question
What is Perfect Competition?
answer
neither consumption decisions by individual consumers nor production decisions by individual producers affect the market price of the good
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The model of perfect competition best applies to markets with:
answer
A. a few firms selling identical products.
B. a few firms selling differentiated products
C. many firms selling identical products
B. a few firms selling differentiated products
C. many firms selling identical products
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Which of the following most closely approximates a perfectly competitive market?
answer
A. The automobile industry
B. The illegal drug industry
C. The defense Industry
B. The illegal drug industry
C. The defense Industry
question
Which of the following characteristics is not exhibited by a perfectly competitive market?
answer
A. Many sellers
B. Entry and exists are easy
C. Barriers to entry
B. Entry and exists are easy
C. Barriers to entry
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Which of the following is true of the model of perfect competition?
answer
A. There is a high degree of product differentiation
B. There are only a few, large firms in the market
C. None of the Above
B. There are only a few, large firms in the market
C. None of the Above
question
In the model of perfect competition,
answer
A. There are many firms in the market
B. Each firm produces a product which is indistinguishable from other firms' products
C. All of the Above
B. Each firm produces a product which is indistinguishable from other firms' products
C. All of the Above
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Perfect Competition describes firm behavior when:
answer
A. There are many firms producing identical products and entry is easy
B. There are few firms producing identical products
C. There are few firms producing identical products and entry
B. There are few firms producing identical products
C. There are few firms producing identical products and entry
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Economic profits are earned:
answer
A. When price is less than average fixed cost
B. When price exceeds average total cost
C. When price equals average variable cost
B. When price exceeds average total cost
C. When price equals average variable cost
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The minimum point of average-variable-cost curve is referred to as:
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A. The shutdown price
B. The break-even price
C. Profit maximizing point
B. The break-even price
C. Profit maximizing point
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The minimum point of average-total-cost curve is known as:
answer
A. The break-even price
B. Profit maximizing point
C. Revenue maximizing point
B. Profit maximizing point
C. Revenue maximizing point
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In the short run, the shutdown price:
answer
A. The minimum point of the firms average variable cost curve
B. The minimum point of the firms marginal cost curve
C. The minimum point of the firms demand curve
B. The minimum point of the firms marginal cost curve
C. The minimum point of the firms demand curve
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If a perfectly competitive firm decides to charge less than the market price, it will:
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A. Not be maximizing profits
B. Lower its ATC curve
C. Increase its sales
B. Lower its ATC curve
C. Increase its sales
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To maximize profits in the short run, a perfectly competitive firm will produce that output at which:
answer
A. MR equals demand
B. P=MC
C.MR=ATC
B. P=MC
C.MR=ATC
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When marginal cost is falling for a perfectly competitive firm:
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A. The firm cannot be maximizing profits
B. Average total cost must be increasing
C. Total Revenue is falling
B. Average total cost must be increasing
C. Total Revenue is falling
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The demand curve for a fir in perfect competition is not:
answer
A. It's average revenue curve
B. It's per unit revenue curve
C. It's marginal cost curve
B. It's per unit revenue curve
C. It's marginal cost curve
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T or F: In a perfectly competitive market, the individual demand curve is perfectly inelastic?
answer
True
False
False
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T or F: If a firm is a price taker then the firms individual demand curve will be perfectly elastic?
answer
True
False
False
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T or F: In the model of perfect competition, there are many firms selling identical products in a market with ease entry and exit.
answer
True
False
False
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T or F: Markets with only a few firms are best described by the model of perfect competition.
answer
True
False
False
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T or F: In the model of perfect competition, there are many small firms selling differentiated products in a market with easy entry and exit.
answer
True
False
False
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