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