Solutions for Microeconomics, 5th Canadian
Edition by Glenn Hubbard
Which of the following is not characteristic of perfect competition?
a. many buyers and sellers
b. brand name advertising
c. standardized products
d. fully informed buyers and sellers
e. free entry and exit of firms - answer-b. brand name advertising
Which of the following is likely to be present in a perfectly competitive market?
a. patents
b. government licenses
c. nonprice competition such as advertising
d. high capital costs
e. firms producing identical products - answer-e. firms producing identical products
Firms in perfect competition have no control over
a. all of the following
b. where to operate on their average total cost curves
c. what price to charge
d. how many inputs to use
e. how much to produce - answer-c. what price to charge
The price charged by a perfectly competitive firm is determined by
a. each individual firm
b. a group of firms acting together as a cartel
c. market demand and market supply
d. the firm's total costs alone
e. the firm's average variable cost - answer-c. market demand and market supply
The demand curve for the output of a perfectly competitive firm is
a. perfectly inelastic
b. perfectly elastic
c. unit elastic
d. downward sloping
e. nonlinear - answer-b. perfectly elastic
, In perfect competition, if one firm raises its price,
a. others will follow
b. that firm will increase its revenues
c. that firm will lose revenues because other firms will not follow d. all consumers will be
adversely affected
e. the market demand curve will shift - answer-c. that firm will lose revenues because
other firms will not follow
The perfectly competitive firewood market is composed of 1,000 identical consumers
and 1,000 identical firms. Exhibit 8-1 shows cost data for one firm and demand data for
one consumer. What is the equilibrium price?
a. $60
b. $80
c. $100
d. $120
e. It is impossible to determine the equilibrium price because there is no information on
market demand or supply. - answer-c. $100
Exhibit 8-20 shows the cost schedule for 'No#2 widget factory'. We know that the
market for widgets is perfectly competitive, and the widgets are selling for $10 each. If
'No#2 widget factory' sells 3 widgets, the total revenue is:
a. $10
b. $20
c. $30
d. $21
e. $50 - answer-c. $30
Exhibit 8-20 shows the cost schedule for 'No#2 widget factory'. We know that the
market for widgets is perfectly competitive, and the widgets are selling for $10 each.
How many widgets should the factory produce to maximize its profit?
a. 1
b. 2
c. 3
d. 4
e. 5 - answer-d. 4
Given the information in Exhibit 8-2, the price of a wool blanket
a. is $10
b. is $20
c. is $30
d. is $40
e. depends on the quantity sold - answer-a. is $10
Edition by Glenn Hubbard
Which of the following is not characteristic of perfect competition?
a. many buyers and sellers
b. brand name advertising
c. standardized products
d. fully informed buyers and sellers
e. free entry and exit of firms - answer-b. brand name advertising
Which of the following is likely to be present in a perfectly competitive market?
a. patents
b. government licenses
c. nonprice competition such as advertising
d. high capital costs
e. firms producing identical products - answer-e. firms producing identical products
Firms in perfect competition have no control over
a. all of the following
b. where to operate on their average total cost curves
c. what price to charge
d. how many inputs to use
e. how much to produce - answer-c. what price to charge
The price charged by a perfectly competitive firm is determined by
a. each individual firm
b. a group of firms acting together as a cartel
c. market demand and market supply
d. the firm's total costs alone
e. the firm's average variable cost - answer-c. market demand and market supply
The demand curve for the output of a perfectly competitive firm is
a. perfectly inelastic
b. perfectly elastic
c. unit elastic
d. downward sloping
e. nonlinear - answer-b. perfectly elastic
, In perfect competition, if one firm raises its price,
a. others will follow
b. that firm will increase its revenues
c. that firm will lose revenues because other firms will not follow d. all consumers will be
adversely affected
e. the market demand curve will shift - answer-c. that firm will lose revenues because
other firms will not follow
The perfectly competitive firewood market is composed of 1,000 identical consumers
and 1,000 identical firms. Exhibit 8-1 shows cost data for one firm and demand data for
one consumer. What is the equilibrium price?
a. $60
b. $80
c. $100
d. $120
e. It is impossible to determine the equilibrium price because there is no information on
market demand or supply. - answer-c. $100
Exhibit 8-20 shows the cost schedule for 'No#2 widget factory'. We know that the
market for widgets is perfectly competitive, and the widgets are selling for $10 each. If
'No#2 widget factory' sells 3 widgets, the total revenue is:
a. $10
b. $20
c. $30
d. $21
e. $50 - answer-c. $30
Exhibit 8-20 shows the cost schedule for 'No#2 widget factory'. We know that the
market for widgets is perfectly competitive, and the widgets are selling for $10 each.
How many widgets should the factory produce to maximize its profit?
a. 1
b. 2
c. 3
d. 4
e. 5 - answer-d. 4
Given the information in Exhibit 8-2, the price of a wool blanket
a. is $10
b. is $20
c. is $30
d. is $40
e. depends on the quantity sold - answer-a. is $10
