Chapter 8- Perfect Competition

What condition indicates a supernormal profit?

• P(AR) = AC

• P(AR) < AC

• P(AR) = 0

• P(AR) > AC

When does a firm achieve normal profit?

• P(AR) = AC

• P(AR) > AVC

• P(AR) < AC

• P(AR) > AC

What does it mean if P(AR) < AC?

• The firm is maximizing revenue

• The firm is breaking even

• The firm is making a profit

• The firm is making a loss

What is the shutdown condition for a firm?

• P(AR) < AC

• P(AR) > AVC

• P(AR) = AC

• P(AR) = AVC

At the point of equilibrium, what must be true for profit maximization?

• MR = MC

• MR < MC

• MR > MC

• TR > TC

What happens when TR < TC?

• The firm is making a supernormal profit

• The firm is making a normal profit

• The firm is making a loss

• The firm is maximizing profit

What is the condition for long run equilibrium?

• P(AR) > AVC

• P(AR) < AC

• P(AR) < AVC

• P(AR) = AC

What does MR stand for in the context of market structure?

• Market Rate

• Marginal Revenue

• Mean Revenue

• Maximum Revenue

If a firm continues production, what can be inferred about P(AR) and AVC?

• P(AR) < AVC

• P(AR) = AVC

• P(AR) > AVC

• P(AR) = AC

What is the term for when TR = TC?

• Loss

• Subnormal Profit

• Normal Profit

• Supernormal Profit