Which of the following is not necessarily a characteristic of perfect competition? (Points: 1)
low prices
a large number of buyers and sellers
a homogeneous product
perfect information
2. In the short run, a perfectly competitive ball bearing manufacturer will continue to produce at a loss if (Points :1)
it is covering all of its variable cost plus part of its fixed cost
it is covering all of its fixed cost
variable cost is less than the fixed cost
fixed cost is zero
3. The golden rule of profit maximization states that any firm maximizes profit by producing where (Points :
marginal revenue equals marginal cost
demand is unit elastic, and total revenue is the greatest
price equals marginal revenue
price equals marginal cost
4. Which of the characteristics of perfect competition assures that economic profit will be zero in the long run? (Points: 1)
There are easy entry and exit in the market.
Each firm is a price taker.
Each firm has access to perfect information.
Each firm is small relative to the market.
5. A constant-cost industry is distinguished by the fact that(Points: 1)
firms' short-run average total costs are horizontal
firms' short-run marginal cost curves are horizontal
the long-run industry supply curve is perfectly elastic
the short-run industry supply curve is perfectly elastic
6. Commodity products are (Points: 1)
pasteurized
bland
perceived by consumers to be identical
made by one manufacturer
7. In a perfectly competitive industry we are likely to find(Points: 1)
firms producing a wide variety of products
barriers to entry
no profit possible in the short run
firms that do not advertise
8. Perfectly competitive firms are price takers because (Points :1)
all small firms must take the price set by the largest firm in the market
firms take the price that government determines is a "fair" price
each firm is small and goods are perfect substitutes for one another
free entry and exit in the short run creates a constant market price in the long run
9. In perfect competition, if one firm raises its price, (Points :1)
others will follow
that firm will increase its revenues
that firm will lose revenues because other firms will not follow
all consumers will be adversely affected
10. Suppose, at its present rate of output, a perfectly competitive firm's marginal revenue exceeds both its marginal cost and its average variable cost. To maximize profit, the firm should (Points: 1)
lower the price
raise the price
increase output
reduce output
Which of the following is not necessarily a characteristic of perfect competition? (Points: 1)
low prices
a large number of buyers and sellers
a homogeneous product
perfect information
2. In the short run, a perfectly competitive ball bearing manufacturer will continue to produce at a loss if (Points :1)
it is covering all of its variable cost plus part of its fixed cost
it is covering all of its fixed cost
variable cost is less than the fixed cost
fixed cost is zero
3. The golden rule of profit maximization states that any firm maximizes profit by producing where (Points :
marginal revenue equals marginal cost
demand is unit elastic, and total revenue is the greatest
price equals marginal revenue
price equals marginal cost
4. Which of the characteristics of perfect competition assures that economic profit will be zero in the long run? (Points: 1)
There are easy entry and exit in the market.
Each firm is a price taker.
Each firm has access to perfect information.
Each firm is small relative to the market.
5. A constant-cost industry is distinguished by the fact that(Points: 1)
firms' short-run average total costs are horizontal
firms' short-run marginal cost curves are horizontal
the long-run industry supply curve is perfectly elastic
the short-run industry supply curve is perfectly elastic
6. Commodity products are (Points: 1)
pasteurized
bland
perceived by consumers to be identical
made by one manufacturer
7. In a perfectly competitive industry we are likely to find(Points: 1)
firms producing a wide variety of products
barriers to entry
no profit possible in the short run
firms that do not advertise
8. Perfectly competitive firms are price takers because (Points :1)
all small firms must take the price set by the largest firm in the market
firms take the price that government determines is a "fair" price
each firm is small and goods are perfect substitutes for one another
free entry and exit in the short run creates a constant market price in the long run
9. In perfect competition, if one firm raises its price, (Points :1)
others will follow
that firm will increase its revenues
that firm will lose revenues because other firms will not follow
all consumers will be adversely affected
10. Suppose, at its present rate of output, a perfectly competitive firm's marginal revenue exceeds both its marginal cost and its average variable cost. To maximize profit, the firm should (Points: 1)
lower the price
raise the price
increase output
reduce output
Related textbook solutions
Related questions
QUESTION 22
For a perfectly competitive firm, profit maximization (or loss minimization) occurs at the level of output at which
| a. |
MR = MC. |
|
| b. |
MR = AVC. |
|
| c. |
P = ATC. |
|
| d. |
MR = ATC. |
4 points
QUESTION 23
If MR > MC, then
| a. |
profits are being maximized. |
|
| b. |
the firm is producing too much of the good to be maximizing profits. |
|
| c. |
the firm can increase its profits (or minimize its losses) by increasing output. |
|
| d. |
the firm must be incurring losses. |
4 points
QUESTION 24
If firms are earning zero economic profits, they must be producing at an output level at which
| a. |
price minus marginal cost. |
|
| b. |
total revenue equals total costs, in other words, normal profits. |
|
| c. |
price equals average variable cost. |
|
| d. |
marginal revenue equals marginal cost. |
|
| e. |
none of the above |
4 points
QUESTION 25
In the theory of perfect competition,
| a. |
the market demand curve is horizontal. |
|
| b. |
the single firm faces a horizontal demand curve. |
|
| c. |
the single firm faces a downward-sloping demand curve. |
|
| d. |
the market demand curve is downward sloping. |
|
| e. |
b and d |
Match the following.
| constant-cost industry | A market structure in which a large number of firms sell a homogenous product or service with no restrictions on entry or exit and each firm is a price-taker. |
| increasing-cost industry | The demand facing a price-taking firm. |
| long-run equilibrium | A firm produces zero output but must still pay its fixed costs. |
| marginal revenue product | Price below which a firm shuts down in the short run. |
| perfect competition | All firms produce where price equals long-run marginal cost, and economic profits are zero. |
| perfectly elastic demand | Industry in which input prices rise as all firms in the industry expand output. |
| shut down | Industry in which input prices remain constant as all firms in the industry expand output. |
| the shut-down price | The additional revenue earned by hiring one more unit of a variable input. |
