曼昆经济学题库chapter13

Chapter13FirmsinCompetitiveMarketsMultipleChoice1.  Amarketiscompetitiveif(i)  firmshavetheflexibilitytopricetheirownproduct.(ii)  eachbuyerissmallcomparedtothemarket.(iii)  eachsellerissmallcomparedtothemarket.a.  (i)and(ii)onlyb.  (i)and(iii)onlyc.  (ii)and(iii)onlyd.  Alloftheabovearecorrect.ANSWER:c.  (ii)and(iii)onlyTYPE:MDIFFICULTY:2SECTION:14.12.  Whenafirmhaslittleabilitytoinfluencemarketpricesitissaidtobeinwhatkindofamarket?a.  acompetitivemarketb.  astrategicmarketc.  athinmarketd.  apowermarketANSWER:a.  acompetitivemarketTYPE:MDIFFICULTY:1SECTION:14.13.  Inacompetitivemarket,theactionsofanysinglebuyerorsellerwilla.  haveanegligibleimpactonthemarketprice.b.  havelittleeffectonoverallproductionbutwillultimatelychangefinalproductprice.c.  causeanoticeablechangeinoverallproductionandachangeinfinalproductprice.d.  adverselyaffecttheprofitabilityofmorethanonefirminthemarket.ANSWER:a.  haveanegligibleimpactonthemarketprice.TYPE:MDIFFICULTY:2SECTION:14.1Usetheinformationinthetablebelowtoanswerquestions4through7.Quantity  Price1  132  133  134  135  136  137  138  139  134.  Thepriceandquantityrelationshipinthetableismostlikelythatfacedbyafirminaa.  monopoly.b.  concentratedmarket.c.  competitivemarket.d.  strategicmarket.ANSWER:c.  competitivemarket.TYPE:MDIFFICULTY:1SECTION:14.15.  Overwhichrangeofoutputisaveragerevenueequaltoprice?a.  1to5b.  3to7c.  5to9d.  Averagerevenueisequaltopriceoverthewholerangeofoutput.ANSWER:d.  Averagerevenueisequaltopriceoverthewholerangeofoutput.TYPE:MDIFFICULTY:1SECTION:14.16.  Overwhatrangeofoutputismarginalrevenuedeclining?a.  1to6b.  3to7c.  7to9d.  None;marginalrevenueisconstantoverthewholerangeofoutput.ANSWER:d.  None;marginalrevenueisconstantoverthewholerangeofoutput.TYPE:MDIFFICULTY:2SECTION:14.17.  Ifthefirmdoublesitsoutputfrom3to6units,totalrevenuewilla.  increasebylessthan$39.b.  increasebyexactly$39.c.  increasebymorethan$39.d.  Itcannotbedeterminedfromtheinformationprovided.ANSWER:b.  increasebyexactly$39.TYPE:MDIFFICULTY:1SECTION:14.18.  Forafirminaperfectlycompetitivemarket,thepriceofthegoodisalwaysa.  equaltomarginalrevenue.b.  equaltototalrevenue.c.  greaterthanaveragerevenue.d.  Alloftheabovearecorrect.ANSWER:a.  equaltomarginalrevenue.TYPE:MDIFFICULTY:1SECTION:14.19.  Ifafirminaperfectlycompetitivemarkettriplesthenumberofunitsofoutputsold,thentotalrevenuewilla.  morethantriple.b.  lessthantriple.c.  exactlytriple.d.  Alloftheabovearepotentiallytrue.ANSWER:c.  exactlytriple.TYPE:MDIFFICULTY:1SECTION:14.110.  Becausethegoodsofferedforsaleinacompetitivemarketarelargelythesame,a.  therewillbefewsellersinthemarket.b.  therewillbefewbuyersinthemarket.c.  buyerswillhavemarketpower.d.  sellerswillhavelittlereasontochargelessthanthegoingmarketprice.ANSWER:d.  sellerswillhavelittlereasontochargelessthanthegoingmarketprice.TYPE:MDIFFICULTY:1SECTION:14.111.  WhichofthefollowingisNOTacharacteristicofaperfectlycompetitivemarket?a.  Firmsarepricetakers.b.  Firmshavedifficultyenteringthemarket.c.  Therearemanysellersinthemarket.d.  Goodsofferedforsalearelargelythesame.ANSWER:b.  