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- 1. Multiple ChoicePrice takers are individuals in a market who:select a price from a wide range of alternatives.select the lowest price available in a competitive market.select the average of prices available in a competitive market.have no ability to affect the price of a good in a market.
- 2. Multiple Choice
The market for breakfast cereal contains hundreds of similar products, such as Froot Loops, Corn Flakes, and Rice Krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:
many buyers and sellers.
a standardized product.
complete information.
ease of entry and exit.
- 3. Multiple ChoiceThe demand curve for a perfectly competitive firm is:perfectly inelastic.perfectly elastic.downward sloping.relatively but not perfectly elastic.
- 4. Multiple ChoiceIn the short run, a perfectly competitive firm produces output and breaks even if:the firm produces the quantity at which P < ATC.the firm produces the quantity at which P = ATC.the firm produces the quantity at which P > ATC.the firm produces the quantity at which P = (TR/Q + TC/Q) × Q.
- 5. Multiple Choice
Shut DownTake loss but stay openNormal ProfitPositive Economic Profit - 6. Multiple ChoiceThis perfect competitor will maximize profits at what output level?ABCD
- 7. Multiple ChoiceAt price G, the area of which rectangle represents total revenue for the profit-maximizing perfect competitor?0GKC0FJCFGKJEFJH
- 8. Multiple Choice
Perfect competition is best described as a market with
few firms producing essentially the same product
many firms producing essentially the same product
many firms producing very different products
few firms producing very different products
- 9. Multiple Choice
Which is not a requirement for a market to have perfect competition?
Diverse buyers and sellers participate in a market
Sellers offer the same products
Sellers can freely enter and exit the market
Consumers and producers are informed about products
- 10. Multiple Choice
A factor that makes it difficult for firms to enter a market is called...
a barrier to entry
an obstacle to entry
a block to entry
an impediment to entry
- 11. Multiple Choice
Perfect competition pushes firms to
maximum sales
take over other firms
maximum possible output
efficiency
- 12. Multiple Choice
Which of the following is NOT a characteristic of a perfectly competitive market?
Free entry and exit
Numerous sellers
Perfect information
No substitutes
- 13. Multiple ChoiceFor a perfectly competitive firm producing the profit-maximizing quantity, the average total cost is $10 and the average variable cost is $8. If the market price for its product is $10, which of the following is true for the firm?It is sustaining a loss and should shut down.It is earning zero economic profit and will remain in business.
It will temporarily shut down until price rises.The firm is earning positive economic profit. - 14. Multiple ChoiceIn the graph pictured, TC is total cost and TR is total revenue. At what quantity is profit maximized?Q1Q2Q3Q4
- 15. Multiple ChoiceAll of the following are essential characteristics of a perfectly competitive industry EXCEPT:All products produced by the firms in the industry are homogeneous.All firms in the industry are price takers.Price is equal to marginal revenue for every firm in the industry.There are barriers to entry into and exit from the industry.
- 16. Multiple Choice
The image above shows a firm making
Economic Profit
Economic loss
Breaking even
Shutting down
- 17. Multiple Choice
Should the following firm shutdown?
Yes
No
Not enough information present
- 18. Multiple ChoiceThe reason that firms in perfect competition earn zero economic profit in the long run is that:Firms are smallThere are a large number of sellersThere are no barriers to entry or exitEach firm has control over market price
- 19. Multiple ChoiceA perfectly competitive market in equilibrium is allocatively efficient and it maximizes:total revenuetotal consumer surplus
total producer surplus
the sum of total consumer surplus and total producer surplus - 20. Multiple ChoiceBased on the graph of a perfectly competitive firm, which of the following statements is TRUE?Price is equal to average total costNew firms are likely to enter the market in the long runEconomic profits are zeroThe market is in long run equilibrium
- 21. Multiple ChoicePrice takers are individuals in a market who:select a price from a wide range of alternatives.select the lowest price available in a competitive market.select the average of prices available in a competitive market.have no ability to affect the price of a good in a market.
- 22. Multiple ChoiceIn the short run, a perfectly competitive firm produces output and breaks even if:the firm produces the quantity at which P < ATC.the firm produces the quantity at which P = ATC.the firm produces the quantity at which P > ATC.the firm produces the quantity at which P = (TR/Q + TC/Q) × Q.
- 23. Multiple Choice
Productive efficiency is about
ensuring the costs of production are as low as they can be
using the most up-to-date technological method
making as much profit as possible
All of the above
None of the above
- 24. Multiple Choice
The price charged by a perfectly competitive firm is
higher the more the firm produces.
lower the more the firm produces.
the same as the market price.
indeterminate.
different than the price charged by competing firms.
- 25. Multiple Choice
MR DARP stands for
marginal revenue
demand
average revenue
price
all of the above
- 26. Multiple Choice
If the corn industry is perfectly competitive and the market price for corn is $3 per bushel. How many bushels will Farmer Kardashian sell at $3.50 per bushel?
more than she would at a price of $3 per bushel
some, but fewer than she would at $3 per bushel
just as many as she would at $3 per bushel
none
more info is needed about the prices of other farmers
- 27. Multiple Choice
At price $5, the firm is operating in
long run equilibrium at break even.
short run equilibrium with an economic loss.
long run equilibrium with an economic loss.
short run equilibrium with an economic profit.
short run equilibrium at break even.
- 28. Multiple Choice
This firm is experiencing
economic loss.
economic profit.
normal profit.
accounting profit.
break-even profit.
- 29. Multiple Choice
In the long run we would expect firms to _______ the industry and the market price to _______
leave; rise
leave; fall
enter; rise
enter; fall
enter; remain the same.
- 30. Multiple Choice
In the long run we would expect firms to _____ the market and the market price to ______.
enter; rise
enter; fall
leave; rise
leave; fall
profit from the market; remain the same.
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