# CH13 - Name Date 1 The short-run supply curve for a...

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Name: __________________________ Date: _____________ 1. The short-run supply curve for a perfectly competitive firm is: A) the average total cost curve above the break-even price. B) the average variable cost curve above the shut-down price. C) the marginal cost curve above the break-even price. D) the marginal cost curve above the shut-down price. 2. Firms in the model of perfect competition will: A) maximize total revenue by using the marginal decision rule. B) increase output up to the point that the marginal benefit of an additional unit of output is greater than the marginal cost. C) increase output up to the point that the marginal benefit of an additional unit of output is equal to the marginal cost. D) always attempt to minimize average variable cost. 3. Suppose a perfectly competitive firm can increase its profits by increasing its output. Then it must be the case that the firm's: A) marginal revenue exceeds its marginal cost. B) price exceeds its average variable cost, but is less than average total cost. C) marginal cost exceeds its marginal revenue. D) price exceeds its marginal revenue. 4. Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, and that the price of each candy cane is \$0.10. Now suppose that the price of sugar rises, increasing the marginal and average total cost of producing candy canes by \$0.05; there are no other changes in production costs. Based on the information given, we can conclude that once all the adjustments to long-run equilibrium are achieved, the price of candy canes will equal: A) \$0.05. B) \$0.10. C) \$0.15. Page 1

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D) The question is impossible to answer without knowing exactly how many firms entered and/or left the industry. 5. For a firm in a perfectly competitive market: A) marginal revenue equals total revenue. B) marginal revenue equals market price. C) net revenue equals price. D) net revenue equals marginal revenue. 6. In the short run, a perfectly competitive firm produces output and breaks even if: A) the firm produces a quantity at which P < ATC. B) the firm produces a quantity at which P = ATC. C) the firm produces a quantity at which P > ATC. D) the firm produces a quantity at which P = ( TR / Q + TC / Q ) × Q. 7. In perfectly competitive long-run equilibrium: A) all firms make positive economic profits. B) all firms produce at the minimum point of their average total cost curves. C) the industry supply curve must be upward-sloping. D) all firms face the same price, but the value of marginal cost will vary directly with firm size. 8. The marginal revenue received by a firm in a perfectly competitive market:
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## This note was uploaded on 02/18/2012 for the course ECON 102 taught by Professor Kim during the Fall '08 term at University of Illinois, Urbana Champaign.

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CH13 - Name Date 1 The short-run supply curve for a...

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