Question

12.) Which of the following is not a characteristic of perfect competition?

a. All goods sold are identical.

b. Firms and consumers all have perfect information about the good and market.

c. all consumers have identical individual demand curves

d. Sellers can enter the market easily.

13.)For a perfectly competitive firm in the short run, if the following conditions are true, P = MR = MC > AC, then

a. the firm is maximizing profits and is making an economic profit.

b. the firm is maximizing profits and is suffering an economic loss.

c. the firm is not maximizing profits but is making an economic profit

d. the firm is not maximizing profits and is not making an economic profit.

27.) A firm will shut down in the short run if

a.) AVC > AFC.

b.) TR > TC.

c.) P < AVC

d.) P > AVC

29.)

In determining whether a market meets the conditions for perfect competition, it is necessary to

a. evaluate the promotional tools that can be used by firms.

b. determine the appropriate size of the firm

c. assess the production technology available to firms.

d. consider the number of firms in the market.

Answer 1

Ans.-12(C)

All consumers don't have individual identical demand curves in a perfectly competitive market.

Ans.13- (A)

Profits are maximized since P=MR=MC.

Profits = (P-AC)* Q

Since P>AC ,so firm is making an economic profit.

Ans.27-(C)

A firm shuts down if it is not able to cover even its avergae variable costm

Ans 29-(D)

There must be many firms in a perfectly competitive market.