Perfect Competition Market

In perfect competition, the marginal revenue of an individual firm 

• is zero

• is positive but less than the price of the product

• equals the price of the product

• exceeds the price of the product

The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______

• perfectly inelastic, perfectly elastic

• downsloping, perfectly inelastic

• downsloping, perfectly elastic

• perfectly elastic, downsloping 

A firm will expand the amount of output it produces as long as its 

• average total revenue exceeds its average total cost

• average total revenue exceeds its average variable cost

• marginal cost exceeds its marginal revenue

• marginal revenue exceeds its marginal cost

In the above figure, if the price is P1, the firm will produce 

• nothing

• where MC equals P1

• where MC equals ATC

• where ATC equals P1

In the figure, if the firm increases its output from Q2 to Q3, it will 

• reduce its marginal revenue

• increase its marginal revenue

• increase its profit

• decrease its profit

The short-run supply curve for a perfectly competitive firm is its marginal cost curve above the minimum point on the 

• average variable cost curve

• average fixed cost curve

• demand curve

• average total cost curve

In the table, the average fixed cost at 4 units of output is 

• $1.00

• $4.50

• $4.70

• $4.80

In the table, the average variable cost at 2 units of output is 

• $1.00

• $2.00

• $4.00

• $4.80

A perfectly elastic demand curve implies that the firm

• must lower price to sell more output

• can sell as much output as it chooses at the existing price

• realizes an increase in total revenue which is less than product price when it sells an extra unit

• is selling a differentiated (heterogeneous) product

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating

• price and average total cost

• price and average fixed cost

• price and marginal revenue

• marginal revenue and marginal cost