Question Micro Test 9 1) Which of the following is NOT a characteristic of a perfectly com

04 Jun Question Micro Test 9 1) Which of the following is NOT a characteristic of a perfectly com

Question
Micro Test 9

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

A) The products sold by the firms in the market are homogeneous.

B) There are many buyers and sellers in the market.

C) It is difficult for a firm to enter or leave the market.

D) Each firm is a price taker.

2) Which of the following is a characteristic of perfect competition?

A) Easy entry and exit

B) Few firms

C) Differentiated products

D) None of the above

3) The perfectly competitive firm cannot influence the market price because

A) it has market power.

B) its production is too small to affect the market.

C) it is a price maker.

D) its costs are too high.

4) A market structure in which the decisions of individual buyers and sellers have no effect on market price is

A) perfect competition.

B) a short-run industry.

C) a long-run industry.

D) a market supply industry.

5) When considering perfect competition the absence of entry barriers implies that

A) no firm can enter the industry.

B) firms can enter but cannot get out of the industry easily.

C) all firms will earn economic profit.

D) firms can enter and leave the industry without serious impediments.

6) Under the perfectly competitive market structure, the demand curve of an individual firm is

A) perfectly inelastic.

B) downward sloping.

C) relatively inelastic.

D) perfectly elastic.

7) Which of the following type of business belongs to perfect competition industry?

A) Airline

B) Soft Drink

C) Nail manufacturer

D) Utility

8) For a firm in a perfectly competitive market, average revenue equals

A) average cost.

B) the change in total revenue.

C) the market price.

D) price divided by quantity.

9) The total revenue of a perfectly competitive firm is calculated by

A) multiplying average revenue by price.

B) dividing price by quantity.

C) multiplying price by quantity.

D) multiplying quantity by average total cost.

10) Which is always true at a firm’s profit-maximizing rate of production?

A) Total Revenue = Total Costs

B) The total revenue curve lies below the total cost curve.

C) Marginal Revenue > Marginal Cost

D) Marginal Revenue = Marginal Cost

11) The perfectly competitive, profit-maximizing rate of production

A) occurs at the point at which marginal revenue is equal to marginal cost.

B) occurs at the point at which the difference between marginal revenue and marginal cost is maximized.

C) is not measurable for a perfectly competitive firm.

D) ignores the relation of total revenues and total costs.

12) When MR < MC for a firm, the firm should A) reduce its level of output. B) stay at the same level of output. C) stop producing. D) increase output, unless P < AVC. 13) When price and marginal cost are equal for a perfectly competitive firm, the firm is A) minimizing average total cost. B) maximizing total revenue. C) maximizing economic profit. D) earning negative economic profit. 14) If a firm is producing an output rate at which marginal cost is greater than price, the firm A) is sustaining economic loss. B) should increase its output level. C) should reduce its output level. D) will not be covering its fixed cost. 15) If a firm is producing an output rate at which marginal cost is equal price, the firm A) is maximizing profits. B) should increase its output level. C) should reduce its output level. D) will not be covering its fixed cost.