Question : 15.2   Output, Price, and Profit in the Short Run 1) The : 1241197

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.