Chapter 14
Firms in Competitive Markets TRUE/FALSE
1. For a firm operating in a perfectly competitive industry, total revenue, marginal revenue, and average revenue are all equal. ANS: F
DIF: 2
REF: 14-1 NAT: Analytic
TOP: Average revenue | Marginal rev-LOC: Perfect competition enue
MSC: Interpretive
2. For a firm operating in a perfectly competitive industry, marginal reve-nue and average revenue are equal. ANS: T
DIF: 2
REF: 14-1 NAT: Analytic
TOP: Average revenue | Marginal rev-LOC: Perfect competition enue
MSC: Interpretive
3. If a firm notices that its average revenue equals the current market price, that firm must be participating in a competitive market. ANS: F
DIF: 2
REF: 14-1 NAT: Analytic
TOP: Average revenue
LOC: Perfect competition MSC: Interpretive
4. A profit-maximizing firm in a competitive market will increase produc-tion when average revenue exceeds marginal cost. ANS: T DIF: 2 REF: 14-1 NAT: Analytic LOC: Perfect competition MSC: Interpretive
5. Because there are many buyers and sellers in a perfectly competitive market, no one seller can influence the market price. ANS: T
DIF: 1
REF: 14-1 NAT: Analytic
TOP: Competitive markets
LOC: Perfect competition MSC: Definitional
6. Firms operating in perfectly competitive markets try to maximize prof-its.
ANS: T DIF: 2 REF: 14-1 NAT: Analytic LOC: Perfect competition
TOP: Profit maximization
929
TOP: Average revenue
MSC: Applicative
7. In competitive markets, firms that raise their prices are typically re-warded with larger profits. ANS: F
DIF: 2
REF: 14-1 NAT: Analytic
TOP: Competitive markets
LOC: Perfect competition MSC: Interpretive
8. When an individual firm in a competitive market increases its produc-tion, it is likely that the market price will fall. ANS: F DIF: 2 REF: 14-1 NAT: Analytic LOC: Perfect competition MSC: Interpretive
9. In a competitive market, firms are unable to differentiate their product from that of other producers. ANS: T
DIF: 1
REF: 14-1 NAT: Analytic
TOP: Competitive markets
LOC: Perfect competition MSC: Interpretive
10. Firms in a competitive market are said to be price takers because there are many sellers in the market and the goods offered by the firms are very similar if not identical.
ANS: T DIF: 2 REF: 14-1 NAT: Analytic LOC: Perfect competition TOP: Competitive markets MSC: Interpretive
11. A firm's incentive to compare marginal revenue and marginal cost is an application of the principle that rational people think at the margin. ANS: T
DIF: 1
REF: 14-2 NAT: Analytic
TOP: Profit maximization
LOC: Perfect competition MSC: Interpretive
12. By comparing the marginal revenue and marginal cost from each unit produced, a firm in a competitive market can determine the profit-maximizing level of production. ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Profit maximization
LOC: Perfect competition MSC: Interpretive
TOP: Competitive markets
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Chapter 14/Firms in Competitive Markets ? 931
13. Firms operating in perfectly competitive markets produce an output level where marginal revenue equals marginal cost. ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Marginal revenue
LOC: Perfect competition MSC: Applicative
14. A firm is currently producing 100 units of output per day. The man-ager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $4.75. The firm should continue to pro-duce 100 units in order to maximize its profits (or minimize its losses). ANS: F
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Profit maximization
LOC: Perfect competition MSC: Analytical
15. A firm is currently producing 100 units of output per day. The man-ager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $5. The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses). ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Profit maximization
LOC: Perfect competition MSC: Analytical
16. A firm is currently producing 100 units of output per day. The man-ager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the unit for $6. The firm should produce more than 100 units in order to maximize its profits (or minimize its losses). ANS: T DIF: 2 REF: 14-2 NAT: Analytic LOC: Perfect competition TOP: Profit maximization MSC: Analytical
17. A dairy farmer must be able to calculate sunk costs in order to deter-mine how much revenue the farm receives for the typical gallon of milk. ANS: F
DIF: 1
REF: 14-2 NAT: Analytic
TOP: Sunk costs MSC: Interpretive
LOC: Perfect competition
18. Because nothing can be done about sunk costs, they are irrelevant to decisions about business strategy. ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Sunk costs MSC: Interpretive
LOC: Perfect competition
19. A miniature golf course is a good example of where fixed costs be-come relevant to the decision of when to open and when to close for the season. ANS: F
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Sunk costs MSC: Interpretive
LOC: Perfect competition
20. A popular resort restaurant will maximize profits if it chooses to stay
open during the less-crowded “off season” when its total revenues exceed its variable costs. ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Sunk costs MSC: Interpretive
LOC: Perfect competition
21. All firms maximize profits by producing an output level where marginal
revenue equals marginal cost; for firms operating in perfectly competitive in-dustries, maximizing profits also means producing an output level where price equals marginal cost. ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Profit maximization
LOC: Perfect competition MSC: Interpretive
22. A firm operating in a perfectly competitive industry will continue to op-erate in the short run but earn losses if the market price is less than that firm’s average total cost but greater than the firm’s average variable cost. ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Supply curve
LOC: Perfect competition MSC: Interpretive
23. A firm operating in a perfectly competitive industry will continue to op-erate in the short run but earn losses if the market price is less than that firm’s average variable cost. ANS: F DIF: 2 REF: 14-2 NAT: Analytic LOC: Perfect competition MSC: Interpretive
24. A firm operating in a perfectly competitive industry will shut down in the short run but earn losses if the market price is less than that firm’s aver-age variable cost. ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Supply curve
LOC: Perfect competition MSC: Interpretive
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TOP: Supply curve
Chapter 14/Firms in Competitive Markets ? 933
25. In the short run, a firm should exit the industry if its marginal cost ex-ceeds its marginal revenue. ANS: F
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Supply curve
LOC: Perfect competition MSC: Interpretive
26. In making a short-run profit-maximizing production decision, the firm must consider both fixed and variable cost.
ANS: F DIF: 2 REF: 14-2 NAT: Analytic LOC: Perfect competition TOP: Profit maximization MSC: Interpretive
27. A firm will shut down in the short run if revenue is not sufficient to cov-er its variable costs of production. ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Shut down MSC: Interpretive
LOC: Perfect competition
28. Suppose a firm is considering producing zero units of output. We call this shutting down in the short run and exiting an industry in the long run. ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Shut down MSC: Interpretive
LOC: Perfect competition
29. Suppose a firm is considering producing zero units of output. We call
this exiting an industry in the short run and shutting down in the long run. ANS: F DIF: 2 REF: 14-2 NAT: Analytic LOC: Perfect competition
TOP: Shut down MSC: Interpretive
30. A firm will shut down in the short run if revenue is not sufficient to cov-er all of its fixed costs of production. ANS: F
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Shut down MSC: Interpretive
LOC: Perfect competition
31. The supply curve of a firm in a competitive market is the average va-riable cost curve above the minimum of marginal cost. ANS: F
DIF: 2
REF: 14-2 NAT: Analytic
TOP: Supply curve
LOC: Perfect competition MSC: Interpretive
32. When a profit-maximizing firm in a competitive market experiences rising prices, it will respond with an increase in production. ANS: T
DIF: 2
REF: 14-2 NAT: Analytic
曼昆《经济学原理》(微观)第五版测试题库 (14) (1)
