Name (PRINT):
Class:
Date:
Quiz 7
Indicate whether the statement is true or false.
1. The market demand curve in a perfectly competitive industry is horizontal, while the demand
curve faced by an individual perfectly competitive firm is downward sloping.
a. True
b. False
2. The behavior of an individual perfectly competitive firm has a perceptible influence on the
market price.
a. True
b. False
3. The demand curve faced by a perfectly competitive firm is vertical.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
4. If the gadget industry is a constant cost industry, one would expect that the long run result of
an increase in demand for gadget to include ____ firms and a(n) ____ in price.
a. more; increase.
b. more; no change.
c. more; decrease.
d. fewer; increase.
5. Which of the following is true?
a. The long run supply curve for a competitive increasing cost industry will be upward
sloping.
b. The long run supply curve for a competitive increasing cost industry will be more
elastic than the industry's short run supply curve.
c. The long run supply curve for a competitive increasing cost industry will be
horizontal.
d. Both (a) and (b) are true.
Copyright Cengage Learning. Powered by Cognero.
Page 1
Name (PRINT):
Class:
Date:
Quiz 7
EXHIBIT 12-8
6. Refer to Exhibit 12.8. When market price is $2, a competitive profit-maximizing firm's total
cost is:
a. $6.
b. $21.
c. $3.
d. $12.50.
Copyright Cengage Learning. Powered by Cognero.
Page 2
Name (PRINT):
Class:
Date:
Quiz 7
Exhibit 12-9
7. Refer to Exhibit 12-9. When the market price for lawn care services decreases from P1 to P0,
the firm will most likely:
a. continue providing q1 units of services.
b. decrease its production of services.
c. leave the industry.
d. increase its production of services.
8. In the short run, a perfectly competitive firm can earn:
a. positive economic profits.
b. zero economic profits.
c. negative economic profits.
d. any of the above.
Copyright Cengage Learning. Powered by Cognero.
Page 3
Name (PRINT):
Class:
Date:
Quiz 7
Exhibit 12-6
9. Refer to Exhibit 12-6. If P represents the market price for a price-taking firm, the best course
of action in the short run for the firm is to:
a. shut down immediately.
b. continue operating because average total cost exceeds price.
c. continue operating because price exceeds average total cost.
d. continue operating because price exceeds average variable cost.
10. During a period when new entrants are being attracted to an industry, we would expect that:
a. economic profits are positive.
b. as a result, economic profits are falling.
c. as a result, economic profits are rising.
d. both (a) and (b) are true.
Copyright Cengage Learning. Powered by Cognero.
Page 4
Name (PRINT):
Class:
Date:
Quiz 7
Answer Key
1. False
2. False
3. False
4. b
5. d
6. a
7. b
8. d
9. d
10. d
Copyright Cengage Learning. Powered by Cognero.
Page 5