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Perfect Competition

Authored by Auttapol Suebpongsakorn

Social Studies

University

Used 98+ times

Perfect Competition
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20 questions

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1.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

Which of the following is TRUE regarding a perfectly competitive firm?

The firm can charge a lower price than its competitors and thereby sell more output and increase its profits.

The firm always earns a normal profit.

The firm's marginal revenue continually decreases.

The firm's minimum efficient scale is small relative to the market demand.

2.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

Perfect competition exists in a market if

There are many firms producing an identical product.

There are many firms producing a similar product, each of which may have unique features.

The firm is protected by a barrier to entry.

The firm is always at the break-even point where it is earning only a normal profit.

3.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

When a firm is considered to be a "price taker" that means that the firm

can charge any price that it wants to charge, that is, "take" any price it wants.

pays a fixed price for all of its inputs.

will accept ("take") the lowest price that its customers offer.

cannot influence the market price of the good that it sells.

4.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

In perfect competition, an individual firm

faces unitary elasticity of demand.

has a price elasticity of supply equal to one.

faces a perfectly elastic demand.

has perfectly elastic supply.

5.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

The economic profit of a perfectly competitive firm

is less than its total revenue.

equals its total revenue.

is greater than its total revenue.

is less than its total revenue if its supply curve is inelastic and is greater than its total revenue if its supply curve is elastic.

6.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

For a perfectly competitive firm, price is the same as

Marginal revenue.

Average variable cost.

Total revenue.

Both answers A and B are correct.

7.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Media Image

Sue's Sea Shells by the Sea Shore is a perfectly competitive firm selling sea shells at the market price of $2 per dozen. Sue's Sea Shells by the Sea Shore has fixed costs of $40 per day and a variable cost schedule in the table above. The profit-maximizing level of output for Sue's Sea Shells by the Sea Shore is

202 dozen sea shells by the sea shore per day.

204 dozen sea shells by the sea shore per day.

205 dozen sea shells by the sea shore per day.

206 dozen sea shells by the sea shore per day.

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