question
Which of the following industries most closely approximate pure competition:
-agriculture
-farm implements
-clothing
-steel
-agriculture
-farm implements
-clothing
-steel
answer
Agriculture
question
A purely competitive seller is
answer
A "price taker"
question
Which of the following is NOT a characteristic of pure competition:
-pricing strategies by firms
-a standardization product
-no barriers to entry
-a larger number of sellers
-pricing strategies by firms
-a standardization product
-no barriers to entry
-a larger number of sellers
answer
Price strategies by firms
question
The demand schedule or curve confronted by the individual, purely competitive firm is
answer
Perfectly elastic
question
If a firm in a purely competitive industry is confronted with an equilibrium price of 5$, it's marginal revenue
answer
Will also be 5$
question
The demand curve in a purely competitive industry is ___________. While the demand curve to a single firm in that industry is __________.
answer
Down-sloping, perfectly elastic
question
Marginal revenue is the
answer
change in total revenue associated with the sale of one more unit of output
question
A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating
answer
Marginal revenue and marginal cost
question
Suppose you find that the price of your product is less than minimum AVC. You should
answer
Close down because, by producing, your losses will exceed your total fixed costs.
question
Which of the following distinguishes the short run from the long run in pure competition?
answer
Firms can enter and exit the market in the long run but not in the short run
question
If a purely competitive firm is producing at the MR = MC output level and earning an economic profit, then
answer
new firms will enter this market.
question
Long-run competitive equilibrium
answer
results in zero economic profits
question
Allocative efficiency is achieved when the production of a good occurs where
answer
P=MC
question
The term productive efficiency refers to
answer
the production of a good at the lowest average total cost
question
If the price of bottled water is $2 and the marginal cost of producing it is $2.50,
answer
If the price of bottled water is $2 and the marginal cost of producing it is $2.50,
question
Under pure competition, in the long run
answer
Under pure competition, in the long run
question
Which of the following conditions is true for a purely competitive firm in long-run equilibrium?
answer
P = MC = minimum ATC.
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