Firmshavedifficultyenteringthemarket.TYPE:MDIFFICULTY:1SECTION:14.112.  Whenbuyersinacompetitivemarkettakethesellingpriceasgiven,theyaresaidtobea.  marketentrants.b.  monopolists.c.  freeriders.d.  pricetakers.ANSWER:d.  pricetakers.TYPE:MDIFFICULTY:1SECTION:14.113.  Whenfirmsaresaidtobepricetakers,itimpliesthatifafirmraisesitsprice,a.  buyerswillgoelsewhere.b.  buyerswillpaythehigherpriceintheshortrun.c.  competitorswillalsoraisetheirprices.d.  firmsintheindustrywillexercisemarketpower.ANSWER:a.  buyerswillgoelsewhere.TYPE:MDIFFICULTY:1SECTION:14.114.  Whichofthefollowingstatementsbestreflectsaprice-takingfirm?a.  Ifthefirmweretochargemorethanthegoingprice,itwouldsellnoneofitsgoods.b.  Thefirmhasnoincentivetochargelessthanthegoingprice.c.  Thefirmcansellasmuchasitwantstosellatthegoingprice.d.  Alloftheabovearecorrect.ANSWER:d.  Alloftheabovearecorrect.TYPE:MDIFFICULTY:2SECTION:14.115.  Inacompetitivemarket,nosingleproducercaninfluencethemarketpricebecausea.  manyothersellersareofferingaproductthatisessentiallyidentical.b.  consumershavemoreinfluenceoverthemarketpricethanproducersdo.c.  governmentinterventionpreventsfirmsfrominfluencingprice.d.  producersagreenottochangetheprice.ANSWER:a.  manyothersellersareofferingaproductthatisessentiallyidentical.TYPE:MDIFFICULTY:2SECTION:14.116.  Acompetitivefirmmightchoosetosetitspricebelowthemarketprice,becausea.  thiswouldresultinhigheraveragerevenue.b.  thiswouldresultinhigherprofits.c.  thiswouldresultinlowertotalcosts.d.  Noneoftheabovearecorrect.ANSWER:d.  Noneoftheabovearecorrect.TYPE:MDIFFICULTY:2SECTION:14.117.  Ofthefollowingcharacteristicsofcompetitivemarkets,whicharenecessaryforfirmstobepricetakers?(i)  Therearemanysellers.(ii)  Firmscanfreelyenterorexitthemarket.(iii)  Goodsofferedforsalearelargelythesame.a.  (i)and(ii)onlyb.  (i)and(iii)onlyc.  (ii)onlyd.  Allarenecessary.ANSWER:b.  (i)and(iii)onlyTYPE:MDIFFICULTY:2SECTION:14.118.  Whenafirminacompetitivemarketproduces10unitsofoutput,ithasamarginalrevenueof$8.00.Whatwouldbethefirm’stotalrevenuewhenitproduces6unitsofoutput?a.  $4.80b.  $6.00c.  $48.00d.  $60.00ANSWER:c.  $48.00TYPE:MDIFFICULTY:2SECTION:14.119.  Whenafirminacompetitivemarketreceives$500intotalrevenue,ithasamarginalrevenueof$10.Whatistheaveragerevenue,andhowmanyunitsweresold?a.  $5and100b.  $10and50c.  $10and100d.  Theanswercannotbedeterminedfromtheinformationgiven.ANSWER:b.  $10and50TYPE:MDIFFICULTY:2SECTION:14.120.  Startingfromasituationinwhichafirminacompetitivemarketproducesandsells500doorknobsforapriceof$10perdoorknob,whichofthefollowingeventswoulddecreasethefirm’saveragerevenue?a.  Thefirmincreasesitsoutputabove500doorknobs.b.  Thefirmdecreasesitsoutputbelow500doorknobs.c.  Themarketpriceofdoorknobsrisesabove$10.d.  Themarketpriceofdoorknobsfallsbelow$10.ANSWER:d.  Themarketpriceofdoorknobsfallsbelow$10.TYPE:MDIFFICULTY:1SECTION:14.221.  Wheneveraperfectlycompetitivefirmchoosestochangeitslevelofoutput,holdingthepriceoftheproductconstant,itsmarginalrevenuea.  increasesifMRATC.b.  doesnotchange.c.  increases.d.  decreases.ANSWER:b.  doesnotchange.TYPE:MDIFFICULTY:1SECTION:14.122.  