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?