Perfect Competition Short Run (1 of 2)- Old Version

Mr. Clifford introduces perfect competition, a market structure where firms produce identical products and are price takers. He explains the characteristics of perfect competition, such as many small firms and identical products. The video covers how firms in perfect competition have horizontal demand curves and are price takers. It also explains profit maximization, where firms produce where marginal revenue equals marginal cost. The video concludes with a demonstration of calculating profit using graphs and emphasizes the importance of understanding these concepts for exams.

Which of the following is NOT a characteristic of perfect competition?

• Firms have no control over the price.

• There are many small firms.

• Firms are price makers.

• Products are identical.

In a perfectly competitive market, why are firms considered price takers?

• The market determines the price, and firms must accept it.

• They have a monopoly over the market.

• They can set any price they want.

• They produce unique products.

What does the horizontal demand curve in perfect competition indicate?

• There is no demand for the product.

• Firms have no control over the price.

• Demand is perfectly inelastic.

• Firms can charge different prices.

What is the profit-maximizing rule in microeconomics?

• Produce as much as possible.

• Produce where average cost is minimized.

• Produce where marginal revenue equals marginal cost.

• Produce where total cost equals total revenue.

How is economic profit calculated in a perfectly competitive market?

• Total revenue plus total cost.

• Total cost divided by total revenue.

• Total cost minus total revenue.

• Total revenue minus total cost.