Free Printable Perfect Competition

1.

When marginal product is 0 ...

a)

Total product is decreasing

b)

Total product is at its max

c)

Total product is increasing

d)

Total product is negative

2.

In the long run, perfectly competitive firms...

a)

will make an accounting profit

b)

will make an economic profit

c)

will make a normal profit

d)

must cover their explicit cost, but not their implicit costs

3.

There are no fixed costs in the long run

a)

True

b)

False

4.

Which of the following is NOT a formula to find marginal cost?

a)

$\ \frac{\Delta Total\ Cost\ }{\Delta Quantity}$

b)

$\ \frac{\Delta Variable\ Cost\ }{\Delta Quantity}$

c)

$\frac{\text{d}P}{\text{d}Q}\ of\ Total\ Cost$

d)

$\frac{Total\ Cost}{Quantity}$

5.

Which of the following graphs could show a perfectly competitive firm in a long run equilibrium?

a)

b)

c)

6.

A perfectly competitive firm produces where...

a)

ATC = MC

b)

MC = ATC

c)

MC = AR

d)

ATC = MR

7.

A firm will exit the market in the short run if...

a)

P < ATC

b)

AVC < P < ATC

c)

P = ATC

d)

P < AVC

8.

Which of the following will increase the profits of a perfectly competitive firm in the short run?

a)

An innovation that decreases MC

b)

A decreased demand for the product

c)

An increase in an input cost

d)

More firms enter the industry

9.

Which of the following describes the purpose of expansionary fiscal policy?

a)

Create inflation

b)

Counter inflation

c)

Decrease unemployement

d)

Increase GDP

10.

Which of the following is NOT a direct reason for sticky wages?

a)

Minimum wages

b)

Employment contracts

c)

Trade unions

d)

Government spending

11.

What did Keynes believe was the key to returning an economy in a recession back to equilibrium?

a)

Increasing aggregate supply

b)

Increasing aggregate demand

c)

Decreasing aggregate demand

d)

Decreasing aggregate supply

12.

How did Keynes and Friedman differ about the main cause of the Great Depression?

a)

Nobody knows....

b)

Keynes believed it was a failure of the free market; Friedman a failure of the Federal Reserve

c)

Keynes believed it was a failure of the Federal Reserve; Friedman a failure of the free market

d)

Keynes believed it was a failure of government intervention; Friedman a failure of foreign policy

Perfect Competition

Total questions: 12

Worksheet time: 8mins

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