WorksheetsCompetitive Firms
Total questions: 10
Worksheet time: 5mins
Why did some Communist Markets fail?
Planning Errors
Price Fixing
Political Intervention
Systemic Flaws
What is the role of private ownership of means of production in Capitalism?
Boost Innovation
Increase Shareholder value
Allow Firms to Aquire Capital
Encourage Production
Where, according to the Hotelling model do two beach vendors set up their stand?
At both ends
At equal space from the center
At the center
It does not matter
A competitive firm should shut down if
The price falls below average variable cost
The price falls below average total cost
The price falls below total cost
Never
A competitive firm should exit the market if
The price falls below average variable cost
The price falls below average total cost
The price falls below total cost
Never
A competitive firm’s supply curve is given by
The total cost curve
The average total cost curve
The average variable cost curve
The marginal cost curve
Can competitive firms stay in business if they make zero economic profit?
Yes, in the short run
Yes, as opportunity costs are included in the economic costs
No, the sunk cost will not be recovered
No, competition will force them out of the market
What is true for a competitive firm in the long run?
Price equals the minimum of average variable cost
Price is greater than average total cost
Price is below average variable cost
Price equals total cost
In the long run competitive firms are
Making economic profit
Making zero economic profit
Making zero accounting profit
Making loss
An increase in demand in a perfectly competitive market has the following effect in the long run
The price will increase
Supply will increase and bring the price back to equilibrium
The firm will make profit
There will be a shortage
