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- 1. Multiple Choice
MC crosses the ATC and AVC
where you draw it
at its lowest point
where MR=MC
None of the above
- 2. Multiple Choice
Which of the following markets is closest to perfectly competitive?
airlines
wheat
cell phones
textbooks
- 3. Multiple Choice
Which of the following is NOT an assumption of perfect competition
perfect information
free entry and exit
different goods
lots of buyers/sellers
- 4. Multiple ChoiceThe market for milk is an example of perfect competition. Why?Sellers offer a nearly identical productAnyone can start a dairy farm or leave the dairy business at any timeMany people buy and sell milkAll of the above
- 5. Fill in the Blank
The market price is $10. Marginal revenue for the 10th unit would be
- 6. Multiple Choice
What is the profit maximizing condition?
MR = D
MR = MC
MC = D
D = Profits
- 7. Multiple Choice
Suppose a firm in a perfectly competitive market faces a price which is lower than their average cost (ATC) but higher than their average variable costs (AVC). In the short run, this firm should
shut down
exit the industry
raise the price
produce where MC=MR
- 8. Multiple Choice
Based on this graph, this firm will:
make positive short-run profits
incur losses in the short-run
shut-down in the short run
- 9. Fill in the Blank
In the long-run, price will equal
- 10. Multiple Choice
Firms are incurring short-run losses in a perfectly competitive firm. What will happen in the long-run?
New firms will enter and price will increase
New firms will enter and price will decrease
Firms will exit and price will increase
Firms will exit and price will decrease
- Answer choicesTagsAnswer choicesTags