Perfect Competition - QUIZ

Which of the following could attract new firm to join an industry?

• Normal profits

• Economic losses

• Economic profits

• Accounting profits

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

A firm faces a perfectly elastic demand curve, if _____________.

• MC = MR

• MR = AR

• AR = MC

• ATC = AVC

What is the goal of a firm?

• to make profits

• to maximize profits

• to maximize revenue

• none of the above

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

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

For a competitive firm, marginal revenue equals the price of the good it sells.

• True

• False

Under perfect competition , selling cost has ______

• a significant role to play

• Insignificant role to play

• either a or b

• either a or b

Under perfect competition , price is determined at ______

• Equilibrium price of the industry

• Equilibrium price of the firm

• when MC = MR

• All of these

Under perfect competition , each firm is a

• Price maker

• Price taker

• Neither a and b

• Both a and b