Sadie's Cleaning Services is a perfectly competitive firm that currently cleans 20 offices an evening. Sadie's marginal cost is less than the price it charges. Sadie's will increase its profit if it cleans _______________.

fewer than 20 offices an evening
20 offices an evening but increases its price
more than 20 offices an evening
more than 20 offices an evening and charges a higher price

The table shows the total cost incurred by Sue's Coat Shop. If the market price of a coat is $250, Sue's will maximize profit by selling ________ coats a day.

9
7
11
8

Tammy sells woolen hats in a perfectly competitive market. The marginal cost of producing 1 hat is $12. The marginal cost of producing a second hat is $14 and the marginal cost of producing a third hat is $16. The market price of a hat is $14. To maximize profit, Tammy produces ________ a day.

3 hats
1 hat
2 hats
as many hats as possible

The figure shows Mollie's Mugs' costs of producing mugs. The mug market is perfectly competitive. If the market price of a mug falls to $5 and Mollie's shuts down temporarily, its total variable cost is ___________ and it incurs an economic loss of ______________.

$5 a week; $8 a week
$500 a week; $800 a week
$0 a week; $300 a week
$8 a week; $800 a week

If the market price in a perfectly competitive industry exceeds the firm's minimum average variable cost, then the firm's total revenue will always exceed its __________________.

total variable cost
opportunity cost
total cost
total fixed cost

The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $7 a frame. Paul produces _______ frames each week, makes _______ of total revenue, and makes zero_______ profit.

100; $700; economic
70; $280; normal
70; $280; economic
100; $700; normal

The donut market is perfectly competitive. The figure shows the costs of a typical donut producer. In the short run, the donut producer's supply curve is the curve running from point ____.

b to point e
d to point e
c to point e
a to point e

When some firms exit an industry in which firms incur economic losses, the short-run industry supply curve shifts _______, the market price _______, and each firm's economic loss _______.

leftward; decreases; decreases
rightward; decreases; decreases
rightward; increases; increases
leftward; increases; decreases

The industry that produces zangs is in long-run equilibrium. Then the demand for zangs decreases permanently. As a result, firms will _________________. Some firms will _______ the industry, and the industry supply curve will shift _______.

incur economic losses; exit; leftward
incur economic losses; exit; rightward
make normal profits; exit; leftward
make economic profits; enter; rightward

Perfect competition achieves efficiency if ____________________.

producer surplus equals zero
marginal benefit is greater than marginal cost
consumer surplus is greater than producer surplus
there are no external benefits and no external costs

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