What is perfect competition?

many small firms; homogeneous products; price takers

Definition of perfect competition

a large number of firms all produce the same product

Perfect competition represents an industry with...

Infinite firms making identical goods

For this profit-maximizing pure competitor, area Pbgh represents

losses, but the minimum possible economic losses.

The short-run supply curve for a firm in a perfectly competitive industry is

its marginal cost curve above the minimum of its AVC curve

Perfect competition is characterized by:

the inability of any one firm to influence price

Which of these are one of the conditions of Perfect Competition?

The producers are able to enter and exit the market freely.

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Perfect competition

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Questions 18

Answers

1
What is perfect competition?
many small firms; homogeneous products; price takers
many small firms; heterosexual products; price takers
many BIG firms; homosapien products; non-price takers
few small firms; homosexual products; price takers
2
Definition of perfect competition
factor that makes it hard for a new firm to enter a market
price a firm must pay before begining to produce and sell
a large number of firms all produce the same product
product that is the same no matter who produces it
3
A perfectly competitive firm's supply curve is:
The downward sloping part of the MC curve only
The MC curve in its entirety
The MC curve above the AVC
The MC curve above the ATC
4
Perfect competition represents an industry with...
Infinite firms making identical goods
A few firms making unique goods
Many firms making identical goods
Infinite firms making unique goods
5
A firm that maximises its economic profit in perfect competition will sell its goods...
At market price
Below the market price
Above the market price
Below market price if inelastic PeD, above if elastic PeD
6
For this profit-maximizing pure competitor, area Pbgh represents
maximum positive economic profits.
losses, but the minimum possible economic losses.
fixed cost (TFC).
average fixed cost (AFC).
7
Profit Maximization occurs when:
Q=P
TVC=TFC
MR=MC
ATC=AFC
8
The short-run supply curve for a firm in a perfectly competitive industry is
its average total cost curve above its marginal cost curve
its marginal cost curve above the minimum of its AVC curve
its entire marginal cost curve
its marginal cost curve above the minimum of its ATC curve
9
The demand curve facing a purely competitive seller is:
the horizontal summation of all potential buyers’ individual demand curves.
horizontal at the market
vertical at the market quantity
negatively sloped.
10
This profit-maximizing pure competitor’s fixed cost TFC. can be computed as area:
daef
Pbgh.
0bgq2.
0Phq2.
11
Total revenue TR. for this profit-maximizing pure competitor equals area
0Phq2.
0bgq2.
0aeq1.
Pbgh.
12
Normal profit is...
sufficient to cover implicit costs
all of the above
sufficient to keep in business
same return as the next best alternative
13
If the world price for wheat is $10 per bushel, Del, who owns the biggest wheat farm, will operate
point b
point c
point f
point d
14
Perfect competition is characterized by:
the inability of any one firm to influence price
widely recognized brands
rivalry in advertising
fierce quality competition
15
A purely competitive firm
all of the above.
makes economic profits when its total revenue is greater than total cost
has no control over the price of its products.
maximizes profits where MR=MC
16
The shutdown point occurs at the level of output for which the ________ is at its minimum
marginal cost
average fixed cost
average variable cost
total cost
17
This profit-maximizing pure competitor’s total cost TC. equals area
0aeq1.
Pbgh.
0bgq2.
0Phq2.
18
Which of these are one of the conditions of Perfect Competition?
The competition within these markets keeps both costs low.
Price and Output
They give a company power by simply issuing a patent.
The producers are able to enter and exit the market freely.

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