A. A competitive firm
- can consider only its location in setting the price.
- must base its competitive price on product differentiation.
- has the ability to set its own price.
- must accept the price determined by the intersection of the market supply and demand curves.
- has no supply curve.
B. If a firm is making an economic profit, then
- the factors of production are being paid their opportunity costs.
- there will be no change in the number of firms if the industry is perfectly competitive.
- the factors of production are being paid less than their opportunity costs.
- the factors of production are being paid more than their opportunity costs.
- the firm will exit the industry
C. Along a downward-sloping monopoly demand curve,
- marginal revenue is greater than price.
- the elasticity of demand is constant.
- marginal revenue decreases when the price decreases.
- marginal revenue is equal to zero when the price is equal to zero
D. If, in the short run, a perfectly competitive firm is producing at a point where the total cost is greater than total revenue, then the firm should
- shut down because economic profits are negative.
- continue to produce as long as P > AVC.
- continue to produce because accounting profits are positive.
- set a higher price for its output.
- set a lower price for its output
E. For a perfectly competitive firm, the demand curve is
- the marginal revenue curve.
- perfectly inelastic.
- always equal to marginal cost.
- the same as the market demand curve
F. A firm in a(n) industry will have the most elastic demand curve
- monopolistic
- oligopolistic
- monopolistically competitive
- perfectly competitive
G. If the demand curve of a monopolist is in the inelastic range, then
- total revenue will fall if the price increases.
- total revenue will be unchanged if the price increases.
- total revenue will rise if the price increases.
- the total supply will increase by an equal amount if demand increases.
- the price will be unchanged if total revenue increases
H. Monopolistic competition and oligopoly are examples of
- monopoly.
- perfect competition.
- theories of consumer behavior.
- imperfect competition.
- the extreme cases on the market structure continuum
I. Under which market structure do firms face the flattest (most elastic) demand curve?
- perfect competition
- monopolistic competition
- oligopoly
- monopoly
J. At the point of long-run equilibrium for a perfectly competitive firm,
- economic profits are zero.
- TR > TC.
- TR < TC.
- P = AVC.
- normal profits are zero.