Exam 3 ECON 301 2025 Questions and
Answers
A competitive firm maximizes profit at the output level where - --CORRECT
ANSWER--the slope of the total revenue curve equals the slope of the total cost
curve.
The competitive firm is known as a price taker because - --CORRECT ANSWER-
-it accepts the market price as a given.
Which of the following correctly explains the effect of a price ceiling in a market? -
--CORRECT ANSWER--The demand for the product will exceed supply resulting
in a shortage.
The following figure shows the marginal cost curve, average total cost curve,
average variable cost curve, and marginal revenue curve for a firm for different
levels of output.
Refer to Figure 9-3. At the profit-maximizing level of output - --CORRECT
ANSWER--the firm is earning economic profit.
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, The perfectly competitive firm minimizes losses by shutting down whenever - --
CORRECT ANSWER--price is below the minimum point of the average variable
cost curve.
The short-run supply curve for a competitive industry - --CORRECT ANSWER--
is subject to the law of diminishing returns.
The following figure shows the marginal cost curve, the average cost curve, the
average variable cost curve, and the demand curve for a firm over different levels
of output. The market price is $P.
Refer to Figure 9-4. The total variable cost for the firm at output level OB is - --
CORRECT ANSWER--BTVO.
Which of the following will occur in response to an unexpected increase in
demand in a constant-cost, competitive industry? - --CORRECT ANSWER--The
output will increase with input prices remaining unchanged.
Zero economic profit occurs when - --CORRECT ANSWER--price equals long-
run average cost.
In an increasing-cost industry, the slope of the long-run supply curve is - --
CORRECT ANSWER--positive.
Which of the following statements about the effects of monopoly is
INCORRECT? - --CORRECT ANSWER--A monopoly causes input prices to
rise.
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Answers
A competitive firm maximizes profit at the output level where - --CORRECT
ANSWER--the slope of the total revenue curve equals the slope of the total cost
curve.
The competitive firm is known as a price taker because - --CORRECT ANSWER-
-it accepts the market price as a given.
Which of the following correctly explains the effect of a price ceiling in a market? -
--CORRECT ANSWER--The demand for the product will exceed supply resulting
in a shortage.
The following figure shows the marginal cost curve, average total cost curve,
average variable cost curve, and marginal revenue curve for a firm for different
levels of output.
Refer to Figure 9-3. At the profit-maximizing level of output - --CORRECT
ANSWER--the firm is earning economic profit.
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
, The perfectly competitive firm minimizes losses by shutting down whenever - --
CORRECT ANSWER--price is below the minimum point of the average variable
cost curve.
The short-run supply curve for a competitive industry - --CORRECT ANSWER--
is subject to the law of diminishing returns.
The following figure shows the marginal cost curve, the average cost curve, the
average variable cost curve, and the demand curve for a firm over different levels
of output. The market price is $P.
Refer to Figure 9-4. The total variable cost for the firm at output level OB is - --
CORRECT ANSWER--BTVO.
Which of the following will occur in response to an unexpected increase in
demand in a constant-cost, competitive industry? - --CORRECT ANSWER--The
output will increase with input prices remaining unchanged.
Zero economic profit occurs when - --CORRECT ANSWER--price equals long-
run average cost.
In an increasing-cost industry, the slope of the long-run supply curve is - --
CORRECT ANSWER--positive.
Which of the following statements about the effects of monopoly is
INCORRECT? - --CORRECT ANSWER--A monopoly causes input prices to
rise.
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