Ifafirminacompetitivemarketreducesitsoutputby20percent,thenasaresultthepriceofitsoutputislikelytoa.  increase.b.  remainunchanged.c.  decreasebylessthan20percent.d.  decreasebymorethan20percent.ANSWER:b.  remainunchanged.TYPE:MDIFFICULTY:1SECTION:14.123.  Changesintheoutputofaperfectlycompetitivefirm,withoutanychangeinthepriceoftheproduct,willchangethefirm’sa.  totalrevenue.b.  marginalrevenue.c.  averagerevenue.d.  Alloftheabovearecorrect.ANSWER:a.  totalrevenue.TYPE:MDIFFICULTY:2SECTION:14.124.  Whenaprofit-maximizingfirminacompetitivemarkethaszeroeconomicprofit,accountingprofita.  isnegative(accountinglosses).b.  ispositive.c.  isalsozero.d.  couldbepositive,negativeorzero.ANSWER:b.  ispositive.TYPE:MDIFFICULTY:2SECTION:14.125.  Asageneralrule,whenaccountantscalculateprofittheyaccountforexplicitcostsbutusuallyignorea.  certainoutlaysofmoneybythefirm.b.  implicitcosts.c.  operatingcosts.d.  fixedcosts.ANSWER:b.  implicitcosts.TYPE:MDIFFICULTY:1SECTION:14.126.  Incalculatingaccountingprofit,accountantstypicallydon’tincludea.  long-runcosts.b.  sunkcosts.c.  explicitcostsofproduction.d.  opportunitycoststhatdonotinvolveanoutflowofmoney.ANSWER:d.  opportunitycoststhatdonotinvolveanoutflowofmoney.TYPE:MDIFFICULTY:1SECTION:14.1Usethefollowinginformationtoanswerquestions27through29.AspartofanestatesettlementMaryreceived$1million.ShedecidedtousethemoneytopurchaseasmallbusinessinAnywhere,USA.IfMarywouldhaveinvestedthe$1millioninarisk-freebondfundshecouldhavemade$100,000eachyear.ShealsoquitherjobwithLucky.ComInc.todevoteallofhertimetohernewbusiness;hersalaryatLucky.ComInc.was$75,000peryear.27.  Attheendofthefirstyearofoperatinghernewbusiness,Mary’saccountantreportedanaccountingprofitof$150,000.WhatwasMary’seconomicprofit?a.  $25,000lossb.  $50,000lossc.  $25,000profitd.  $150,000profitANSWER:a.  $25,000lossTYPE:MDIFFICULTY:2SECTION:14.128.  WhatareMary’sopportunitycostsofoperatinghernewbusiness?a.  $25,000b.  $75,000c.  $100,000d.  $175,000ANSWER:d.  $175,000TYPE:MDIFFICULTY:2SECTION:14.129.  HowlargewouldMary’saccountingprofitsneedtobetoallowhertoattainzeroeconomicprofit?a.  $100,000b.  $125,000c.  $175,000d.  $225,000ANSWER:c.  $175,000TYPE:MDIFFICULTY:2SECTION:14.130.  TheWheelerWheatFarmsellswheattoagrainbrokerinSeattle,Washington.Sincethemarketforwheatisgenerallyconsideredtobecompetitive,theWheelerFarmdoesnota.  choosethequantityofwheattoproduce.b.  choosethepriceatwhichitsellsitswheat.c.  haveanyfixedcostsofproduction.d.  Alloftheabovearecorrect.ANSWER:b.  choosethepriceatwhichitsellsitswheat.TYPE:MDIFFICULTY:1SECTION:14.131.  Inacompetitivemarket,a.  nosinglebuyerorsellercaninfluencethepriceoftheproduct.b.  thereisasmallnumberofsellers.c.  thegoodsofferedbythedifferentsellersaremarkedlydifferent.d.  Alloftheabovearecorrect.ANSWER:a.  nosinglebuyerorsellercaninfluencethepriceoftheproduct.TYPE:MDIFFICULTY:1SECTION:14.132.  Inacompetitivemarket,a.  eachsellercansellallhewantstosellatthegoingprice.b.  buyersandsellersarepricetakers.c.  thegoodsofferedbythedifferentsellersarelargelythesame.d.  Alloftheabovearecorrect.ANSWER:d.  Alloftheabovearecorrect.TYPE:MDIFFICULTY:1SECTION:14.133.  