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Which of the following is not a condition for perfect competition Firms take prices as given Firms sell a standardized product Firms are protected by barriers to entry

Which of the following is not a condition for perfect competition? 

A. Firms take prices as given

B. Firms sell a standardized product

C. Firms are protected by barriers to entry

D. Firms have perfect information

2.The profit maximizing output level for a perfectly competitive firm is always where:  

A. P = MC

B. P = AVC

C. MC = ATC

D. MC = AVC

3.What does it mean to say that a firm is a price taker?  

A. The government sets the price

B. The customer will haggle over the price

C. The firm has market power

D. If the firm charges a higher price than competitors it gets no customers.

4.If a firm makes no economic profit, its accounting profits are:  

A. positive

B. negative

C. zero

D. Impossible to tell.

5.If P > MC which of the following is not true?  

A. The firm makes economic profit.

B. The firm makes accounting profit.

C. Firms will exit the industry.

D. Firms will join the industry.

6.If ATC > MC > AVC the firm should:  

A. shut down immediately

B. shut down in the long run

C. operate indefinitely

D. Cannot tell without more information

7.When the perfectly competitive firm maximizes profits the price of its product always equals:  

A. average revenue

B. marginal revenue

C. marginal costs

D. All the choices are correct

8.If a firm's demand curve falls below its AVC curve, then the firm should:  

A. shut down now

B. operate in the short run but not the long run

C. set price = marginal cost

D. shutdown in the long-run

9.The demand curve facing a perfectly competitive firm is:  

A. infinitely elastic

B. perfectly inelastic

C. downward sloping

D. perfectly elastic

10.Say a competitive firm is producing at point where ATC = €10, AVC = €2. If the firm charges €5 for its output, the in the short-run this firm should:  

A. shutdown production

B. exit the industry

C. continue to operate

D. try to reduce its fixed costs

 

Feb 11 2020 View more View Less

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