Question 1

If an individual seller in a purely competitive market gets $4.00 for the first unit of its product sold, the seller's demand and marginal revenue curves will both be:

Accepted Answer

In a purely competitive market, individual sellers are price takers, meaning they have no control over the market price. Therefore, the demand and marginal revenue curves for an individual seller are horizontal lines at the market price, which in this case is $4.00. This reflects the fact that the seller can sell any quantity of the product at the market price, but cannot influence the price by changing the quantity sold.

Question 2

Assume that a purely competitive firm sold 100 units of output today and the marginal revenue from the 100th unit sold was $4.00. If instead of 100 units it sold 1,000 units, the marginal revenue from the 1,000th unit would have been:

Accepted Answer

In a purely competitive market, the price of each unit sold is constant regardless of the quantity sold, meaning the marginal revenue remains the same for each additional unit sold.

Question 3

-The firm represented in this figure is:

Accepted Answer

The answer of 
-The firm represented in this figure is:
...

Question 4

-To maximize its profit or minimize its loss, the firm represented in this figure should sell:

Accepted Answer

The firm should produce where marginal cost equals marginal revenue to maximize profit or minimize loss. This typically occurs at the output level where these two curves intersect, which is often around the midpoint of the production capacity, such as 5,000 units.

Question 5

-When the firm in this figure operates at its profit-maximizing or loss-minimizing position, it will be:

Accepted Answer

At the profit-maximizing or loss-minimizing position, a firm sets its output where marginal cost equals marginal revenue, which typically results in maximizing profit.

Question 6

-This firm:

Accepted Answer

The answer of 
-This firm:
...

Question 7

-If the market price for this product were $1.00:

Accepted Answer

The answer of 
-If the market price for this product...

Question 8

-If this firm were operating in the long run, the price it receives would be:

Accepted Answer

The answer of 
-If this firm were operating in the...

Question 9

Assume that over the short run, the price a pure competitor can earn when operating where marginal cost equals marginal revenue is greater than average variable cost but less than average total cost. This firm will:

Accepted Answer

In this scenario, producing where marginal cost equals marginal revenue results in a price that covers the average variable cost but not the total average cost, indicating the firm is covering its variable costs but not making enough to cover fixed costs fully. By continuing to produce, the firm minimizes its losses to the extent of its fixed costs, rather than incurring a total loss of both fixed and variable costs by shutting down.

Question 10

Assume that over the short run, the price a pure competitor can earn when operating where marginal cost equals marginal revenue is less than average variable cost. This firm will:

Accepted Answer

If the price a firm can earn is less than its average variable cost, it minimizes its loss by shutting down in the short run, because continuing to produce would mean incurring losses greater than its fixed costs.

Question 11

The "shutdown loss"for a firm is:

Accepted Answer

The "shutdown loss" for a firm refers to the total fixed costs that a firm must pay even when it is not producing anything. Variable costs can be avoided if production is halted, but fixed costs must be paid regardless of the level of production.

Question 12

Assume a firm taking a loss will minimize that loss if it keeps producing rather than shut down. Based on this, you know that if the firm produces its price will cover:

Accepted Answer

When a firm decides to keep producing despite taking a loss, it does so because the price it receives for its products covers all of its variable costs and at least part of its fixed costs. This means that the revenue generated from selling the goods is enough to cover the variable costs of production (like labor and raw materials) and contributes towards covering fixed costs (like rent and salaries), which the firm would have to pay regardless of its production decision. Shutting down would mean the firm covers none of its costs, so continuing production minimizes the loss by covering variable costs and some fixed costs.

Question 13

Assume a firm taking a loss will minimize that loss by shutting down rather than producing. Based on this, you know that if the firm were to produce its price would cover:

Accepted Answer

If a firm shuts down, it means that the price does not cover the variable costs. If it were to produce, it would cover part of its variable costs but none of its fixed costs, leading to a greater loss than shutting down.

Question 14

-This firm would:

Accepted Answer

A firm minimizes its loss or maximizes its profit by producing at the output level where marginal cost (MC) equals marginal revenue (MR), assuming it covers its variable costs. This principle applies whether the firm is in a loss situation or a profit situation.

Question 15

-If this firm were to produce at its profit-maximizing or loss-minimizing output it would:

Accepted Answer

A firm minimizes its losses by producing at a level where its total revenue covers all of its variable costs plus part of its fixed costs. The loss incurred is thus equal to a portion of its fixed costs, since fixed costs are incurred regardless of the level of output.

Question 16

Suppose that in the short run a firm's price just equals its average variable cost at its profit-maximizing or loss-minimizing level of output. This firm would:

Accepted Answer

The answer of Suppose that in the short run a...

Question 17

When the demand curve for the product of an individual seller is downward sloping, the seller's marginal revenue curve for that product is:

Accepted Answer

When the demand curve is downward sloping, the marginal revenue curve is also downward sloping but lies below the demand curve. This is because, to sell additional units, the seller must lower the price, which reduces the revenue gained from selling additional units compared to the revenue if prices remained constant.

Question 18

-This figure could apply to:

Accepted Answer

The figure in question (not visible in this interaction) could apply to all the given options because both monopolies and monopolistic competition can experience periods of economic profit or loss in the short run. Over the long run, a monopoly can sustain profits due to barriers to entry, while firms in monopolistic competition may only earn normal profits due to the entry of new competitors. However, without seeing the specific figure, this explanation assumes it depicts a scenario that could be applicable to each of the contexts mentioned.

Question 19

-This figure could apply to:

Accepted Answer

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-This figure could apply to:
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Question 20

-This figure applies to a:

Accepted Answer

A monopolist maximizes profit by producing at the quantity where marginal revenue equals marginal cost, regardless of the time frame (short or long run). This is a characteristic that applies to monopolists in general, as they have the market power to set prices above marginal cost.

Quiz 13: Competition and Market Structures

If an individual seller in a purely competitive market gets $4.00 for the first unit of its product sold, the seller's demand and marginal revenue curves will both be:

Assume that a purely competitive firm sold 100 units of output today and the marginal revenue from the 100th unit sold was $4.00. If instead of 100 units it sold 1,000 units, the marginal revenue from the 1,000th unit would have been:

-The firm represented in this figure is:

-To maximize its profit or minimize its loss, the firm represented in this figure should sell:

-When the firm in this figure operates at its profit-maximizing or loss-minimizing position, it will be:

-This firm:

-If the market price for this product were $1.00:

-If this firm were operating in the long run, the price it receives would be:

Assume that over the short run, the price a pure competitor can earn when operating where marginal cost equals marginal revenue is greater than average variable cost but less than average total cost. This firm will:

Assume that over the short run, the price a pure competitor can earn when operating where marginal cost equals marginal revenue is less than average variable cost. This firm will:

The "shutdown loss"for a firm is:

Assume a firm taking a loss will minimize that loss if it keeps producing rather than shut down. Based on this, you know that if the firm produces its price will cover:

Assume a firm taking a loss will minimize that loss by shutting down rather than producing. Based on this, you know that if the firm were to produce its price would cover:

-This firm would:

-If this firm were to produce at its profit-maximizing or loss-minimizing output it would:

Suppose that in the short run a firm's price just equals its average variable cost at its profit-maximizing or loss-minimizing level of output. This firm would:

When the demand curve for the product of an individual seller is downward sloping, the seller's marginal revenue curve for that product is:

-This figure could apply to:

-This figure could apply to:

-This figure applies to a: