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WorksheetsPerfect Competition
Total questions: 18
Worksheet time: 27mins
What is the goal of a firm?
to make profits
to maximize profits
to maximize revenue
none of the above
Total Revenue (minus) Explicit and Implicit cost =
Accounting Profit
Economic Profit
Economic Cost
Total Profit
Select all that apply: Rent would be an example of a
Implicit cost
Explicit Cost
Variable cost
Fixed cost
Fixed Costs are only fixed in the
Long run
Short run
Period where there is neither a profit or a loss
none of the above
A firm in the long run will make
Losses
Economic Profit
Profits greater than MC
none of the above
Marginal =
Next
Additional
Profit
To find TC from ATC, you simply
Multiply by the cost
Divide by the quantity
Multiply by the quantity
Divide by the cost
MR =
MC
NC
WC
KFC
If a AFC curve is not present but AVC does not equal the ATC then
you are in the short run
you are in the long run
MC crosses the ATC and AVC
where you draw it
at its lowest point
where MR=MC
None of the above
If Q is increasing but so is ATC then it must be
Economies of Scale
Constant returns to scale
Diseconomies to scale
bad
If ATC is going down and Quantity is increase then
Economies of Scale
Diseconomies of Scale
Constant returns to scale
none
The lowest possible ATC point is the
Efficiency scale
Efficient scale
Profit Maximization condition
none
What is the profit maximizing condition?
MR = D
MR = MC
MC = D
D = Profits
Check all that apply: Which of the following are characteristics of a perfectly competitive market?
Many buyers/sellers
Identical Products
Price Makers
Low barriers of entry
The image above shows a firm making
Economic Profit
Economic loss
Breaking even
Shutting down
Should the following firm shutdown?
Yes
No
Not enough information present
Select all that apply: When should a firm decide to shutdown?
When their demand curve is below AVC
When their MR curve is below AVC
When the price is below the AVC
When the MC is below the AVC
