.10..objective.

Question 1 Firms in perfect competition face a: a) Perfectly elastic demand curve b) Perfectly inelastic demand curve c) Perfectly elastic supply curve d) Perfectly inelastic supply curve Question 2 In perfect competition: a) The price equals the marginal revenue b) The price equals the average variable cost c) The fixed cost equals the variable costs d) The price equals the total costs Question 3 A profit maximizing firm in perfect competition produces where: a) Total revenue is maximized b) Marginal revenue equals zero c) Marginal revenue equals marginal cost d) Marginal revenue equals average cost Question 4 In perfect competition: a) The products firms offer are very similar b) Products are heavily differentiated c) A few firms dominate the market d) Consumers have limited information Question 5 In the long run in perfect competition: a) The price equals the total revenue b) Firms are allocatively inefficient c) Firms are productively efficient d) The price equals total cost Question 6 In perfect competition: a) Short run abnormal profits are competed away by firms leaving the industry b) Short run abnormal profits are competed away by firms entering the industry c) Short run abnormal profits are competed away by the government d) Short run abnormal profits are competed away by greater advertising Question 7 In perfect competition: a) A few firms dominate the industry b) Firms are price makers c) There are many buyers but few sellers d) There are many buyers and sellers Question 8 In the short run firms in perfect competition will still produce provided: a) The price covers average variable cost b) The price covers variable cost c) The price covers average fixed cost d) The price covers fixed costs Question 9 In the long run equilibrium in perfect competition: a) Price = average cost = marginal cost b) Price = average cost = total cost c) Price = marginal revenue = total cost d) Total revenue = total variable cost Question 10 For a perfectly competitive firm: a) Total revenue is a straight line b) Price is greater than marginal revenue c) Price equals total revenue d) Price equals total cost