Perfect Competition

What defines perfect competition from an economics point of view?

• Selling identical products or services

• Many buyers and sellers

• Perfect information for every participant

• No barriers to entry or exit

What does perfect information mean in the context of perfect competition?

• Every participant knows exactly what is happening in the market

• Participants have limited information about the market

• Only sellers have access to market information

• Buyers have more information than sellers

What is the equilibrium price and quantity for the market in perfect competition?

• Equilibrium quantity is high, equilibrium price is high

• Equilibrium quantity is low, equilibrium price is low

• Equilibrium quantity is low, equilibrium price is high

• Equilibrium quantity is high, equilibrium price is low

What is the marginal cost curve for a firm in perfect competition?

• Upward-sloping

• Vertical

• Horizontal

• Downward-sloping

In perfect competition, what defines the marginal revenue for a firm?

• Average total cost

• Market price

• Demand curve

• Average revenue

What is the behavior of firms in perfect competition with regards to price?

• They have control over the market price

• They constantly undercut each other

• They charge higher than the market price

• They are passive price takers

What is the demand curve for the firm in perfect competition equal to?

• Price that the firm actually gets

• Average total cost

• Marginal revenue

• Marginal cost

What is the main takeaway about the behavior of firms in perfect competition?

• They have control over the market price

• They constantly change their prices

• They produce where marginal cost intersects with average total cost

• They are aggressive price setters

What is the impact of no barriers to entry in perfect competition?

• It allows anyone to enter the industry

• It restricts new entrants

• It leads to higher prices

• It results in limited competition

Why might perfect competition not be desirable in certain markets?

• It leads to higher quality products

• It encourages innovation

• It allows for barriers to entry

• It may not require specialized skills or training