1.A perfectly competitive market is characterized by:

a)many firms producing an identical product,

b)freedom of entry into the industry,

c)many buyers,

d)all of the above.

2.In a perfectly competitive market, the firm's demand curve:

a)is the same as the market demand curve,

b)is normally downward sloping to the right,

c)is normally upward sloping to the right,

d)is horizontal at the price which equates industry demand and industry supply.

3.A perfectly competitive firm is maximizing profit when:

a)it is operating at the minimum point of its average total cost curve,

b)is marginal revenue exceeding its marginal cost by the greatest possible amount,

c)its marginal cost equals price of its product,

d)its marginal cost equals average variable cost.

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4.The monopolist faces a downward-sloping demand curve. This means that marginal revenue is:

a)greater than price,

b)less than price,

c)equal to price,

d)equal to average revenue.

5.A profit maximizing monopoly will never operate at an output level at which:

a)Total cost is greater than total revenue,

b)Marginal revenue is less than price,

c)Marginal cost is greater than average cost,

d)Marginal revenue is negative.