Question 1

1pts

If the perfectly competitive firm is producing an output level at which price equals marginal cost, it is

Group of answer choices

earning profits.

taking losses.

earning normal profit.

There is not enough information to answer the question.

Question 3

1pts

Perfectly competitive firms are price takers for all of the following reasons except that

Group of answer choices

each firm is quite small relative to the total market supply.

buyers and sellers have all the necessary information about prices, etc.

the product is homogeneous.

barriers to exit force firms to sell at the market price.

Question 5

1pts

A perfectly competitive firm that wants to maximize profits or minimize losses will produce in the short run as long as

Group of answer choices

customers are buying its product.

price is above average variable cost.

price is above marginal revenue.

average variable cost is above price.

average total cost is above price.

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Question 6

1pts

A perfectly competitive firm should shut down production in the short run if price is less than average fixed cost at the loss-minimizing level of output.

Group of answer choices

True

False

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Question 7

1pts

Firm X is producing the quantity of output at which marginal revenue equals marginal cost. It is earning

Group of answer choices

a positive economic profit.

an economic loss.

a normal profit.

There is not enough information to answer the question.

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Question 8

1pts

In the theory of perfect competition, the assumption of easy entry into and exit from the market implies

Group of answer choices

positive economic profits in the long run.

losses in the long-run equilibrium.

zero economic profits in the long run.

zero economic profits in both the short run and the long run.

positive economic profits in both the short run and the long run.

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Question 9

1pts

As firms exit an industry, the industry supply curve shifts __________ and the equilibrium price __________ until long-run competitive equilibrium is established and the surviving firms are earning __________ economic profits.

Group of answer choices

leftward; rises; zero

leftward; falls; positive

leftward; rises; positive

rightward; falls; negative

rightward; rises; positive

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Question 10

1pts

If a firm is a price taker, its demand curve is

Group of answer choices

downward sloping.

upward sloping.

perfectly inelastic.

perfectly elastic.