IfABCCompanysellsitsproductinacompetitivemarket,thena.  thepriceofthatproductdependsonthequantityoftheproductthatABCCompanyproducesandsells.b.  ABCCompany’stotalrevenueisproportionaltoitsquantityofoutput.c.  ABCCompany’stotalcostisproportionaltoitsquantityofoutput.d.  ABCCompany’stotalrevenueisequaltoitsaveragerevenue.ANSWER:b.  ABCCompany’stotalrevenueisproportionaltoitsquantityofoutput.TYPE:MDIFFICULTY:2SECTION:1.4134.  Whichofthefollowingexpressionsiscorrectforacompetitivefirm?a.  Profit=Totalrevenue–Totalcost.b.  Marginalrevenue=(Changeintotalrevenue)/(Changeinquantityofoutput).c.  Averagerevenue=Totalrevenue/Quantityofoutput.d.  Alloftheabovearecorrect.ANSWER:d.  Alloftheabovearecorrect.TYPE:MDIFFICULTY:2SECTION:14.135.  Foracompetitivefirm,a.  Totalrevenue=Averagerevenue.b.  Totalrevenue=Marginalrevenue.c.  Totalcost=Marginalrevenue.d.  Averagerevenue=Marginalrevenue.ANSWER:d.  Averagerevenue=Marginalrevenue.TYPE:MDIFFICULTY:1SECTION:14.136.  Foracompetitivefirm,a.  averagerevenueequalsthepriceofthegood,butmarginalrevenueisdifferent.b.  marginalrevenueequalsthepriceofthegood,butaveragerevenueisdifferent.c.  averagerevenueequalsmarginalrevenue,butthepriceofthegoodisdifferent.d.  averagerevenue,marginalrevenue,andthepriceofthegoodareallequaltooneanother.ANSWER:d.  averagerevenue,marginalrevenue,andthepriceofthegoodareallequaltooneanother.TYPE:MDIFFICULTY:2SECTION:14.137.  Ifacompetitivefirmis(i)selling1,000unitsofitsproductatapriceof$9perunitand(ii)earningapositiveprofit,thena.  itstotalcostislessthan$9,000.b.  itsmarginalrevenueislessthan$9.c.  itsaveragerevenueisgreaterthan$9.d.  Alloftheabovearecorrect.ANSWER:a.  itstotalcostislessthan$9,000.TYPE:MDIFFICULTY:2SECTION:14.138.  Whenacompetitivefirmtriplestheamountofoutputitsells,a.  itstotalrevenuetriples.b.  itsaveragerevenuetriples.c.  itsmarginalrevenuetriples.d.  Alloftheabovearecorrect.ANSWER:a.  itstotalrevenuetriples.TYPE:MDIFFICULTY:2SECTION:14.139.  Totalprofitforafirmiscalculatedbya.  marginalrevenueminusaveragecost.b.  averagerevenueminusaveragecost.c.  marginalrevenueminusmarginalcost.d.  totalrevenueminustotalcost.ANSWER:d.  totalrevenueminustotalcost.TYPE:MDIFFICULTY:1SECTION:14.2Usetheinformationforacompetitivefirminthetablebelowtoanswerquestions40through45.Quantity  TotalRevenue  TotalCost0  $0  $101  9  142  18  193  27  254  36  325  45  406  54  497  63  598  72  709  81  8240.  Ataproductionlevelof4unitswhichofthefollowingistrue?a.  Marginalcostis$6.b.  Totalrevenueisgreaterthanvariablecost.c.  Marginalrevenueislessthanmarginalcost.d.  Alloftheabovearecorrect.ANSWER:b.  Totalrevenueisgreaterthanvariablecost.TYPE:MDIFFICULTY:2SECTION:14.241.  Atwhichquantityofoutputismarginalrevenueequaltomarginalcost?a.  3b.  6c.  8d.  Alloftheabovearecorrect.ANSWER:b.  6TYPE:MDIFFICULTY:2SECTION:14.242.  Ifthisfirmchoosestomaximizeprofititwillchoosealevelofoutputwheremarginalcostisequaltoa.  6.b.  7.c.  8.d.  9.ANSWER:d.  9.TYPE:MDIFFICULTY:2SECTION:14.243.  Themaximumprofitavailabletothisfirmisa.  $5.b.  $4.c.  $3.d.  $2.ANSWER:a.  $5.TYPE:MDIFFICULTY:1SECTION:14.244.  Ifthefirmfindsthatitsmarginalcostis$11,itshoulda.  