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Business Economics Course Instructor: Ms.

Shamyla Chaudry
PMBA -1 Name: ________________________
QUIZ 5 (A) Sec:__________________

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that is. At the A) both a "price maker" and a "price taker. C) clothing B) will also be $5. D) a "price maker. D) E units at price B. C) 0BGE. the elasticity realize: coefficient is greater than unity. profit or minimize losses this firm will B) In long-run equilibrium it will earn an produce: economic profit. the firm will A) relatively elastic. In which of the following industry structures is the entry of new firms the most difficult? A) pure monopoly B) oligopoly C) monopolistic competition D) pure competition Q4. C) Its product will have a brand name. At the Q6. total variable cost D) a larger number of sellers is equal to: Q7. B) 0BGE. Refer to the above diagram. closely approximates pure competition? its marginal A) agriculture revenue: B) farm implements A) may be either greater or less than $5. total revenue will B) neither a "price maker" nor a "price taker. competition to describe: A) all industries which produce standardized Use the following to answer questions 9-13 products. C) relatively inelastic. Q2. B) a standardized product Q12. its competitors. B) any industry in which there is no nonprice competition. Q5. A) K units at price C. D) Its product is slightly different from those of C) E units at price A. A purely competitive seller is: Q10. that is. Refer to the above diagram. D) an economic profit of ABGH. confronted by the individual purely Q13. B) perfectly elastic. . Which of the following is not profit-maximizing output. C) 0CFE. A) a loss equal to BCFG." Q11. D) ABGH. B) D units at price J. D) those markets which are not purely competitive." profit-maximizing output. D) ABGE. Q8. the elasticity C) an economic profit of ACFH. coefficient is less than unity. C) a pure monopoly only. Which of the following statements applies to a purely competitive producer? Q9. At the competitive firm is: profit-maximizing output." A) 0AHE. B) a loss equal to ACFH. The demand schedule or curve A) 0AHE." be: C) a "price taker. At the C) no barriers to entry profit-maximizing output. D) steel C) will be less than $5. B) 0CFE. D) BCFG. Which of the following industries most is confronted with an equilibrium price of $5. D) perfectly inelastic. To maximize A) It will not advertise its product. Economists use the term imperfect D) will be greater than $5. C) 0CFE. Refer to the above diagram. B) 0BGE. Refer to the above diagram. If a firm in a purely competitive industry Q1. Q3. Refer to the above diagram. total fixed cost is characteristic of pure competition? equal to: A) price strategies by firms A) 0AHE.

At P3. Q16. Refer to the above diagram. A) new firms will enter this industry. Q15. its TC = $1000. In the short run a purely competitive C) produce 66 units and earn only a normal firm will always make an economic profit if: profit. A) P = ATC. price: D) shut down in the short run. Refer to the above diagram. B) produce 44 units and earn only a normal D) liquidate its assets and go out of business. B) maximize your profits by producing where P Use the following to answer questions 16-19 = MC. Q21. should: C) the firm should shut down in the short run. At P2. a purely competitive seller in the short run? C) 66 units and earn only a normal profit. Suppose you find that the price of your B) the firm should produce the MC = MR output product is less than minimum AVC. D) D) shut down in the short run. You and realize an economic profit. profit. this Q24. A) minimize your losses by producing where P D) the firm should expand its plant = MC. Q20. At P1. Q22. TVC = $800. The short-run supply curve of a purely competitive producer is based on its: A) AVC curve. B) P > AVC. profit. A) Price must be at least equal to average total D) 24 units and earn only a normal profit. profit. between price and costs for B) 47 units and realize an economic profit. C) AFC curve. A firm finds that at its MR = MC output. Q17. TFC = $200. D) close down because total revenue exceeds total variable cost. cost. AVC exceeds C) produce 40 units and incur a loss. this B) Price times quantity produced must be equal firm will: to or greater than total variable cost for some A) shut down in the short run. . this B) produce because the resulting loss is less than firm will: its TFC. C) price exceeds marginal revenue. profit. C) P = MC. output or the firm will close down in the short C) produce 30 units and earn only a normal run. and total revenue is $900. by producing.Q14. If a purely competitive firm is D) produce 10 units and earn only a normal producing at some level less than the profit. A) produce 44 units and realize an economic C) produce because it will realize an economic profit. A) produce 14 units and realize an economic B) fixed costs are large relative to variable costs. profit. B) produce 62 units and earn only a normal D) marginal revenue exceeds marginal cost. This firm should: A) shut down in the short run. At P4. P > ATC. C) close down because. profit. this A) price is necessarily greater than average total firm will: cost. If at the MC = MR output. B) ATC curve. your losses will exceed your total fixed costs. level of B) produce 30 units and incur a loss. Refer to the above diagram. then: Q19. Which of the following is not a valid firm will produce: generalization concerning the relationship A) 47 units and break even. Q18. D) MC curve. maximizing output. Refer to the above diagram. Q23.

