#1
In a perfectly competitive market, what is the shape of the demand curve?
Upward-sloping
Downward-sloping
Horizontal
Vertical
#2
What is a characteristic feature of perfectly competitive markets?
Numerous buyers and sellers
Single seller dominating the market
Barriers to entry
High level of product differentiation
#3
What is the key assumption about product homogeneity in perfectly competitive markets?
Products are differentiated
Products are identical
Products are luxury goods
Products are scarce
#4
Which of the following is a characteristic of perfect competition in the short run?
Supernormal profits
Monopoly power
Differentiated products
Barriers to entry
#5
What is the typical shape of the short-run average total cost (ATC) curve for a perfectly competitive firm?
U-shaped
Downward-sloping
Upward-sloping
Vertical
#6
Which of the following conditions characterizes a perfectly competitive market in the long run?
Positive economic profit
Marginal cost (MC) exceeds marginal revenue (MR)
Price (P) equals average total cost (ATC)
Barriers to entry
#7
In a perfectly competitive market, what happens if a firm charges a price higher than the equilibrium price?
It will sell more units
It will sell fewer units
It will not affect sales
It will exit the market
#8
What is the long-run equilibrium condition for firms in a perfectly competitive market?
MC = MR
P = MC
P > ATC
P = AVC
#9
What is the role of entry and exit in perfectly competitive markets in the long run?
Entry leads to higher profits, exit leads to lower profits
Entry leads to lower profits, exit leads to higher profits
Entry and exit have no impact on profits
Entry and exit lead to equilibrium profits
#10
Which of the following is NOT a characteristic of a perfectly competitive market?
Homogeneous products
Price-setting power for individual firms
Perfect information
Free entry and exit
#11
What is the profit-maximizing output level for a perfectly competitive firm in the short run?
Where marginal cost (MC) equals marginal revenue (MR)
Where marginal cost (MC) equals average total cost (ATC)
Where price (P) equals marginal cost (MC)
Where price (P) equals average total cost (ATC)
#12
In the long run, what happens to economic profit in perfectly competitive markets?
Economic profit remains positive
Economic profit equals zero
Economic profit increases indefinitely
Economic profit becomes negative
#13
In the long run, what is the relationship between price and average total cost (ATC) for firms in perfectly competitive markets?
Price equals ATC
Price exceeds ATC
Price is less than ATC
Price equals marginal cost (MC)
#14
What does the term 'economic profit' mean in the context of perfectly competitive markets?
Total revenue minus explicit costs
Total revenue minus total costs
Total revenue minus implicit costs
Total revenue minus opportunity costs
#15
In a perfectly competitive market, what is the relationship between marginal revenue (MR) and price (P)?
MR > P
MR = P
MR < P
MR is unrelated to P
#16
What is the main reason for the absence of economic profit in the long run in perfectly competitive markets?
High barriers to entry
Product differentiation
Low barriers to entry
Government regulations
#17
What happens to the price of a product in a perfectly competitive market when there is an increase in demand?
Price increases
Price decreases
Price remains unchanged
Price becomes indeterminate
#18
What does allocative efficiency refer to in perfectly competitive markets?
Producing at the lowest possible cost
Allocating resources to their most valued uses
Maximizing total revenue
Minimizing opportunity costs