1. The "quantity demanded" is
a. a contradiction to the law of demand.
b. an amount per unit of time at a particular price that buyers are willing and able to buy.
c. what buyers will buy at every possible price.
d. what buyers will purchase at the price they prefer to pay.
e. the amount buyers will purchase at the highest price they are willing to pay.
2.People come to expect that the price of a gallon of gasoline will rise next week. As a result,
a.today's supply of gasoline increases.
b.the price of a gallon of gasoline falls today.
c. today's demand for gasoline and today's supply of gasoline do not change.
d. next week's supply of gasoline decreases.
e. today's demand for gasoline increases.
3. For a perfectly competitive corn grower in Nebraska, the marginal revenue curve is
a. U-shaped.
b. downward sloping.c.
c. vertical at the profit maximizing quantity of production.
d. the same as its demand curve.
e. upward sloping.
4. The cranberry market is perfectly competitive. Reports that consuming cranberries can lead to improved health result in a permanent increase in the demand for cranberries and an immediate upward jump in the price of cranberries. As time passes, the price of cranberries ________ and the initial firms' economic ________.
a. rises still higher; loss will be eliminated
b. falls; profit will not change
c. falls; loss will be increased
d. rises still higher; profit will not change
e. falls; profit will be eliminated
4. Under what conditions would a perfectly competitive cotton farmer who is incurring an economic loss temporarily stay in business?
a. if the total revenue exceeds the total fixed cost
b. if the total revenue exceeds the total variable cost
c. if the marginal revenue exceeds the price.
d. if the total revenue is increasing
e. if the total revenue is positive
5. If firms in a perfectly competitive industry are earning an economic profit, then in the ________ firms will ________ the industry.
a. long run; enter
b. long run; exit
c. short run; exit
d. short run; enter
e. More information about the firms' costs and the price of the product is needed to determine if firms enter or exit the industry.
6. A perfectly competitive firm's short-run supply curve is
a. horizontal at the market price.
b. its marginal cost curve above the AVC curve.
c. its total cost curve above the AVC.
d. its marginal revenue curve below the ATC curve.
e. its marginal cost curve below the marginal revenue curve.
7. Jennifer's Bakery Shop produces baked goods in a perfectly competitive market. If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120. She can sell this batch of cookies at a market price of $110. To maximize her profit, Jennifer should
a. not produce this additional batch.
b. charge $120 for this batch.
c. produce this batch of cookies because their MR exceeds their MC.
d. produce this batch of cookies because they will help lower her average fixed cost.
e. shut down.