Video 3.7 Perfect Competition

Which of the following is a characteristic of a perfectly competitive market?

• High barriers to entry and exit.

• Firms are price makers.

• Products are differentiated.

• Many small firms.

In a perfectly competitive market, what does the individual firm's demand curve represent?

• Marginal Cost, Average Total Cost, and Price.

• Marginal Revenue, Demand, Average Revenue, and Price.

• Total Revenue, Total Cost, and Profit.

• Supply, Demand, and Equilibrium Quantity.

What is the long-run outcome for firms in a perfectly competitive market?

• Firms make economic profits due to high barriers to entry.

• Firms make economic losses, leading to industry contraction.

• Firms make zero economic profit, covering all explicit and implicit costs.

• Firms achieve productive efficiency but not allocative efficiency.

Perfectly competitive firms are considered both allocatively and productively efficient in the long run. What conditions define these efficiencies?

• Allocative efficiency: Price > Marginal Cost; Productive efficiency: ATC is maximized.

• Allocative efficiency: Price = Marginal Cost; Productive efficiency: ATC is minimized.

• Allocative efficiency: Marginal Revenue = Marginal Cost; Productive efficiency: Price = Average Total Cost.

• Allocative efficiency: Price = Average Total Cost; Productive efficiency: Marginal Cost = Average Total Cost.