Intro to Perfect Competition

Which of the following is NOT a characteristic of a perfectly competitive market?

• Price-setting behavior

• Identical goods

• Many buyers and sellers

• Free entry and exit

Which of the following is an example of a very competitive market?

• Stock market

• Electrical utilities

• Diamonds

• Pharmaceuticals

If the market price is $10, then the marginal revenue for a perfectly competitive firm is

• $10

• Greater than $10

• Less than $10

• Unknown

The demand curve for a perfectly competitive firm is downward sloping.

• True

• False

If MC = 10 and MR = 10 when q=100, what should the firm do?

• Increase output

• Decrease output

• Keep output the same

If MC = 10 and MR = 30, then what should the firm do?

• Increase output

• Decrease output

• Keep output the same

The break-even point occurs when

• MR = AVC

• MR=MC

• MR=ATC=MC

• MR=AVC=MC

When should a firm shut-down in the short-run?

• When market price falls below AVC

• When market price is between AVC and ATC

• When market price is greater than or equal to ATC

Draw an example of the short-run supply curve for a firm. Include the vertical part.