#1
Which of the following is NOT a characteristic of perfect competition?
Many buyers and sellers
Homogeneous products
Firms have market power
Free entry and exit
#2
Which market structure is characterized by a single firm with no close substitutes and significant barriers to entry?
Perfect competition
Monopoly
Monopolistic competition
Oligopoly
#3
What is a characteristic of a perfectly competitive market?
Firms can set prices.
There are significant barriers to entry.
There is product differentiation.
Firms are price takers.
#4
What is the primary objective of a firm in any market structure?
Maximize revenue
Minimize costs
Maximize profit
Increase market share
#5
What happens to a firm's average fixed cost as output increases?
It increases
It decreases
It remains constant
It fluctuates randomly
#6
What is the formula for calculating total revenue?
Price per unit multiplied by quantity sold
Price per unit minus variable cost per unit
Average revenue multiplied by quantity sold
Total cost divided by quantity sold
#7
In the short run, a firm in perfect competition will shut down if:
Price is above average total cost
Price is below average variable cost
Price is below average total cost
Price is above marginal cost
#8
What does the law of diminishing marginal returns state?
As production increases, marginal cost decreases
As more of a variable input is added to a fixed input, marginal product eventually decreases
As output increases, average variable cost decreases
As output increases, average fixed cost decreases
#9
What does the shutdown point represent for a firm in perfect competition?
The point where total revenue equals total cost
The point where price equals average variable cost
The point where price equals average total cost
The point where marginal cost equals average total cost
#10
What is the profit-maximizing rule for a firm in perfect competition in the short run?
Produce where marginal cost equals marginal revenue
Produce where marginal cost equals average total cost
Produce where price equals average total cost
Produce where price equals marginal cost
#11
What is a characteristic feature of long-run equilibrium in perfect competition?
Zero economic profit
Monopolistic power
Excess capacity
Limited competition
#12
In monopolistic competition, firms may engage in product differentiation in order to:
Increase the number of firms in the market
Eliminate all competition
Maximize profits
Minimize costs
#13
What is a characteristic of a natural monopoly?
Many firms producing identical products
High barriers to entry
Perfectly elastic demand curve
Low economies of scale
#14
What is the main difference between a firm's short-run supply curve and its long-run supply curve in perfect competition?
The short-run supply curve is upward-sloping, while the long-run supply curve is horizontal.
The short-run supply curve is horizontal, while the long-run supply curve is upward-sloping.
Both the short-run and long-run supply curves are horizontal.
Both the short-run and long-run supply curves are upward-sloping.
#15
In monopolistic competition, what happens to the demand curve faced by a firm in the long run as it earns economic profit?
It shifts to the left.
It becomes perfectly elastic.
It shifts to the right.
It becomes perfectly inelastic.