Question : 31) To maximize its profit, in the short run a : 1226196

31) To maximize its profit, in the short run a perfectly competitive firm decides

A) what price to charge for its product.

B) what quantity of output to produce.

C) whether to exit the market.

D) whether to increase the size of its plant.

E) how much advertising it should undertake.

32) A perfectly competitive firm can

A) sell all of its output at the prevailing market price.

B) set a higher price to customers who are willing to pay more.

C) raise its price in order to increase its total revenue.

D) sell additional output only by lowering its price.

E) usually not sell all the output it produces, but still “over-produces” because there are some periods when it can sell the extra output at very profitable prices.

33) In a perfectly competitive market, one farmer’s barley is

A) completely different from another farmer’s barley.

B) a perfect substitute for another farmer’s barley.

C) a monopolized product in that farmer’s local market.

D) a monopolized product in the national market.

E) slightly different from another farmer’s barley.

34) A firm in perfect competition is a price taker because

A) there are no good substitutes for its good.

B) many other firms produce identical products.

C) it is very large.

D) its demand curves are downward sloping.

E) it’s demand curve is vertical at the profit-maximizing quantity.

35) The price charged by a perfectly competitive firm is

A) the same as the market price.

B) different than the price charged by competing firms.

C) lower the more the firm produces.

D) higher the more the firm produces.

E) indeterminate.

36) For a perfectly competitive firm, the price of its good is equal to the firm’s marginal revenue because

A) information about price changes is hard to come by for small sellers.

B) price and marginal revenue are the same economic concepts.

C) individual perfectly competitive firms cannot influence the market price by changing their output.

D) the firm’s total revenue cannot be changed by anything the firms can do.

E) there are only a small number of firms in the market.

37) A large number of sellers all selling an identical product implies which of the following?

A) market chaos

B) the inability of any seller to change the price of the product

C) large losses incurred by all sellers

D) horizontal market supply curves

E) vertical market supply curves

38) A firm that is a price taker faces

A) an elastic supply curve.

B) an inelastic supply curve.

C) a perfectly elastic demand curve.

D) a perfectly inelastic demand curve.

E) an elastic but not perfectly elastic demand curve.

39) We know that a perfectly competitive firm is a price taker because

A) its MC curve slopes upward.

B) its ATC curve is U-shaped.

C) its demand curve is horizontal.

D) MC and ATC are equal at the profit-maximizing amount of output.

E) it has no supply curve.

40) Suppose Pat’s Paints is a perfectly competitive firm. If Pat’s Paints’ marginal revenue equals $5 per can, and Pat decides to sell 100 cans of paint, Pat’s total revenue equals

A) $5.

B) $100.

C) $500.

D) $20.

E) Information on the price of a can of paint is needed to answer the question.