Understanding Perfect Competition

Which of the following are a market structure?

• Oligopoly

• Monopoly

• Duopoly

• Monopolistic competition

• Perfect Competition

In perfect competition, firms are considered as:

(a)  

• Price setters

• Price takers
• Oligopolists

• Monopolists

What happens if a firm in perfect competition tries to raise its price above the market level?

(a)  

• They will monopolize the market

• They will increase their profits

• They will attract more customers

• They will lose customers

What does MR=D=AR=P stand for?

• Marginal Rate = Distribution = Average Rate = Price

• Marginal Revenue = Demand = Average Revenue = Price

• Market Rate = Demand = Average Rate = Production

• Market Revenue = Demand = Average Revenue = Production

What rule do firms use to maximize profit?

(a)  

• Produce where MR is less than MC

• Produce where MC is less than MR

• Produce where MR equals MC
• Produce where MC equals AR

What is the shape of the demand curve for an individual firm in perfect competition?

(a)  

• Upward sloping

• Horizontal
• Vertical

• Downward sloping