Chapter 9_1: Perfect Competition

Chapter 9_1: Perfect Competition; Time: 40 phút

Question 1: Perfect competition is an industry with
a. a few firms producing identical goods.
b. many firms producing goods that differ somewhat.
c. a few firms producing goods that differ somewhat in quality.
d. many firms producing identical goods.

Question 2: In a perfectly competitive industry, there are
a. many buyers and many sellers.
b. many sellers, but there might be only one or two buyers.
c. many buyers, but there might be only one or two sellers.
d. one firm that sets the price for the others to follow.

Question 3: In perfect competition, the product of a single firm
a. is sold to different customers at different prices.
b. has many perfect complements produced by other firms.
c. has many perfect substitutes produced by other firms.
d. is sold under many differing brand names.

Question 4: In perfect competition, restrictions on entry into an industry
a. do not exist.
b. apply to labor but not to capital.
c. apply to both capital and labor.
d. apply to capital but not to labor.

Question 5: In perfect competition,
a. there are significant restrictions on entry.
b. each firm can influence the price of the good.
c. there are few buyers.
d. all firms in the market sell their product at the same price.

Question 6: The price elasticity of demand for any particular perfectly competitive firm's output is
a. less than 1.
b. equal to zero.
c. infinite.
d. 1

Question 7: The demand for wheat from farm A is perfectly elastic because wheat from farm A is a(n)
a. perfect complement to wheat from farm B.
b. perfect substitute for wheat from farm B.
c. normal good.
d. inferior good.

Question 8: In perfect competition, the elasticity of demand for the product of a single firm is
a. 0
b. infinite.
c. 1
d. between 0 and 1.

Question 9: In perfect competition, the elasticity of demand for the product of a single firm is
a. infinite, because many other firms produce identical products.
b. zero, because many other firms produce identical products.
c. zero, because the firm produces a unique product.
d. infinite, because the firm produces a unique product.

Question 10: In perfect competition, an individual firm
a. has a price elasticity of supply equal to one.
b. faces unitary elasticity of demand.
c. has a price elasticity of supply equal to infinity.
d. faces infinitely elastic demand.

Question 11: If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has
a. elasticity equal to the price of apples.
b. unitary elasticity.
c. infinite elasticity.
d. zero elasticity.

Question 12: In a perfectly competitive industry, the price elasticity of demand for the market demand is ________ and the price elasticity of demand for an individual firm's demand is ________.
a. infinite; less than infinite
b. infinite; infinite
c. less than infinite; less than infinite
d. less than infinite; infinite

Question 13: A perfectly competitive firm's demand curve is
a. perfectly inelastic.
b. the same as the market demand curve.
c. downward sloping.
d. the same as the firm's marginal revenue curve.

Question 14: The market for fish is perfectly competitive. So, the price elasticity of demand for fish from a single fishery
a. is sometimes greater than and sometimes less than the elasticity of demand for fish overall.
b. is greater than the elasticity of demand for fish overall.
c. is less than the elasticity of demand for fish overall.
d. equals the elasticity of demand for fish overall.

Question 15: In perfect competition, the price of the product is determined where the industry
a. elasticity of supply equals the industry elasticity of demand.
b. supply curve and industry demand curve intersect.
c. fixed cost is zero.
d. average variable cost equals the industry average total cost.

Question 16: Economists assume that a perfectly competitive firm's objective is to maximize its
a. revenue.
b. economic profit.
c. output price.
d. quantity sold.

Question 17: Total economic profit is
a. total revenue minus total opportunity cost.
b. marginal revenue minus marginal cost.
c. total revenue divided by total cost.
d. marginal revenue divided by marginal cost.

Question 18: The economic profit of a perfectly competitive firm
a. is less than its total revenue.
b. is greater than its total revenue.
c. equals its total revenue.
d. is less than its total revenue if its supply curve is inelastic and is greater than its total revenue if its supply curve is elastic.

Question 19: In perfect competition, a firm that maximizes its economic profit will sell its good
a. below the market price.
b. above the market price.
c. below the market price if its supply curve is inelastic and above the market price if its supply curve is elastic.
d. at the market price.

Question 20 - 25

Question 20: The above figure shows a firm's total revenue line. The firm must be in a market with
a. monopolistic competition.
b. monopoly.
c. perfect competition.
d. oligopoly.

Question 21: For a perfectly competitive firm, curve A in the above figure is the firm's
a. average fixed cost curve.
b. average variable cost curve.
c. total revenue curve.
d. total fixed cost curve.

Question 22: The figure above portrays a total revenue curve for a perfectly competitive firm. Curve A is straight because the firm
a. has perfect information.
b. wants to maximize its profits.
c. is a price taker.
d. faces constant returns to scale.

Question 23: The figure above portrays a total revenue curve for a perfectly competitive firm. The firm's marginal revenue from selling a unit of output
a. equals $1.00.
b. equals $2.00.
c. equals $0.50.
d. cannot be determined.

Question 24: The figure above portrays a total revenue curve for a perfectly competitive firm. The price of the product in this industry
a. equals $1.00.
b. equals $2.00.
c. equals $0.50.
d. cannot be determined.

Question 25: In the above figure showing a perfectly competitive firm's total revenue line, the firm's marginal revenue
a. does not change as output increases.
b. falls as output increases.
c. rises as output increases.
d. cannot be determined.



Time Coundown: