Perfect Competition MCQs (part 2 of 2)

In a perfectly competitive market, firms are considered to be:

• Price controllers

• Price makers

• Price takers

• Price setters

What happens to the supply curve when new firms enter a perfectly competitive market?

• Shifts to the right

• Becomes vertical

• Shifts to the left

• Remains unchanged

In the long run, perfectly competitive firms make:

• No economic profit

• Economic loss

• Economic profit

• Supernormal profit

Perfectly competitive firms are allocatively efficient because:

• Price is greater than marginal cost

• Price equals marginal cost

• Price is less than marginal cost

• Marginal cost is zero

In the short run, if a perfectly competitive firm is making a loss, it should:

• Decrease production

• Continue producing if price covers average variable cost

• Shut down immediately

• Increase production

What is the shape of the demand curve for an individual firm in a perfectly competitive market?

• Downward sloping

• Upward sloping

• Horizontal

• Vertical

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

• Price takers

• Homogeneous products

• High barriers to entry

• Many small firms

Which of the following could attract new firm to join an industry?

• Normal profits

• Economic losses

• Economic profits

• Accounting profits

For a competitive firm, marginal revenue equals the price of the good it sells.

• True

• False