Perfectly Competitive Markets

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Part 1

A price taker is

• a consumer who accepts different prices from different firms.

• a perfectly competitive firm

• a firm that cannot influence the market price.

Which of the following is a key assumption of a perfectly competitive​ market?

• It is difficult for new sellers to enter the market.

• Commodities have few sellers.

• Each seller has a very small share of the market.

• Firms can influence market price

Which of the following costs may provide barriers to entry in a​ market?

• High research and development expenditures

• License fees

• Sunk costs associated with specialized facilities

• All of the above are correct

If managers do not choose to maximize profit but pursue some other goal such as revenue maximization or​ growth,

• they are less likely to be replaced by stockholders

• they are more likely to become takeover targets of​ profit-maximizing firms.

• they are less likely to be replaced by the board of directors.

Owners and managers

• must be the same people

• may be different people with different​ goals, but in the long​ run, firms that do best are those in which the managers pursue the goals of the owners

• may be different people with different​ goals, and in the long​ run, firms that do best are those in which the managers are allowed to pursue their own independent goals.

• may be different people with the same goals.

Question content area

Part 1

The textbook for your class was not produced in a perfectly competitive industry because

• ​upper-division microeconomics texts are not all alike

• there are so few firms in the industry that market shares are not​ small, and​ firms' decisions have an impact on market price.

• it is not costless to enter or exit the textbook industry.

• of all of the above reasons

The​ "perfect information" assumption of perfect competition includes all of the following except one. Which​ one?

• Firms know their​ costs, prices, and technology.

• Consumers know the prices available

• Consumers can anticipate price changes

• Consumers know their preferences.

An association of businesses that are jointly owned and operated by members for mutual benefit is a

• condominium

• cooperative.

• joint tenancy.

• corporation

Revenue is equal to

• price times quantity minus marginal cost.

• price times quantity.

• expenditure on production of outpu

• price times quantity minus total cost

A firm maximizes profit by operating at the level of output where

• marginal revenue exceeds marginal cost by the greatest amount

• average revenue equals average cost.

• marginal revenue equals marginal cost.

• average revenue equals average cost