Perfect Competition Market Structure

25. In the above figure showing a perfectly competitive firm's total revenue line, the firm's marginal revenue A) does not change as output increases. B) falls as output increases. C) rises as output increases. D) cannot be determined.

A

33. When Sidney's Sweaters, Inc. makes exactly zero economic profit, Sidney, the owner, A) makes an income equal to his best alternative forgone income. B) will boost output. C) will shut down in the short run. D) is taking a loss.

A

14. The market for fish is perfectly competitive. So, the price elasticity of demand for fish from a single fishery A) is sometimes greater than and sometimes less than the elasticity of demand for fish overall. B) is greater than the elasticity of demand for fish overall. C) is less than the elasticity of demand for fish overall. D) equals the elasticity of demand for fish overall.

B

11. If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has A) elasticity equal to the price of apples. B) unitary elasticity. C) infinite elasticity. D) zero elasticity.

C

20. The above figure shows a firm's total revenue line. The firm must be in a market with A) monopolistic competition. B) monopoly. C) perfect competition. D) oligopoly.

C

21. For a perfectly competitive firm, curve A in the above figure is the firm's A) average fixed cost curve. B) average variable cost curve. C) total revenue curve. D) total fixed cost curve.

C

22. The figure above portrays a total revenue curve for a perfectly competitive firm. Curve A is straight because the firm A) has perfect information. B) wants to maximize its profits. C) is a price taker. D) faces constant returns to scale.

C

1. Perfect competition is an industry with A) a few firms producing identical goods. B) many firms producing goods that differ somewhat. C) a few firms producing goods that differ somewhat in quality. D) many firms producing identical goods.

D

10. In perfect competition, an individual firm A) has a price elasticity of supply equal to one. B) faces unitary elasticity of demand. C) has a price elasticity of supply equal to infinity. D) faces infinitely elastic demand.

D

12. In a perfectly competitive industry, the price elasticity of demand for the market demand is________ and the price elasticity of demand for an individual firm's demand is ________. A) infinite; less than infinite B) infinite; infinite C) less than infinite; less than infinite D) less than infinite; infinite

D

13. A perfectly competitive firm's demand curve is A) perfectly inelastic. B) the same as the market demand curve. C) downward sloping. D) the same as the firm's marginal revenue curve.

D