#1
In perfect competition, firms are considered to be price takers because they:
Have the ability to influence market prices.
Produce identical products.
Are large in size compared to the market.
Have barriers to entry.
#2
Which of the following is a characteristic of a perfectly competitive market?
Product differentiation.
Few buyers and sellers.
Low barriers to entry.
Market power for individual firms.
#3
What is the long-run equilibrium condition for a perfectly competitive firm?
Marginal cost equals marginal revenue.
Price equals marginal cost.
Average total cost equals price.
Average variable cost equals price.
#4
In perfect competition, which of the following is NOT true?
Firms earn economic profits in the long run.
Firms produce at the minimum point of their average total cost curve.
Firms earn normal profits in the long run.
Firms are price takers.
#5
What is the characteristic feature of a perfectly competitive market in terms of product differentiation?
Products are highly differentiated.
Products are identical.
Products are similar but not identical.
Products are complementary.
#6
In perfect competition, what happens to the price when a firm increases its output?
Price decreases.
Price increases.
Price remains constant.
Price fluctuates randomly.
#7
What is the key characteristic of the short run for a perfectly competitive firm?
All factors of production are variable.
All factors of production are fixed.
Some factors of production are variable while others are fixed.
Firms cannot earn any profit.
#8
What is the economic profit in the long run for a perfectly competitive firm?
Zero.
Positive.
Negative.
Indeterminate.
#9
In perfect competition, what happens to the number of firms in the long run if firms are earning economic profits?
New firms enter the market, increasing the number of firms.
Existing firms exit the market, decreasing the number of firms.
The number of firms remains constant.
The number of firms fluctuates unpredictably.
#10
Which of the following statements best describes the demand curve faced by a perfectly competitive firm?
It is perfectly elastic.
It is perfectly inelastic.
It is downward-sloping but not perfectly elastic.
It is upward-sloping.
#11
In a perfectly competitive market, what is the relationship between the market price and the firm's marginal revenue?
Market price equals marginal revenue.
Market price is greater than marginal revenue.
Market price is less than marginal revenue.
There is no relationship between market price and marginal revenue.
#12
What is the main reason for the absence of economic profits in the long run in a perfectly competitive market?
Barriers to entry prevent new firms from entering the market.
Firms do not maximize profits.
Marginal revenue equals marginal cost for all firms.
Firms do not incur any costs.
#13
In perfect competition, what is the relationship between the price and marginal cost in the long run?
Price equals marginal cost.
Price is greater than marginal cost.
Price is less than marginal cost.
There is no relationship between price and marginal cost.