4.1.5.3 Perfect competition NOTES

4.1.5.3 Perfect competition NOTES

Professional Development

13 Qs

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4.1.5.3 Perfect competition NOTES

4.1.5.3 Perfect competition NOTES

Assessment

Quiz

Social Studies

Professional Development

Medium

Created by

James Hannaford

Used 3+ times

FREE Resource

13 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a key characteristic of firms operating in perfectly competitive markets according to the document?

They are price takers.

They have significant market power.

They are price setters.

They have restricted market entry.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Perfect competition assumes which of the following conditions?

Perfect knowledge.

Limited number of producers.

Differentiated products.

High entry barriers.

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What outcome results from perfect competition, given certain assumptions?

Efficient allocation of resources.

Inefficient resource allocation.

Increased externalities.

Decreased market competition.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What determines a firm's decision to produce in a perfectly competitive market in the short run?

The firm's total fixed costs

The price relative to its average variable cost (AVC)

The number of competitors in the market

The firm's long-run average cost (LRAC)

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What happens when the price is below the average variable cost (AVC) in a perfectly competitive market?

The firm will increase production

The firm will continue producing at the same level

The firm will shut down.

The firm will permanently exit the market

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In the long run, what is the significance of the long-run average cost (LRAC) curve's minimum point for perfectly competitive firms?

It indicates the point of maximum profit

It represents the scale at which firms are least efficient

It is where firms operate at their most efficient scale - productive efficiency

It determines the number of firms in the market

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is NOT a characteristic of a perfectly competitive market?

Identical products

Barriers to entry and exit

Freedom of entry and exit

Intense price competition

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