Perfect Competition Quiz
A perfectly elastic demand curve
A firm in a perfectly competitive industry has
Productively efficient
A firm that is producing at the lowest possible average cost is always
Produce the quantity where its marginal cost equals its marginal revenue
A perfectly competitive firm should always
Not earn an economic profit, but be allocatively efficient and productively efficient
A perfectly competitive firm that is in long-run equilibrium will
Decrease its output
A perfectly competitive firm that is receiving a price of $5 and has a marginal cost of $6 should always
Negatively sloped demand curve
A perfectly competitive industry has a
Experience an economic profit and produce more in the short run
Assume that a perfectly competitive firm that produces widgets is in long-run equilibrium. Then suddenly the market demand for widgets increases. The firm will
A total profit of $2000
If a profit maximizing perfectly competitive firm is selling 1000 units at a price of $10 and its average total cost is $8 the firm is experiencing
Increase its output to maximize profit
If a perfect competitor is producing at a level where its average cost is $8, and its marginal cost is $9, and it is receiving a price of $10 for its product, the firm should
Always Allocatively efficient
If the price a firm receives for its product is equal to the marginal cost of producing that product, the firm is
Firms will exit the market and the price will increase
If the typical firm in a perfectly competitive market is experiencing an economic loss, which of the following will happen?
Economic Profit
In the long run, a perfectly competitive firm will not achieve this
Increasing its price
Not a valid option for a perfectly competitive firm
Marginal cost curve above its average variable cost curve
The supply curve for a perfect competitor is its
Other firms will enter the market
Which of the following is most likely to happen if a typical firm in a perfectly competitive market is experiencing an average revenue that is greater than its average cost?