10/24/23, 12:10 PM Assessment 10: Attempt review
ECS1501-23-S2 Assessments Assessment 10
QUIZ
Started on Tuesday, 24 October 2023, 11:56 AM
State Finished
Completed on Tuesday, 24 October 2023, 12:09 PM
Time taken 13 mins 5 secs
Marks 12.00/12.00
Grade 100.00 out of 100.00
Question 1
Complete
Not graded
I con rm
that this assessment will be my own individual work;
that I will not communicate with anyone else in any way during the completion of
this assessment;
that I will not cheat in any way in completing and submitting this assessment.
I con rm.
I do not con rm.
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,10/24/23, 12:10 PM Assessment 10: Attempt review
Question 2
Complete
Mark 1.00 out of 1.00
Which one of the following is not a requirement for or a characteristic of perfect
competition?
the good must be homogeneous.
there should be no government intervention.
all market participants should have perfect knowledge of market conditions.
every rm must have the power to set its price.
All the rms in a perfectly competitive market are price takers, which means that the
price determined in the market is given, and no rm can set prices or manipulate
prices. All the other alternatives are characteristics of perfect competition:
1. Many Buyers and Sellers: There are numerous buyers and sellers in the
market, and no single buyer or seller has the power to in uence the market
price. Each buyer and seller is a price taker, meaning they accept the market
price as given and cannot change it.
2. Homogeneous Products: The products or services sold in a perfectly
competitive market are homogeneous (meaning they are identical and
indistinguishable from one another).
3. Perfect Information: All buyers and sellers in a perfectly competitive market
have access to perfect information. T
4. Free Entry and Exit: There are no barriers to entry or exit in the market.
5. Firms are Price Takers: Each rm in a perfectly competitive market is so small
compared to the overall market that its actions cannot affect the market price.
Therefore, each rm accepts the market price as given and adjusts its
quantity of output to maximise pro ts at that price.
. Pro t Maximisation: Firms in a perfectly competitive market aim to maximise
pro ts.
7. No government intervention: The market answers the questions What? How?
and For whom?
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,10/24/23, 12:10 PM Assessment 10: Attempt review
Question 3
Complete
Mark 1.00 out of 1.00
If a rm in a perfectly competitive industry raises its price above the market price
_____.
sales will rise slightly.
sales will stay the same.
all other rms in the industry will follow.
sales will drop to zero.
A rm in a perfectly competitive market is faced with a horisontal demand curve,
which implies that rms can sell any quantity at the given market price. If a rm
raises its price above the market price, sales will drop to zero, because consumers
can buy any quantity at the given (lower) market price.
Question 4
Complete
Mark 1.00 out of 1.00
Economists assume that the goal of the rm is to
break-even in the long run.
maximise pro ts.
minimise implicit costs.
maximise total revenue.
Economists generally assume that the goal of the rm is to maximise its pro ts.
Pro t maximisation occurs when a rm produces a quantity of goods or services at
which its marginal cost (the cost of producing an additional unit) equals its marginal
revenue (the revenue earned from selling an additional unit).
While pro t maximisation is a common assumption in economic theory, real-world
rms often have various objectives and goals, including market share growth,
customer satisfaction, social responsibility, or long-term sustainability.
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, 10/24/23, 12:10 PM Assessment 10: Attempt review
Question 5
Complete
Mark 1.00 out of 1.00
Which one of the following statements is incorrect? Under perfect competition
rms may earn normal pro t in the short run.
rms may earn an economic pro t in the long run.
rms may earn economic pro ts in the short run.
rms may suffer economic losses in the short run.
In the short run, the perfectly competitive rm may earn a loss, a normal pro t or an
economic pro t, but in the long run only normal pro t is earned. In the long run,
rms making a loss will leave the market (driving the market price up) or if
economic pro ts are made, new rms will enter the market (putting downward
pressure on the market price). Thus, market forces will ensure that only normal
pro t is earned in the long run.
Question 6
Complete
Mark 1.00 out of 1.00
If a perfectly competitive rm’s marginal cost is greater than its marginal revenue at
its current level of production, what must the rm do to increase its pro t?
Reduce the price of its product.
Increase the price of its product.
Increase its output.
Decrease its output.
A perfectly competitive rm is a price taker; hence the rm will not increase or
reduce the price of the product, it takes the price of the product as given. If the MR
< MC, it means each unit of the good is costing more to produce than the amount it
sells for, therefore the rm should reduce its output.
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