Pure Competition - Pure competition 1. Which of the...

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Pure competition 1. Which of the following statements applies to a purely competitive producer? A) It will not advertise its product. B) In long-run equilibrium it will earn an economic profit. C) Its product will have a brand name. D) Its product is slightly different from those of its competitors. 2. A purely competitive seller is: A) both a "price maker" and a "price taker." B) neither a "price maker" nor a "price taker." C) a "price taker." D) a "price maker." 3. The demand schedule or curve confronted by the individual purely competitive firm is: A) relatively elastic, that is, the elasticity coefficient is greater than unity. B) perfectly elastic. C) relatively inelastic, that is, the elasticity coefficient is less than unity. D) perfectly inelastic. 4. If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: A) may be either greater or less than $5. B) will also be $5. C) will be less than $5. D) will be greater than $5. 5. The marginal revenue curve of a purely competitive firm: A) lies below the firm's demand curve. B) increases at an increasing rate as output expands. C) is horizontal at the market price. D) is downsloping because price must be reduced to sell more output. 6. A perfectly elastic demand curve implies that the firm: A) must lower price to sell more output. B) can sell as much output as it chooses at the existing price. C) realizes an increase in total revenue which is less than product price when it sells an extra unit. D) is selling a differentiated (heterogeneous) product. Page 1
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7. Marginal revenue is the: A) change in product price associated with the sale of one more unit of output. B) change in average revenue associated with the sale of one more unit of output. C) difference between product price and average total cost. D) change in total revenue associated with the sale of one more unit of output. 8. Marginal revenue for a purely competitive firm: A) is greater than price. B) is less than price. C) is equal to price. D) may be either greater or less than price. Profit maximizing in short run 9. Firms seek to maximize: A) per unit profit. B) total revenue. C) total profit. D)
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This note was uploaded on 08/10/2010 for the course ASC 102 taught by Professor Johnh during the Spring '10 term at 카이스트, 한국과학기술원.

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Pure Competition - Pure competition 1. Which of the...

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