201-tutorial-9 - Econ 201 Tutorial #9 Date: Week of Mar....

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Date: Week of Mar. 22-28, 2010 Coverage: Chapter 9 Perfect Competition I. Multiple Choice Questions: 1. The perfectly competitive firm’s short run supply curve is the upward-sloping part of its a. Average variable cost curve, at all points above the point of AVCmin. b. Marginal cost curve, at all points above the point of AFCmin. c. Marginal revenue curve, at all points above the point of minimum average revenue. d. Marginal revenue curve, at all points above the point of minimum average total cost. e. Marginal cost curve, at all point above the point of AVCmin. 2. A perfectly competitive firm will produce output in the short run even if P<ATC because a. As long as P MC, it can minimize it losses. b. As long as P AVCmin, it can minimize it losses. c. Profits are positive. d. Fixed costs are avoidable in the short run. e. None of the above. 3. If a perfectly competitive firm reduces its output by 20%, the unit price of its output is _, and total revenue is _. a. Unchanged, reduced by 20%. b. Unchanged, reduced by less than 20%. c. Reduced, reduced by 20%. d. Reduced, reduced by less than 20%. e. None of the above. 4. The supply curve for an individual firm in a perfectly competitive industry is P=1+2Qs. If the industry consists of 100 identical firms, what is the industry supply when P=$7? a. 300 units. b. 400 units. c. 600 units. d. 800 units. e. None of the above. 5. In the short run, a perfectly competitive firm’s break-even point (P=ATC) occurs at a. A greater quantity of output than the shutdown point. b. A smaller quantity than the shutdown point. c. The same quantity as the shutdown point. d. A lower price than the shutdown point. e. The same price as the shutdown point. 6. A perfectly competitive firm is maximizing profit if a. Marginal cost equals price and price is above minimum AVC. b. Marginal cost equals price and price is above minimum AFC. c. Total revenue is at a maximum. d. AVC is at a minimum. e. ATC is at a minimum. 7. If a profit-maximizing firm's marginal revenue is greater than its marginal cost, the firm a. must be making an economic profit. b. will decrease its output. c. will increase its output. d. must be experiencing economic losses. e. will close down. 8. If firms exit an industry, the a. profits of the remaining firms decrease. b. industry supply curve shifts leftward. c.
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201-tutorial-9 - Econ 201 Tutorial #9 Date: Week of Mar....

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