Microeconomics - Perfect Competition Review Questions with complete Solutions Graded A+
A perfectly competitive firm is a price _____ - Answers taker
Factors of perfect competition - Answers many buyers and sellers, many identical products, no barriers to entry or exit, buyers/sellers have perfec...
A perfectly competitive firm is a price _____ - Answers taker
Factors of perfect competition - Answers many buyers and sellers, many identical products, no barriers
to entry or exit, buyers/sellers have perfect information price
In a market with perfectly competitive firms, the market demand curve is usually ____________ and the
demand curve facing each individual firm is __________. - Answers downward sloping; horizontal
For a perfectly competitive firm, marginal revenue equals average revenue because the ... - Answers
firm's demand curve is horizontal.
The competitive firm has no influence over price because ... - Answers its output is so insignificant
relative to the market as a whole (price takers).
At a perfectly competitive firm's short-run equilibrium level of output ... - Answers p=MR=MC
price = marginal revenue = marginal cost
Short run - Answers supply cannot fully adjust to changes in demand due to fixed resources
Long run - Answers supply fully adjusts to changes in demand, all resources are variable
In short-run equilibrium, a perfectly competitive firm - Answers may earn a profit or a loss.
A firm in short-run equilibrium always earns positive profits if - Answers SRAR>SRAC
(short-run average revenue > short-run average cost)
The perfectly competitive firm's will shut down in the short run if... - Answers Price < average variable
costs (P < AVC)
At a firm's profit-maximizing level of output, its price is $200 and its short-run average total cost is $225.
The firm should shut down if... - Answers ...its short-run average variable cost exceeds $25.
A firm can stay in business while taking a loss in the short-run as long as it covers its ... - Answers
average variable costs. (P >= AVC)
A firm will shut down if... - Answers Total costs - total revenue > total fixed costs
If a firm shuts down in the short run, its losses are equal to - Answers average fixed costs
The short-run supply curve of a perfectly competitive firm - Answers goes through the lowest point on
both its short-run average variable cost and its short-run average total cost curves
The short-run supply curve of the competitive firm is the firm's - Answers MC curve above the minimum
point on the AVC curve
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