Perfect Competition

Which of the following is a characteristic of perfect competition?

• the model can be accurately applied to real life

• the model cannot be applied to real life at all

• the model is based on some assumptions but it's nature is still theoretical

• the model can only be applied in developed countries

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

• the industry consists of a very large number of small firms

• the industry consists of a very large number of large firms

• the firms in the competition do not have control over the prices

• the firms cannot affect the supply chain of the whole industry

Which of the followings are characteristics of products sold in a perfect competition?

• The goods in the competition are always complementary

• The goods all have different brand names and logos

• all of the above

• none of the above

Which of the following is true for firms in a perfect competition?

• The firms have to fill different kinds of forms in order to enter the industry.

• The firms have to notify the local governments whey they are leaving the industry.

• There is no restriction for entry or exit

• The firms have to get consents from other firms in the industry before entering

Which industry can be suggested as quite close to be perfectly competitive markets?

• Energy (e.g. oil)

• Real-estates

• Automobile

• Agricultural

How firms in a perfect competition determine price?

• Set prices according to the quality of their products

• Follow the price in the market

• Consider target customers' disposable income

• Consider target customers' buying preferences

When will firms maximize profits

• MC=MR

• MSB=MSC

• MR=ATC

• MC=TR

In the short tun in perfect competition, what are two possible outcomes

• short-run abnormal profits

• short-run losses

• both

• none

what are possible outcomes of perfect competition in the long run

• abnormal profit

• losses

• break-even

• all of the above

Why equilibrium is the long-term outcome of perfect competition?

• The government will adjust the demand to the optimal level

• The consumer will lose their interests in certain goods over time

• The industry will adjust itself because there are firms entering/leaving the industry

• Laws will make sure the businesses are not making abnormal profits.