Perfect competition

Perfect competition

by Kendrick Broadus

Open Ended

What do you know about monopolies?

Open Ended

What do you know about Oligopolies?

Multiple Choice

What are the two main characteristics of perfect competition?

• Numerous Sellers

  &

  Standardized Product

• Supply and Demand

• Fixed assets and flexibility

Multiple Select

What are two other characteristics of Perfect competition? (Pick all that apply)

• Free entry and exit

• Perfect information

• supply & demand

• Demand curve

Open Ended

explain what free entry into the market means

Open Ended

What are 2 things you learned from this video?

Multiple Choice

Which of the following events shifts the short-run aggregate supply curve to the right?

• a decrease in the money supply

• a drop in oil prices

• an increase in government spending on military equipmentd

• an increase in price expectations

Open Ended

What is 1 thing you learned from this video

Multiple Select

(Long Run Industry Supply)

What happens when supply increases?

• demand drops

• output rises

• demand drops

Multiple Choice

The time frame in which the quantities of ALL factors of production can be varied is...

• Short run

• Long run

• Sunk Cost

• Medium Run

Multiple Choice

The total product is...

• Only the minimum quantity of labour

• The past expenditure on something that has no resale value

• The maximum output that a given quantity of labour can produce

Multiple Choice

The cost of all the firm's variable inputs is called...

• Total cost

• Very expensive

• Minimum cost

• Total variable cost

Multiple Choice

Perfect competition is an industry with...

• a few firms producing identical goods

• many firms producing goods that differ somewhat

• many firms producing identical goods

Multiple Choice

In perfect competition, the firm's marginal revenue curve...

• cuts its demand curve from below, going from left to right

• always lies below its demand curve

• cuts its demand curve from above, going from left to right

Multiple Choice

A competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its...

• external costs

• variable costs

• depreciation due to machinery becoming obsolete

Multiple Choice

In perfect competition...

• there are significant restrictions on entry

• each firm can influence the price of the good

• all firms in the market sell their product at the same price

Multiple Choice

Perfect competition is characterized by

• a large number of sellers and buyers.

• diverse products.

• sellers acting together to set prices.

• uninformed buyers and sellers.

Multiple Choice

Under perfect competition,

• products are similar but not identical.

• numerous restrictions prevent firms from entering the market.

• no seller can sell a product above the prevailing market price.

• a single seller can affect price.

Multiple Choice

A perfect competitive firm charges a price that is ____________.

• different to other firms

• higher than other firms

• lower than other firms

• similar to other firms

Multiple Choice

Which of the following is not a characteristic for perfect competition?

• No barriers to entry and exit

• Large firms

• Perfect Information

• Homogenous product

Multiple Choice

In perfect competition, restrictions on entry into an industry

• apply to labor but not to capital

• do not exist

• apply to both capital and labor

• apply to capital but not to labor

Multiple Choice

The demand curve for a perfectly competitive firm is:

• perfectly inelastic.

• perfectly elastic.

• downward sloping.

• relatively but not perfectly elastic.

Multiple Choice

Entry and exit in perfect competition is

• restricted

• free

• both are correct

Multiple Choice

Number of buyers and sellers in a perfect competition is

• few

• large

• 2

Multiple Choice

If one perfectly competitive firm increases its level of output, market supply

• will increase and market prices fall

• will increase and market prices rise

• and market price will both remain constant

• will decrease and market prices rise

Multiple Choice

in perfect competition sellers

• control prices

• enter and exit the market easily and freely

• join with other sellers to influence prices

• have incomplete information about market conditions

Multiple Choice

Based on the cost and output data in the table shown, a perfectly competitive firm will shut down if price falls below:

• $15 

• $16

• $18

• $20

Multiple Choice

All of the following are essential characteristics of a perfectly competitive industry EXCEPT:

• All products produced by the firms in the industry are homogeneous.

• All firms in the industry are price takers.

• Price is equal to marginal revenue for every firm in the industry.

• There are high barriers to entry into the industry.

Multiple Choice

In the short run, if a firm produces the level of output at which marginal revenue is equal to marginal cost but price is less than average total cost, the firm will: 

• always shut down production

• expand output to lower its average fixed cost 

• continue to operate if price is greater than its average variable cost

• increase out put to increase revenue 

Multiple Choice

Buyers and sellers act dependently.

• TRUE

• FALSE

Multiple Choice

Perfect competition involves:

• Sellers working together to set prices
• A large number of buyers & sellers
• Difficulty entering & exiting the market
• Little information is available to buyers

Multiple Choice

The market for milk is an example of perfect competition. Why?

• Sellers offer a nearly identical product
• Anyone can start a dairy farm or leave the dairy business at any time
• Many people buy and sell milk
• All of the above