AP Unit III Micro Review

The shutdown point for a firm in perfect competition is when

• p = mc

• p = minimum ATC

• p = minimum AVC

• p = mr

If a firm in perfect competition tried to raise prices its revenue would

• decrease

• increase

• decrease to $0

• decrease by an indeterminate amount

If Mark wants to sell his corn at a local farmer's market, he must be aware that the product is standardized and that he will have no control over the price. The market structure he is MOST likely participating in is

• monopolistic competition
• oligopoly
• perfect competition
• monopoly

The demand curve for a firm in perfect competition is

• relatively elastic and has a coefficient greater than 1

• relatively inelastic and has a coefficient less than 1

• perfectly inelastic and has a coefficient of 0

• perfectly elastic and has a coefficient of infinity

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.

In the short run firms in perfect competition are taking a loss. Now assume that the market now adjust to its long run equilibrium. Which of following will occur?

• Market Price Increases Firm Price Decreases

• Market Quantity Decreases Firm Quantity Increases

• Market Quantity Decreases Firm Price Decreases

• Market Quantity Increases Firm Quantity Decreases

Profits will be maximized when a firm produces the quantity at which

• MR = minimum ATC

• MR = MC

• MC = minimum ATC

• P = minimum AVC

If the price of a product is $30 and its marginal cost is $15:

• resources are being underallocated to the product

• resources are being over allocated to the product

• the firm is producing an optimal amount

• the firm is allocatively efficient

A firm in perfect competition is _______ in the short run and ________ in the long run.

• productively efficient, allocatively efficient

• allocatively efficient, productively efficient

• allocatively efficient, allocatively efficient & productively efficient

• productively efficient, productively efficient & allocatively efficient

This is the easiest market structure to enter because of low barriers to entry and the number of producers. 

• Monopoly
• Monopolistic Competition
• Perfect Competition
• Oligopoly