Perfect Competition Graph

Based on this graph, this firm will:

• make positive short-run profits

• incur losses in the short-run

• shut-down in the short run

In the short run, the firm will realize an economic loss but will continue to produce if the price is:

• below P2
  

• between P1 and P2 

• between P2 and P3 

• between P3 and P4 

In the graph pictured, TC is total cost and TR is total revenue. At what quantity is profit maximized?

• Q1

• Q2

• Q3

• Q4

In a perfect competition graph, what does the horizontal line represent?

• Demand curve

• Supply curve

• Marginal cost

• Price level

Which of the following is a characteristic of a firm in perfect competition?

• Price maker

• Price taker

• Monopoly power

• Limited entry

In the long run, what is the economic profit for firms in perfect competition?

• Positive

• Negative

• Zero

• Undefined

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

• Shifts left

• Shifts right

• Becomes vertical

• Becomes horizontal

In perfect competition, what is the relationship between marginal cost and price?

• MC > Price

• MC < Price

• MC = Price

• MC is unrelated to Price

What does the area between the demand curve and the price level represent in a perfect competition graph?

• Consumer surplus

• Producer surplus

• Total revenue

• Total cost

Which curve is perfectly elastic in a perfect competition graph?

• Demand curve

• Supply curve

• Marginal cost curve

• Average total cost curve