Perfect Competition Graph

Did the equilibrium price increase or decrease?

• Increase

• Decrease

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 perfectly competitive market?

• Few sellers

• Product differentiation

• Price takers

• High barriers to entry

In the long run, what is the economic profit for firms in a perfectly competitive market?

• Positive

• Negative

• Zero

• Variable

What happens to the supply curve in a perfect competition graph when new firms enter the market?

• Shifts left

• Shifts right

• Becomes vertical

• Becomes horizontal

Which curve is identical to the demand curve in a perfect competition graph?

• Average total cost

• Marginal cost

• Marginal revenue

• Average variable cost

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

• Price is greater than marginal cost

• Price is less than marginal cost

• Price equals marginal cost

• Price is unrelated to marginal cost

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

• Downward sloping

• Upward sloping

• Vertical

• Horizontal

Which of the following is NOT a feature of perfect competition?

• Free entry and exit

• Perfect information

• Product homogeneity

• Monopoly power

In a perfect competition graph, what does the intersection of the supply and demand curves represent?

• Market equilibrium

• Excess supply

• Excess demand

• Price ceiling