1. A perfectly competitive firm has no influence over price because:

Select one:

A. consumers establish the prices of products.

B. antitrust laws constrain perfectly competitive firms.

C. it is unaware of the demand curve it faces.

D. its output is insignificant relative to the market as a whole.

2. A profit-maximizing, price-taking firm should cease production when

Select one:

A. the price is less than minimum average variable cost.

B. the firm is making a loss.

C. the price is less than minimum average fixed cost.

D. the firm is earning zero economic profit.

3. An agreement between firms in an industry to set a certain price or to share a market is

Select one:

A. a competitive practice

B. a coordinating practice

C. a collusive practice

D. a price-taking strategy

4. A perfectly competitive firm has a demand curve that is:

Select one:

A. vertical and perfectly inelastic.

B. horizontal and perfectly inelastic.

C. vertical and perfectly elastic.

D. horizontal and perfectly elastic.

5. Which of the following is true?

Select one:

A. The objective of the firm is to maximize profits, by producing the amount equates average revenue and average total cost.

B. The objective of the firm is to maximize profits, by producing the amount that equates marginal revenue and marginal cost.

C. The objective of the firm is to maximize profits, by producing the amount that equates total revenue and total cost.

D. The objective of the firm is to maximize profits, by producing the amount that equates average revenue and average variable cost.