Question

Answer Only Please :)

1) Perfect competition is characterized by numerous firms.

False True

2)Once a firm's marginal revenue curve is known, the output level can be determined.

Group of answer choices True False

4)A firm will shut down in the short run if

Group of answer choices AVC > AFC.

P > AVC.

TR > TC.

P < AVC.

5)Helga owns Viking, Inc., started with her $100,000 inheritance. Helga's accountant informs her that her firm earned a profit of $100,000 last year, and that if she chooses to invest the money she can expect a 10% return. If Helga did not run Viking, she would not work. What were Helga's economic profits last year?

Group of answer choices $90,000 $95,000 Zero $100,000

6)One of the following is not a characteristic of perfect competition. Which is it?

Group of answer choices Firms advertise to increase their market share.

Firms pay no attention to their competitors' output levels.

Profits are low in the long run.

Consumers pay little attention to brand names.

7)A market Group of answer choices is that area in which buyers and sellers compete to affect a product price. may be an organized exchange.

All of the above are correct. refers to a set of sellers and buyers whose actions affect a commodity's price.

8)Richard Bland quit his job as an accounting professor to start his own restaurant. He gave up a salary of $50,000 per year and withdrew $100,000 in bank CDs earning 5 percent to buy a building and equipment. In the restaurant's first year it had direct expenses of $75,000 and revenues of $150,000. The restaurant's economic profit was Group of answer choices not possible to determine from the information given. $75,000. $20,000. $15,000.

9)If you must determine the long-run equilibrium output of a perfectly competitive firm and you are permitted to see only one curve, which of the following curves is most helpful?

Group of answer choices marginal cost demand average fixed cost average cost

10)Which of the following is a characteristic of perfect competition?

Group of answer choices a small number of firms large barriers to entry None of the above is correct. firms selling unique goods

11) If the price falls below minimum SRAVC, the quantity supplied by the firm will be

Group of answer choices the quantity at minimum MC. zero. the quantity at the point where MC intersects AC. the quantity at minimum AC.

Answer 1

1. True

Perfect competition is a form of market in which there are large number of buyers and sellers in the market.

2. False

To find equilibrium quantity, firm's Marginal revenue and marginal cost curve should be known.

3. P < AVC.

In short run, firm will continue its production till firm is able to cover all its variable cost. If price is less then AVC then firm prefers to shut down its production because shutting down reduces loss of firm.

6. Firms advertise to increase their market share.

Under perfect competition, all firms sell identical goods which means goods are same in all aspects like color, shape, size. So, no firm has incentive to advertise to increase their market share.

7. All of the above are correct.

Market defined as the sum total of buyers and sellers in area and price of product is determined by the forces of demand and supply.