#1
Which of the following is a characteristic of a perfectly competitive market?
Firms have significant market power.
Products are identical.
There are barriers to entry.
Firms engage in price discrimination.
#2
In a perfectly competitive market, what happens if a firm raises its price above the market price?
It will lose all of its customers.
It will gain a large share of the market.
It will have no effect on the quantity demanded.
It will lose all of its profits.
#3
What is the defining feature of price-taking behavior in a perfectly competitive market?
Firms have control over market prices.
Firms must accept the market price as given.
Firms can set prices based on their costs.
Firms can engage in collusion.
#4
Which of the following is an example of a perfectly competitive market?
The market for diamonds
The market for wheat
The market for prescription drugs
The market for luxury cars
#5
What is the relationship between marginal cost and marginal revenue in a perfectly competitive market in the short run?
Marginal cost is greater than marginal revenue.
Marginal cost is less than marginal revenue.
Marginal cost equals marginal revenue.
There is no relationship between the two.
#6
In a perfectly competitive market, what happens if a firm produces where price is below average total cost in the short run?
The firm earns positive economic profit.
The firm earns negative economic profit.
The firm shuts down.
The firm increases production.
#7
What is the slope of the demand curve in a perfectly competitive market?
Horizontal
Vertical
Downward sloping
Upward sloping
#8
Which of the following is NOT a condition for a market to be perfectly competitive?
Many buyers and sellers
Homogeneous products
Barriers to entry
Perfect information
#9
What is the long-run outcome for firms in a perfectly competitive market in terms of economic profit?
Firms earn positive economic profit.
Firms earn zero economic profit.
Firms earn negative economic profit.
Firms earn increasing economic profit.
#10
Which of the following is NOT a characteristic of a perfectly competitive market?
Product differentiation
Many buyers and sellers
Perfect information
Low barriers to entry
#11
Which of the following statements is true regarding the long-run equilibrium of a perfectly competitive market?
Firms produce at minimum average total cost.
Firms produce where marginal cost equals marginal revenue.
Firms earn positive economic profit.
Firms face no competition.
#12
What happens to the price of a good in a perfectly competitive market if there is an increase in demand?
Price increases.
Price decreases.
Price remains constant.
Price becomes unpredictable.
#13
In the long run, in a perfectly competitive market, what happens to economic profit?
It increases indefinitely.
It stays constant.
It decreases to zero.
It becomes negative.
#14
What role does the concept of marginal revenue play in price-taking behavior?
Firms maximize total revenue.
Firms maximize marginal cost.
Firms set prices based on marginal revenue.
Firms have no control over marginal revenue.
#15
Which of the following is a potential long-run outcome of a perfectly competitive market?
Monopolistic competition
Oligopoly
Monopoly
Constant returns to scale
#16
In the long run, what happens to the number of firms in a perfectly competitive market if there are economic profits?
New firms enter the market.
Existing firms exit the market.
Firms collaborate to maintain profits.
Firms decrease production.
#17
How does the concept of free entry and exit affect long-run equilibrium in a perfectly competitive market?
It leads to monopoly.
It ensures firms earn positive economic profit.
It ensures firms earn zero economic profit.
It causes firms to shut down.