question
Firms in a perfectly competitive market achieve both allocative and productive efficiency in the short run.
answer
FALSE
question
For a perfectly competitive firm, price is identical to marginal revenue at every quantity.
answer
TRUE
question
Perfectly competitive firms are sometimes called price makers because they have significant control over product price.
answer
FALSE
question
Consumers benefit from market exchange when the maximum price they are willing to pay for a unit of a good is less than what they usually pay.
answer
FALSE
question
In a perfectly competitive market, what can one farmer do to change the market price?
answer
The firm cannot change the market price.
question
Perfectly competitive firms will leave the industry that they are operating in if they _____
answer
are unable to cover their variable costs
question
If Harry's Blueberries, a perfectly competitive firm, shuts down in the short run, Harry must pay _____
answer
only the fixed cost of production.
question
To achieve allocative efficiency, firms _____
answer
produce the output consumers value most
question
In the short run, a firm will produce a positive amount of output as long as _____
answer
price exceeds average variable cost.
question
For a perfectly competitive firm, ____
answer
price equals marginal revenue at all output levels.
question
Which of the following firms is most likely to be a perfectly competitive firm?
answer
a farm that grows soybeans
question
A perfectly competitive firm is currently producing at a point where price is $10 and both marginal cost and average variable cost are $7. To maximize profit or minimize loss in the short run, this firm should _____
answer
increase its output.
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