QUESTION 1

For a perfectly competitive firm total revenue:

		Is price times quantity sold.
		Increases by a constant absolute amount as output expands.
		Graphs as a straight upsloping line from the origin.
		Has all of these characteristics.

QUESTION 2

What will happen graphically if firms exit from a perfectly competitive industry?

		The market demand curve will shift to the right.
		The market demand curve will shift to the left.
		The market supply curve will shift to the right.
		The market supply curve will shift to the left.

QUESTION 3

Which of the following conditions means that the perfectly competitive firm is maximizing its profits?

		That the price equals average revenue.
		That the price is equal to marginal revenue.
		That the price is equal to marginal cost.
		That the price is equal to average cost.

QUESTION 4

In the standard model of pure competition, a profit-maximizing entrepreneur will shut down in the short run if:

		Marginal cost is greater than average revenue
		Average cost is greater than average revenue
		Average fixed cost is greater than average revenue
		Price is less than average variable costs

QUESTION 5

Which of the following is true for a perfectly competitive firm?

		It can control it price but not its output.
		It can control its output but not its price.
		It can control both its price and its output.
		It cannot control either its price or its output.

QUESTION 6

In the short run the individual competitive firm's supply curve is that segment of the:

		Average variable cost curve lying below the marginal cost curve.
		Marginal cost curve lying above the average variable cost curve.
		Marginal revenue curve lying below the demand curve.
		Marginal cost curve lying between the average total cost and average variable cost curves.

QUESTION 7

What is break-even price?

		A price that just covers average fixed costs.
		A price that just covers average total costs.
		A price at which the firm makes only normal profits.
		A price that just covers average variable costs.

QUESTION 8

1. Which of the following markets provide the best example of a perfect competition?

		Automobile manufacturing.
		Restaurants.
		Oil refining.
		Wheat farming.

QUESTION 9

For a perfectly competitive seller, price equals:

		Average revenue.
		Marginal revenue.
		Total revenue divided by output.
		All of these.

QUESTION 10

Which of the following is the correct sequence of events following an increase in demand for a product in a perfectly competitive market?

		A decrease in the price and in the total profits of the representative firm which causes new firms to enter the industry.
		An increase in the price and in the total profits of the representative firm which causes firms to leave the industry.
		An increase in the price and in the total profits of the representative firm which causes new firms to enter the industry.
		An increase in the price but a decrease in the total profits of the representative firm which causes firms to leave the industry.