Assume the XYZ Corporation is producing 20 units of output. D) total revenue and total cost are equal. C) P = minimum AVC. or less D) total revenue is equal to TFC. Allocative efficiency is achieved when the production of a good occurs where: A) P = minimum ATC. C) is realizing a loss of $60. Q29. profits encourage firms to leave. D) Normal profits will cause an industry to expand. This corporation: A) should close down in the short run. B) Economic profits induce firms to leave an industry. D) results in zero economic profits. C) Economic profits and losses have no significant impact on the growth or decline of an industry. B) is maximizing its profits. D) earning accounting profits. Q27. B) will never change once it is realized.C) Price may be equal to. Q30. . D) is realizing an economic profit of $40. Q25. It is selling this output in a purely competitive market at $10 per unit. We would expect an industry to expand if firms in that industry are: A) earning normal profits. C) is not economically efficient. greater than. Q28. D) Price must be equal to or greater than minimum average variable cost for the firm to continue producing. losses encourage firms to leave. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. Which of the following statements is correct? A) Economic profits induce firms to enter an industry. B) marginal cost intersects the average variable cost curve. than average total cost. B) P = MC. Long-run competitive equilibrium: A) is realized only in constant-cost industries. C) incurring economic losses. C) total revenue equals total variable cost. Q26. B) earning economic profits. A firm reaches a break-even point (normal profit position) where: A) marginal revenue cuts the horizontal axis.

A B C D 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 . Shamyla Chaudry Name: ________________________ Sec:__________________ Q. Business Economics PMBA -1 QUIZ 5 (B) Course Instructor: Ms.

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but not short-run equilibrium. Resources are efficiently allocated when C) MC equals minimum ATC production occurs where: D) P equals MC A) marginal cost equals average variable cost. Which of the following will not hold true for a C) $4 and $20. Which of the following is true concerning purely competitive industries? A) There will be economic losses in the long run because of cut-throat competition. firms may incur economic losses or earn economic profits. A purely competitive firm: Q12. A) is realized only in constant-cost industries. C) is not economically efficient. then: C) of unimpeded entry to the industry.000 units of output D) no change in the number of firms in this industry. respectively. In the long run we in this purely competitive market is: should expect: A) $5. and produce: product price to fall. respectively. market supply to rise.000. B) The diagrams portray both long-run and short-run equilibrium. Refer to the above table. A) firms to enter the industry. Q6. firms in this industry. marginal revenue and total B) cannot earn economic profit in the long run. profit. B) $4. C) firms to leave the industry. C) price is equal to marginal cost. Refer to the above diagrams. Q5. and B) 60. making economic profit in the long run because: Q8. B) new firms will enter this market. B) P equals minimum ATC Q1. C) The diagrams portray short-run equilibrium. market supply to fall. product price to rise. Refer to the above diagrams. respectively. and Q11. A) the selling price for this firm is above the market D) it produces a differentiated product. Q7." MR = MC output level and earning an economic B) its demand curve is perfectly elastic. A) P equals AFC . A) 600. For each of the 100 A) must earn a normal profit in the short run. At the equilibrium product price to fall. D) 600 units of output. price. D) $2. B) Economic profits will persist in the long run if consumer demand is strong and stable. which pertain to a earn normal profits. Which of the following the short run. D) price is equal to average variable cost. The equilibrium price industry in which it operates. Refer to the above table. competitive firm in long-run equilibrium? D) $3 and $18. but not in industry in which it operates. revenue will C) may realize either economic profit or losses in the be: long run. market supply to rise. purely competitive firm producing output q and the D) There are economic profits in the long run. Q4. A) $4 and $400.000 units of output.000. Q9. C) $3. but in the long run they Q3. If a purely competitive firm is producing at the A) it is a "price taker. Refer to the above table. each of the 100 firms in this industry will B) firms to leave the industry. B) will never change once it is realized. but not long-run equilibrium. which pertain to a purely competitive firm producing output q and the Q10. C) In the short run.000 units of output. Long-run competitive equilibrium: B) price is equal to average revenue. D) cannot earn economic profit in the short run. Q2. B) $3 and $30. respectively. is correct? Use the following to answer questions 10-15 A) The diagrams portray neither long-run nor short-run The following table applies to a purely competitive equilibrium. C) 6.000. D) there must be price fixing by the industry's firms. Use the following to answer questions 3-4 C) some existing firms in this market will leave. D) The diagrams portray long-run equilibrium. A purely competitive firm is precluded from D) results in zero economic profits. industry composed of 100 identical firms. equilibrium price.

