Perfectly Competitive Market

In a perfectly competitive market, there are:

• Few sellers

• Many buyers

• Barriers to entry

• Homogeneous products

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

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

The demand curve facing a perfectly competitive firm is

• perfectly vertical

• perfectly horizontal.

• the same as the market demand curve

The perfectly competitive​ firm's marginal revenue curve is

• horizontal.

• vertical.

• upward sloping.

According to this graph, if this firm sells 1 more item what is the marginal revenue?

• Indeterminent

• 10/Q

• $10

• MR=MC

In order to maximize profit, this firm should produce how many?

• 7

• 8

• 9

• None

According to this model, what is true about the firm?

• To maximize profit the firm should produce 15.

• Total Revenue is $23

• It is making zero economic profit.

• Total Cost is $23

According to this model, what can you say is true about the firm

• It should not produce and shut down.

• It is operating at a loss.

• It's marginal revenue is 8.

• This is an example of a firm in the short run.

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

• No barriers to entry and exit

• Large firms

• Perfect Information

• Homogenous product