Question : 31) In a perfectly competitive industry, in the long-run equilibrium : 1245276

31) In a perfectly competitive industry, in the long-run equilibrium

A) the typical firm is producing at the output where its long-run average total cost is not minimized.

B) the typical firm is earning an accounting profit greater than its implicit costs.

C) the typical firm earns zero profit.

D) the typical firm is maximizing its revenue.

32) A constant cost, perfectly competitive market is in long-run equilibrium. At present, there are 1,000 firms each producing 400 units of output. The price of the good is $60. Now suppose there is a sudden increase in demand for the industry’s product which causes the price of the good to rise to $64. In the new long-run equilibrium, how will the average total cost of producing the good compare to what it was before the price of the good rose?

A) The average total cost will be higher than it was before the price increase since the increase in demand will drive up input prices.

B) The average total cost will be lower than it was before the price increase because of economies of scale.

C) The average total cost will be higher than it was before the price increase because of diseconomies of scale arising from the increased demand.

D) The average total cost will be the same as it was before the price increase.

33) A constant-cost industry is an industry in which

A) average costs fall as the industry expands output.

B) average costs rise as the industry expands output.

C) average costs remain constant as the industry expands output.

D) input prices rise at a constant rate as firms in the industry use more inputs.

34) The long-run supply curve for a perfectly competitive, constant-cost industry

A) is upward-sloping.

B) is horizontal.

C) is downward-sloping.

D) is found by adding up the marginal cost curves for all firms in the industry.

35) A perfectly competitive firm in a constant-cost industry produces 3,000 units of a good at a total cost of $36,000. The prevailing market price is $15. What will happen to the number of firms in the industry and to the industry’s output in the long run?

A) The number of firms and the industry’s output increase.

B) The number of firms and the industry’s output decrease.

C) The number of firms remains constant and the industry’s output increases.

D) The number of firms remains constant and the industry’s output decreases.

36) A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000. The prevailing market price is $48. Assuming that this firm continues to produce in the long run, what happens to output level in the long run?

A) The firm’s output falls.

B) The firm’s output increases.

C) The firm produces the same output level.

D) There is insufficient information to answer the question.

37) If, as a perfectly competitive industry expands, it can supply larger quantities only at a higher long-run equilibrium price, it is

A) a constant-cost industry.

B) an increasing-cost industry.

C) a decreasing-cost industry.

D) a fixed-cost industry.

38) If, as a perfectly competitive industry expands, it can supply larger quantities at the same long-run market price, it is

A) a constant-cost industry.

B) an increasing-cost industry.

C) a decreasing-cost industry.

D) a fixed-cost industry.

39) Ethan Nicholas, who developed the iShoot application for the iPhone 3G, found that to maintain sales in a profitable competitive market, the price of a product

A) will usually rise.

B) will usually fall.

C) will usually remain stable.

D) will eventually fall to zero.

40) What characteristic of a competitive market has made the “long run pretty short” in the market for iPhone applications?

A) few firms in the market

B) identical products

C) ease of entry

D) blocked entry

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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.