The Firm in Perfect Competition

What is the goal of a firm?

• to make profits

• to maximize profits

• to maximize revenue

• none of the above

Marginal =

• Next

• Additional

• Profit

The image above shows a firm making

• Economic Profit

• Economic loss

• Breaking even

• Shutting down

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.

The demand curve for a perfectly competitive firm is:

• perfectly inelastic.
• perfectly elastic.
• downward sloping.
• relatively but not perfectly elastic.

A price-taking firm

• cannot influence the price of the product it sells.

• talks to rival firms to determine the best price for all of them to charge.

• sets the product's price to whatever level the owner decides upon.

• asks the government to set the price of its product.

If a firm sells its output on a market that is characterized by many sellers and buyers, a homogeneous product, unlimited long-run resource mobility, and perfect knowledge, then the firm is a

• monopolist

• oligopolist

• perfect competition

• monopolistic competition