#1
In perfect competition, what is the shape of the demand curve faced by a single firm?
Horizontal
Vertical
Upward sloping
Downward sloping
#2
Which of the following is a characteristic of perfect competition?
Few sellers
Product differentiation
Barriers to entry
Homogeneous products
#3
What happens to market price in the long run in perfect competition?
It remains constant
It fluctuates wildly
It increases continuously
It decreases continuously
#4
What role does marginal cost play in determining the output of a perfectly competitive firm in the short run?
It equals average total cost
It equals marginal revenue
It equals price
It determines profit maximization
#5
What is the condition for long-run equilibrium in a perfectly competitive market?
Marginal cost equals marginal revenue
Price equals average total cost
Price equals marginal cost
Price equals marginal revenue
#6
What is the profit-maximizing rule for a firm in perfect competition?
Produce where total revenue exceeds total cost
Produce where marginal cost equals marginal revenue
Produce where price exceeds marginal cost
Produce where price equals average total cost
#7
What is the characteristic feature of perfect competition regarding entry and exit of firms?
Low barriers to entry and exit
High barriers to entry and exit
No barriers to entry but high barriers to exit
High barriers to entry but low barriers to exit
#8
Which of the following is a condition for perfect competition?
Heterogeneous products
Perfect knowledge
Monopolistic pricing
Government regulation
#9
In perfect competition, how does a firm respond to a price above the equilibrium?
Increase production
Decrease production
Shut down
No change in production
#10
What happens to the number of firms in the long run in a perfectly competitive market if firms are earning economic profits?
New firms enter the market
Existing firms exit the market
Firms continue earning economic profits indefinitely
The number of firms remains constant
#11
What concept does allocative efficiency in perfect competition refer to?
Maximizing total surplus
Minimizing deadweight loss
Allocating resources to the most valued uses
Equal distribution of income
#12
How does an increase in demand impact the short-run equilibrium price and output in perfect competition?
Price increases, output decreases
Price decreases, output increases
Price and output both increase
Price and output both decrease
#13
What happens to the equilibrium quantity produced in the short run in perfect competition when a technological advancement reduces production costs?
Increases
Decreases
Remains unchanged
Becomes indeterminate
#14
What is the relationship between marginal cost and marginal revenue at the profit-maximizing level of output in perfect competition?
Marginal cost exceeds marginal revenue
Marginal cost equals marginal revenue
Marginal cost is less than marginal revenue
Marginal cost is unrelated to marginal revenue