ECO 2023 CH 12 CH 13

Price Takers:

A buyer or seller that is unable to affect market price.

Market price is determined by

the market supply and demand curves.

If an individual firm in a perfectly competitive market increases its price, the firm will experience a. higher revenue. b. lower average total cost. c. increased sales. d. none of the above. d. none of the above.

If an individual firm in a perfectly competitive market increases its price, the firm will experience a. higher revenue. b. lower average total cost. c. increased sales. d. none of the above.

If market demand shifts to the right, how will a competitive firm's level of output change? a. The firm will increase its output, and its profits will increase. b. The firm will need to decrease its output and suffer losses. c. The firm will keep its output constant, but its profits will increase. d. The firm will decrease its output, which will increase its profit. a. The firm will increase its output, and its profits will increase.

If market demand shifts to the right, how will a competitive firm's level of output change? a. The firm will increase its output, and its profits will increase. b. The firm will need to decrease its output and suffer losses. c. The firm will keep its output constant, but its profits will increase. d. The firm will decrease its output, which will increase its profit.

In perfect competition a. the market demand curve and the individual's demand curve are identical. b. the market demand curve is perfectly inelastic while demand for an individual seller's product is perfectly elastic. c. the market demand curve is perfectly elastic while demand for an individual seller's product is perfectly inelastic. d. the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic. d. the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic.

In perfect competition a. the market demand curve and the individual's demand curve are identical. b. the market demand curve is perfectly inelastic while demand for an individual seller's product is perfectly elastic. c. the market demand curve is perfectly elastic while demand for an individual seller's product is perfectly inelastic. d. the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic.

Monopolistic competition is a market structure in which a. firms produce and sell products for which there are no close substitutes. b. the demand curve for a typical firm is horizontal. c. firms cannot influence the market price. d. barriers to entry are low. d. barriers to entry are low.

Monopolistic competition is a market structure in which a. firms produce and sell products for which there are no close substitutes. b. the demand curve for a typical firm is horizontal. c. firms cannot influence the market price. d. barriers to entry are low.

What is the relationship between price, average revenue, and marginal revenue for a firm in a perfectly competitive market? a. Price is equal to average revenue and greater than marginal revenue. b. Price is greater than average revenue and equal to marginal revenue. c. Price is equal to both average revenue and marginal revenue. d. Price, average revenue, and marginal revenue usually all have different values. c. Price is equal to both average revenue and marginal revenue.

What is the relationship between price, average revenue, and marginal revenue for a firm in a perfectly competitive market? a. Price is equal to average revenue and greater than marginal revenue. b. Price is greater than average revenue and equal to marginal revenue. c. Price is equal to both average revenue and marginal revenue. d. Price, average revenue, and marginal revenue usually all have different values.

When the market system allocates inputs efficiently to produce goods and services that best satisfy consumer wants, which of the following is true? a. The price of a good represents the marginal benefit consumers receive from consuming the last unit of the good sold. b. Perfectly competitive firms produce up to the point where the price of the good equals the marginal cost of producing the last unit. c. Firms produce up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it. d. all of the above d. all of the above

When the market system allocates inputs efficiently to produce goods and services that best satisfy consumer wants, which of the following is true? a. The price of a good represents the marginal benefit consumers receive from consuming the last unit of the good sold. b. Perfectly competitive firms produce up to the point where the price of the good equals the marginal cost of producing the last unit. c. Firms produce up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it. d. all of the above

Which of the following are characteristics of a perfectly competitive industry? a. Firms are unable to control the prices of the products they sell b. Firms are unable to earn an economic profit in the long run. c. Firms sell identical products. d. All of the above. d. All of the above.

Which of the following are characteristics of a perfectly competitive industry? a. Firms are unable to control the prices of the products they sell b. Firms are unable to earn an economic profit in the long run. c. Firms sell identical products. d. All of the above.

Which of the following is not a characteristic of a perfectly competitive market structure? a. There are a very large number of firms that are small compared to the market. b. All firms sell identical products. c. There are no restrictions to entry by new firms. d. There are restrictions on exit of firms. d. There are restrictions on exit of firms.

Which of the following is not a characteristic of a perfectly competitive market structure? a. There are a very large number of firms that are small compared to the market. b. All firms sell identical products. c. There are no restrictions to entry by new firms. d. There are restrictions on exit of firms.

A perfectly competitive firm also achieves

allocative efficiency.

barriers to entry

are social, political, or economic impediments that prevent other firms from entering the market. Sometimes take the form of patents granted to produce a certain good.

Market demand in a perfectly competitive market:

is always downward sloping

allocative efficiency

production of a good or service up to the point where a marginal benefit from the last until equals to a marginal cost of producing it.

productive efficiency

refers to the situation in which a good or service is produced at the lowest possible cost.