9. Under perfectly competitive conditions, marginal revenue is
a. greater than average revenue
b. equal to average revenue
c. less than average revenue
d. equal to the average variable

Q10. A firm's break-even point occurs where
a. marginal revenue equals marginal cost
b. marginal revenue equals the average variable cost
c. total revenue equals total cost
d. total revenue equals the total variable cost

Q11. The addition to total output resulting from using one more unit of a productive resource is the
a. average product
b. marginal input
c. total product
d. marginal product

Q12. Unlike a firm in pure competition, a monopolist may be able to
a. block the entry of new firms into the industry
b. continue to earn economic profits in the long run
c. earn economic profits in the short run
d. both (a) and (b)

Q13. Producer surplus is the difference between the price the firm is willing to sell its goods and the price it actually receives.
a. true
b. false

Q14. In the long run, under conditions of perfect competition, market forces come into play to
a. enhance profits
b. increase demand
c. eliminate profits
d. separate MR and AR

Q15. Consumer surplus is the area above the demand curve and below the equilibrium price.
a. true
b. false

Q16. Under perfect competition, the market price is determined by market demand and supply.
a. true
b. false

Q17. The more that firms advertise, the closer they get to perfect competition.
a. true
b. false

Q18. Perfect competition assumes that a producer is interested in maximizing profit.
a. true
b. false

Q19. In the long run, under conditions of perfect competition, the buyer will eventually be able to buy the product at a
a. price equal to the lowest point on the ATC curve past the optimal scale of operation
b. price below cost
c. price equal to the lowest point on the ATC curve at the optimal scale of operation
d. discount

Q20. The lowest possible ATC curve is attained at the optimal scale of output.
a. true
b. false

Q21. Perfect competition assumes that all products are identical and that no advertising exists.
a. true
b. false

Q22. The demand curve for the output of a perfectly competitive firm is
a. perfectly inelastic
b. perfectly elastic
c. a rectangular hyperbola with an elasticity equal to 1
d. identical in shape to the market demand curve

Q23. If a firm is producing an output level for which the market price exceeds the firm's marginal cost,
a. consumers would be willing only to pay a price lower than what it costs the firm to produce another unit
b. consumers would be willing only to pay a price equal to what it costs the firm to produce another unit
c. consumers would be willing to pay a price greater than what it costs the firm to produce another unit
d. consumers would be willing only to pay a price equal to or lower than what it costs the firm to produce another unit

Q24. Under conditions of perfect competition, if losses occur in an industry, market forces may come into play to
a. reduce supply
b. lower average revenue
c. increase supply
d. attract new firms

Q25. An administered price is a price
a. set by overall demand and supply
b. established by a seller
c. set by the government
d. determined through collective bargaining

Answer rating: 100% (QA)

9 Answer b equal to AR Explanation perfectly competitive firm is a price taker firm They sell their product at a prevailing market price 10 Answer c total revenue equal total cost Explanation A firm b... View the full answer