Econ Ch 14 Practice Questions
Which of the following is a characteristic of a competitive market?
Buyers and sellers are price takers
A firm that has little ability to influence market prices operates in a
Competitive market
The competitive firm's short-run supply curve is that portion of the
Marginal cost curve that lies above average variable cost
A key characteristic of a competitive market is that
producers sell nearly identical products
Who is a price taker in a competitive market?
both buyers and sellers
The short-run market supply in a perfectly competitive industry
shows the total quantity supplied by all firms at each possible price
The short-run market supply curve in a perfectly competitive industry
shows the total quantity supplied by all firms at each possible price.
Which of the following represents the firm's short-run condition for shutting down?
shut down if TR < VC
In a perfectly competitive market, the market supply curve is
the horizontal sum of all the individual firms' supply curves
In a perfectly competitive market, the horizontal sum of all the individual firms' supply curves is
the market supply curve
The competitive firm's long-run supply curve is that portion of the marginal cost curve that lies above average
total cost
A sunk cost is one that
was paid in the past and will not change regardless of the present decision
Total profit for a firm is calculated as
(price minus average cost) times quantity of output
Which of the following is not a characteristic of a competitive market?
Entry is limited
Competitive markets are characterized by
Free entry and exit by firms
A firm has market power if it can
Influence the market price of the good it sells
A competitive firm's short-run supply curve is part of which of the following curves?
Marginal Cost
Which of the following could be used to calculate the profit for a firm?
Profit = (P-ATC) Q
Which of the following expressions is correct for a competitive firm?
Profit = (quantity of output) x (price - average total cost)
Which of these curves is the competitive firm's short-run supply curve?
The marginal cost curve above the average variable cost
One of the defining characteristics of a perfectly competitive market is
a similar product
For a competitive firm,
average revenue equals marginal revenue
Which of the following represents the firm's long-run condition for exiting a market?
exit if P < ATC
