Perfect Competition AP Lesson
Refer to this graph for the next two questions and assume a perfectly competitive market structure.
At the price 0A, economic profits are
In the short run, the firm will stop production when the price falls below
A market is clearly NOT perfectly competitive if which of the following is true in equilibrium?
Price exceeds marginal cost.
Price exceeds average variable cost.
Price exceeds average fixed cost.
Price equals opportunity cost.
Accounting profits are positive.
If a perfectly competitive industry is in long-run equilibrium, which of the following is most likely to be true?
Some firms can be expected to leave the industry.
Individual firms are not operating at the minimum points on their average total cost curves.
Firms are earning a return on investment that is equal to their opportunity costs.
Some factors are not receiving a return equal to their opportunity costs.
Consumers can anticipate price increases.
The next two questions are based on the table below, which gives cost information for a perfectly competitive firm.
The average total cost to the firm of producing 2 units of output is
If the product price is $85; how many units of output must the firm produce in order to maximize profits?
The next two questions refer to the graph below showing cost curves for a perfectly competitive firm.
The diagram above shows a perfectly competitive firm’s short-run cost curves. If the price of the output increases from $8 to $10, the profit-maximizing firm will
continue producing 15 units because average total cost is at a minimum
continue producing 15 units because average total cost is equal to marginal cost
increase output to 20 units because this is the output at which price equals average total cost
increase output to 18 units because this is the output at which price equals marginal cost
decrease output to 10 units because this is the output at which average variable cost is at a minimum
At a market price of $6, the profit-maximizing rate of output will result in
profits that are less than normal
profits that are greater than normal
If the market price is $10, how many widgets should this profit-maximizing firm produce?
Which of the following statements is true about a firm that sells its output in a perfectly competitive market?
The firm will earn zero economic profits in long-run equilibrium.
Advertising is an important tool of the firm.
The firm will increase its total economic profits if it charges a price that is lower than the market price.
Which of the following are characteristics of a perfectly competitive industry?
New firms can enter the industry easily and there is no product differentiation.
New firms can enter the industry easily and the industry’s demand curve is perfectly elastic.
There is no product differentiation and the supply curve of an individual firm in the industry is perfectly elastic.
New firms can enter the industry easily, there is no product differentiation, and the supply curve of an individual firm in the industry is perfectly elastic.
New firms can enter the industry easily, the industry’s demand curve is perfectly elastic, and the supply curve of an individual firm in the industry is perfectly elastic.
Never submit passwords through Google Forms.
This content is neither created nor endorsed by Google.
Terms of Service