Free Practice Quiz Question List

2 Short-Run Firm and Market Decisions Online Quiz Questions

Use this free practice quiz with 20 questions to review 2 Short-Run Firm and Market Decisions, test your knowledge, and prepare for your next test or exam.

20 questions

Written response

1 point

At the firm’s best operating output, price is $8 per unit, average variable cost is $6 per unit, and output is 100 units. How many dollars does operating contribute toward fixed costs?

Written response

1 point

At a market price of $5, quantity supplied is 90 units and quantity demanded is 60 units. How many units is the surplus?

Written response

1 point

At an output of 100 units, a firm has average total cost of $10 per unit and average variable cost of $6 per unit. What is its total fixed cost in dollars?

Choose one

1 point

A price-taking firm can sell its output at the market price of $12 per unit. What is its marginal revenue from selling one additional unit?

A
$0 per unit
B
$12 per unit
C
The firm’s marginal cost at every output
D
A value that depends on the firm’s total cost

True or false

1 point

A market price above equilibrium tends to create a surplus, which puts downward pressure on the price.

A
True
B
False

Choose one

1 point

Which description best identifies a perfectly competitive firm’s short-run supply curve?

A
The entire marginal-cost curve, including values below minimum AVC
B
The average-total-cost curve wherever it lies above price
C
The rising portion of the marginal-cost curve at and above minimum AVC
D
The average-variable-cost curve above its minimum

Choose one

1 point

At a particular market price, Firm A supplies 12 units and Firm B supplies 9 units. What is the market quantity supplied at that price?

A
3 units
B
21 units
C
108 units
D
The average of the two firms’ quantities

Choose one

1 point

A firm’s fixed cost rises, but its marginal cost and average variable cost curves do not change. What happens to its short-run supply curve?

A
It remains unchanged if marginal cost and average variable cost are unchanged.
B
It shifts upward by the amount of the fixed-cost increase.
C
It shifts downward because the firm must recover the higher fixed cost.
D
It disappears because the firm must shut down.

Written response

1 point

A price-taking firm sells 70 units at a market price of $9 per unit. What is its total revenue, in dollars?

Choose one

1 point

A competitive firm is producing on the rising portion of its marginal-cost curve, and at its current output the market price is greater than marginal cost. Which adjustment would increase profit?

A
Reduce output until price is below marginal cost.
B
Keep output unchanged because the firm is a price taker.
C
Increase output toward the quantity where price equals marginal cost.
D
Shut down because price exceeds marginal cost.

True or false

1 point

If market price equals a firm’s minimum AVC, the firm is indifferent between shutting down and producing at the shutdown-point output.

A
True
B
False

Choose one

1 point

At its best operating output, a firm faces a price above minimum AVC but below ATC. What should it do in the short run?

A
Shut down because price is below average total cost.
B
Produce at the output where price equals marginal cost.
C
Produce only if price also covers all fixed costs.
D
Exit the market immediately because it is earning a loss.

Choose one

1 point

A competitive firm faces a market price of $5 per unit, while its minimum average variable cost is $7 per unit. What is the firm's best short-run choice?

A
Continue producing because fixed costs are unavoidable.
B
Temporarily shut down and produce zero output.
C
Exit the market immediately.
D
Produce where price equals average total cost.

Choose one

1 point

The market price of a good is below its competitive-market equilibrium price. Which outcome and price pressure are most likely?

A
A shortage tends to put upward pressure on price.
B
A surplus tends to put upward pressure on price.
C
A shortage tends to put downward pressure on price.
D
Quantity demanded must equal quantity supplied.

Choose all

1 point

At an output of 10 units, a firm's total fixed cost is $40 and its total variable cost is $60. Select all correct statements about its costs at this output.

A
Total cost is $100.
B
Average variable cost is $6 per unit.
C
Average total cost is $10 per unit.
D
Average variable cost is $10 per unit.
E
Total fixed cost is part of total variable cost.

Choose all

1 point

Three competitive firms face a market price of $9 per unit. Firm A's minimum AVC is $6, Firm B's is $11, and Firm C's is $8. Select all statements that correctly describe their short-run choices.

A
Firm A should operate.
B
Firm B should temporarily shut down and supply zero output.
C
Firm C should operate.
D
All three firms should supply positive output.
E
Firm C should exit the market immediately.

True or false

1 point

A market has a quantity demanded of 240 units and a quantity supplied of 240 units at the current price. The market is at competitive equilibrium.

A
True
B
False

Fill in the blank

1 point

A cost that does not vary with a firm's current output is its .

Fill in the blank

1 point

A temporary short-run decision to stop producing while unavoidable costs remain is a . A longer-run decision to leave the market is an .

Open ended

1 point

A firm temporarily shuts down and produces zero units for a period. Its total fixed cost for that period is $1,200. State its output, total revenue, total variable cost, total cost, and profit for that period, and briefly explain why its profit is not zero.

2 Short-Run Firm and Market Decisions Online Quiz Questions

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