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12.1 Perfectly Competitive Markets7) Perfect competition is characterized by all of the following exceptA) heavy advertising by individual sellers.B) homogeneous products.C) sellers are price takers.D) a horizontal demand curve for individual sellers.Answer: A8) A very large number of small sellers who sell identical products imply10) The price of a seller's product in perfect competition is determined by 13) Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21. Which of the following will happen?18) In perfect competition A) the market demand curve and the individual's demand are identical.B) the market demand curve is perfectly inelastic while demand for an individual seller's product is perfectly elastic. C) the market demand curve is perfectly elastic while demand for an individual seller's product is perfectly inelastic.D) the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic.Answer: D12.2 How a Firm Maximizes Profit in a Perfectly Competitive Market1) If the market price is $25, the average revenue of selling five units is2) If the market price is $25 in a perfectly competitive market, the marginal revenue from selling the fifth unit is
Table 12-1QuantityTotal Cost(dollars)Variable Cost(dollars)0$1,000$01001,3603602001,5605603001,9609604002,7601,7605004,0003,0006005,8004,800Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units.4) Refer to Table 12-1.What is the fixed cost of production?7) Refer to Table 12-1.If the market price of each camera case is $8 and the firm maximizes profit, what is the amount of the firm's profit or loss?A) $0 (it breaks even)B) loss of $1,000C) profit of $440D) loss of $440Answer: C