Characteristics and Behavior of Competitive Firms Quiz
Test your understanding of competitive firms in industrial organization. Explore their behavior, equilibrium, and profit-maximizing rules.
#1
Which of the following is a characteristic of a competitive firm?
Price taker
Price maker
Price setter
Price manipulator
#2
In a perfectly competitive market, firms are:
Sellers of identical products
Able to influence market price
Able to earn economic profit in the long run
Monopolistic
#3
Which of the following is a characteristic of a competitive firm's demand curve?
Perfectly elastic
Perfectly inelastic
Relatively elastic
Relatively inelastic
#4
What happens to a competitive firm's marginal revenue as it produces more units?
It remains constant
It increases
It decreases
It fluctuates
#5
Which of the following is NOT a condition for perfect competition?
Many buyers and sellers
Homogeneous products
Low barriers to entry and exit
Price discrimination
#6
In the short run, a competitive firm will shut down if price is below its:
Average total cost
Average fixed cost
Average variable cost
Marginal cost
#7
What is the profit-maximizing rule for a competitive firm in the short run?
Produce where marginal cost equals marginal revenue
Produce where marginal cost equals average total cost
Produce where marginal revenue equals average total cost
Produce where marginal revenue equals average variable cost
#8
In the long run, a competitive firm will earn zero economic profit because:
Marginal cost equals marginal revenue
Price equals average total cost
Price equals marginal cost
Price equals average variable cost
#9
Which of the following is a characteristic of long-run equilibrium for a competitive firm?
Economic profit is maximized
Price equals marginal cost
Price is below average total cost
Price equals average variable cost
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