Perfect Competition

Perfect Competition

12th Grade

20 Qs

quiz-placeholder

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Perfect Competition

Perfect Competition

Assessment

Quiz

Other

12th Grade

Hard

Created by

Nhan Le

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20 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

In a perfectly competitive market, why does an individual firm have no control over the price of its product?

The government regulates all prices in competitive markets

Consumers are not price-sensitive in competitive markets

The firm's product is differentiated from its competitors

The firm's output is too small to influence the market price

2.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

What is the primary decision a firm in a perfectly competitive market must make to maximize profit?

How to differentiate its product from competitors

What price to charge for its product

How much quantity to produce at the given market price

How to reduce the number of competitors in the market

3.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

In a perfectly competitive market, why is a firm's marginal revenue equal to the market price?

Because the firm can influence the market price

Because the firm's costs are constant

Because the firm is small relative to the total market and cannot affect the price

Because marginal revenue always equals marginal cost

4.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

A firm is currently producing at a level where marginal revenue is greater than marginal cost. To maximize profits, what should the firm do?

Decrease production

Increase production

Maintain current production level

Shut down operations

5.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Why doesn't it always make sense for a firm to immediately enter an industry when the market price rises above average cost?

Because firms are risk-averse and prefer to wait for higher profits

Because there may be significant entry costs that need to be recovered

Because the government regulates when firms can enter new industries

Because existing firms in the industry will always lower prices to prevent entry

6.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

When a firm is operating at a point where price is below average cost but equal to marginal cost, what does this indicate about the firm's financial situation?

The firm is maximizing its profits

The firm is breaking even

The firm is minimizing its losses in the short run

The firm should immediately exit the industry

7.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

A competitive firm maximizes profit by choosing

Price.

Quantity.

Both price and quantity.

Either price or quantity, but not both.

None of the above.

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