1. Which of the following characteristics does NOT describe a perfectly competitive market?

Group of answer choices

• Companies are able to enter and exit the market without any restrictions.
• Firms set different prices for their product, either at or above the equilibrium price.
• There are many people who desire and have the ability to purchase the product.
• Many firms are producing identical products

2. In a perfectly competitive market...

Group of answer choices

• Economic profits will be driven down to zero in the short run
• Firms will compete for business by setting different prices at or above the prevailing equilibrium price
• It will eventually reach long-run equilibrium.
• A few firms will dominate the market share.

3. The profit maximizing condition for a purely competitive firm is when...

Group of answer choices

• Price = average total costs
• Price elasticity of demand is positive.
• Price = Marginal cost.
• Price < average total costs

4. A strawberry farm operating in a perfectly competitive market is operating below the break-even point. What is the best thing to do in the short run?

Group of answer choices

• Hire more workers.
• Shut down if price falls below AVC; continue to produce with losses if AVC < Price < ATC.
• Borrow money and buy more capital equipment.
• Increase the price of its strawberries.

5. For a constant cost industry in a purely competitive market structure, whenever there is an increase in market demand and price, then the supply curve

Group of answer choices

• The supply curve becomes unstable. and firms leave the market because management costs become very high
• Shifts to the left as some firms leave the market and the market price rises to a new level.
• Shifts to the right with new firms' entry and stops at the point where the new long-run equilibrium intersects at a lower market price.
• Shifts to the right with new firms' entry and stops at the point where the new long-run equilibrium intersects at the same market price as before.

6. How would you explain allocative efficiency in a purely competitive market structure?

Group of answer choices

• Firms ensure that they produce enough quantity so that everyone who wishes to buy the product can do so.
• Allocative efficiency is a concept involving only two goods, so it cannot be applied to a perfectly competitive market..
• Firms produce that quantity where the price consumers pay equals the cost to society to produce it.
• Firms produce the quantity where the price consumers pay is less than the cost to society to produce it.