Cf Micro8 Tif071 1

Principles of Microeconomics, 8e (Case/Fair)
Chapter 7: The Production Process: The Behavior of Profit-Maximizing Firms The Behavior of Profit Maximizing Firms

Multiple Choice
Refer to the information provided in Figure 7.1 below to answer the questions that follow.

Figure 7.1 1)

Refer to Figure 7.1. Panel _____ represents the demand curve facing a perfectly competitive producer of wheat.
A)

A
B)

B
C)

C
D)

D
Answer:

B
Diff: 2
Type: A

2)

Jerry sells cherry sno-cones along the boardwalk in New Jersey. During the summer this is a perfectly competitive business, and Jerry faces a perfectly elastic demand curve. If he wants to try to increase revenues he should
A)

raise the price of his sno-cones to make more per sale.
B)

lower the price of his sno-cones to try to sell more.
C)

keep the price the same but produce more to increase sales.
D)

do nothing; there is nothing he can do to increase revenue.
Answer:

C
Diff: 3
Type: C

3)

A firm in a perfectly competitive market has no control over price because
A)

the government imposes price ceilings on the products produced in perfectly competitive industries.
B)

there is free entry and exit from the industry.
C)

every firm's product is a perfect substitute for every other firm's product.
D)

the market demand for products produced in perfectly competitive industries is perfectly elastic.
Answer:

C
Diff: 1
Type: F

4)

The closest example of a perfectly competitive industry is
A)

fast foods.
B)

beer.
C)

gasoline stations.
D)

soybeans.
Answer:

D
Diff: 3
Type: C

5)

Total revenue minus total cost is equal to
A)

the rate of return.
B)

marginal revenue.
C)

profit.
D)

net cost.
Answer:

C
Diff: 1
Type: F

Refer to the information provided in Figure 7.2 below to answer the following questions.

Figure 7.2

6)

Refer to Figure 7.2. This corn producer produces 100 bushels of corn and sells each bushel at $5.