocolate candy bar producers.

69.If demand is unchanged, a rightward shift in the supply curve for plasma TVs will cause:

A. A decrease in equilibrium quantity and a higher equilibrium price.

B. An increase in equilibrium quantity and a higher equilibrium price.

C. An increase in equilibrium quantity and a lower equilibrium price.

D. A decrease in equilibrium quantity and a lower equilibrium price.

70.Which of the following would cause a decrease in the price of automobiles?

A. A technological advance in automobile manufacturing.

B. An increase in the wages paid to automobile assembly line workers.

C. A decrease in the cost of gasoline.

D. An increase in the number of buyers.