increaseproductiontomaximizeprofit.b.  increasethepriceoftheproducttomaximizeprofit.c.  advertisetoattractadditionalbuyerstomaximizeprofit.d.  Noneoftheabovearecorrect.ANSWER:d.  Noneoftheabovearecorrect.TYPE:MDIFFICULTY:2SECTION:14.245.  Ifthefirmfindsthatitsmarginalcostis$5,itshoulda.  reducefixedcostsbyloweringproduction.b.  increaseproductiontomaximizeprofit.c.  decreaseproductiontomaximizeprofit.d.  maintainitscurrentlevelofproductiontomaximizeprofit.ANSWER:b.  increaseproductiontomaximizeprofit.TYPE:MDIFFICULTY:2SECTION:14.246.  TheWheelerWheatFarmsellswheattoagrainbrokerinSeattle,Washington.Sincethemarketforwheatisgenerallyconsideredtobecompetitive,theWheelerWheatFarmmaximizesitsprofitbychoosinga.  toproducethequantityatwhichaveragetotalcostisminimized.b.  toproducethequantityatwhichaveragefixedcostisminimized.c.  tosellitswheatatapricewheremarginalcostisequaltoaveragetotalcost.d.  thequantityatwhichmarketpriceisequaltothefarm’smarginalcostofproduction.ANSWER:d.  thequantityatwhichmarketpriceisequaltothefarm’smarginalcostofproduction.TYPE:MDIFFICULTY:2SECTION:14.247.  Comparisonofmarginalrevenuetomarginalcost(i)  revealsthecontributionofthelastunitofproductiontototalprofit.(ii)  ishelpfulinmakingprofit-maximizingproductiondecisions.(iii)  tellsafirmwhetheritsfixedcostsaretoohigh.a.  (i)onlyb.  (i)and(ii)onlyc.  (ii)and(iii)onlyd.  Alloftheabovearecorrect.ANSWER:b.  (i)and(ii)onlyTYPE:MDIFFICULTY:2SECTION:14.248.  Ifmarginalcostexceedsmarginalrevenue,thefirma.  ismostlikelytobeataprofit-maximizinglevelofoutput.b.  shouldincreasethelevelofproductiontomaximizeitsprofit.c.  mustbeexperiencinglosses.d.  maystillbeearningaprofit.ANSWER:d.  maystillbeearningaprofit.TYPE:MDIFFICULTY:2SECTION:14.249.  Whenmarginalrevenueequalsmarginalcost,thefirma.  shouldincreasethelevelofproductiontomaximizeitsprofit.b.  maybeminimizingitslosses,ratherthanmaximizingitsprofit.c.  mustbegeneratingeconomicprofits.d.  mustbegeneratingeconomiclosses.ANSWER:b.  maybeminimizingitslosses,ratherthanmaximizingitsprofit.TYPE:MDIFFICULTY:2SECTION:14.250.  Whenmanagersoffirmsthinkatthemarginandmakeincrementaladjustmentstothelevelofproduction,theyarenaturallyledtoalevelofproductionwherea.  averagevariablecostexceedsmarginalcost.b.  totalcostislessthanaveragerevenue.c.  costsareminimized.d.  profitismaximized.ANSWER:d.  profitismaximized.TYPE:MDIFFICULTY:2SECTION:14.251.  Asageneralrule,profit-maximizingproducersinacompetitivemarketproduceoutputatapointwherea.  marginalcostisincreasing.b.  marginalcostisdecreasing.c.  marginalrevenueisincreasing.d.  priceislessthanmarginalrevenue.ANSWER:a.  marginalcostisincreasing.TYPE:MDIFFICULTY:2SECTION:14.2Thegraphbelowdepictsthecoststructureforafirminacompetitivemarket.Usethegraphtoanswerquestions52through55.Note:Ontheabovediagram,changethevertical-axislabelsfromMC1toP1,MC2toP2,etc.52.  WhenpriceisequaltoP3,theprofit-maximizingfirmwillproducewhatlevelofoutput?a.  Q1b.  Q2c.  Q3d.  Q4ANSWER:c.  Q3TYPE:MDIFFICULTY:2SECTION:14.253.  WhenmarketpriceisatP2,afirmproducingoutputlevelQ1wouldexperiencea.  profitsequalto(P2–P1)Q1.b.  lossesequalto(P2–P1)Q1.c.  lossesbecauseP2