D) monopolistic market. The total cost of D) D) cannot be determined from the information the flight would be $1100 of which fixed costs are given. If a firm is confronted with economic losses in shuts down in the short run: the short run. Q27. D) is efbc. If each of the 100 firms in the industry is maximizing its profit. The short-run shut-down point for a purely supply curve for this firm is the: competitive firm occurs: A) entire MC curve. This firm is selling Q18. The loss of a purely competitive firm which Q19. B) fg. it will decide whether or not to A) is equal to its total variable costs. Refer to the above diagram. B) $4. at D) total revenue and total fixed cost. $800. revenue. The profit- normal profit. flight from Red Cloud to David City. If each of the 100 firms in the industry is maximizing its profit and earning only a Q20. . B) between the two break-even points. The short-run Q17.000. B) $20. each must have an average total cost maximizing output: of: A) is n. D) the minimum point on its MC curve. D) $24. each must have a total cost of: A) $18. D) $2. If each of the 100 firms in the industry is maximizing its profit and earning only a normal profit.Q13. C) segment of the MC curve lying above the ATC curve. Refer to the above table. B) price and minimum average variable cost. A) $2. At the profit- B) not add this flight because it is not profitable at the maximizing output. Refer to the above diagram. Q14. comparing: C) is equal to its total fixed costs. Expected revenues from the flight are $600. B) B) is k. D) cannot be determined. B) $3.000. The lowest point on a purely competitive firm's its product in a(n): short-run supply curve corresponds to: A) purely competitive market. C) $22. D) $5. A) not add this flight because only flights which cover their full costs are profitable. Refer to the above diagram. C) egac. For any level of marginal costs. B) the minimum point on its AVC curve. C) monopsonistic market. C) ATC is being minimized. each must have a marginal cost of: A) $5. average variable cost is: should: A) ef. A) at any point where price is less than the minimum B) segment of the AVC curve lying to the right of the AVC. If a purely competitive firm is producing at the C) total revenue and total cost. C) is ba. C) $4. DASH Airlines is considering the addition of a C) C) is h. At the profit- DASH maximizing output. C) at any point where total revenue is less than total cost. produce by B) is zero. Refer to the above table. B) is 0gan. Refer to the above diagram. MC curve. C) add this flight because marginal revenue exceeds Q23. C) na. total profit is: margin. Refer to the above table.000. output. Refer to the above diagram. Q16. B) imperfectly competitive market.000. C) $3. D) ac. Refer to the above diagram. A) marginal revenue and marginal cost. total fixed cost: D) not add this flight because total costs exceed total A) is fgab. Q15. Q25. Q21. P = MC output and realizing an economic profit. A) efbc. that Use the following to answer questions 20-25 output: A) marginal revenue is less than price. C) the minimum point on its AFC curve. A) the minimum point on its ATC curve. Q22. D) 0fbn. D) segment of the MC curve lying above the AVC D) at any point where the firm is not making an curve. Q26. economic profit. B) marginal revenue exceeds ATC. Q24. B) fgab.

D) MC curve. If at the MC = MR output. A firm reaches a break-even point (normal profit position) where: A) marginal revenue cuts the horizontal axis. Q30. . The short-run supply curve of a purely competitive producer is based on its: A) AVC curve. B) the firm should produce the MC = MR output and realize an economic profit.D) total revenue equals total cost. C) the firm should shut down in the short run. B) marginal cost intersects the average variable cost curve. C) total revenue equals total variable cost. C) AFC curve. Q29. D) the firm should expand its plant. AVC exceeds price: A) new firms will enter this industry. Q28. D) total revenue and total cost are equal. B) ATC curve.