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Costs , Supply And Perfect Competition
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Costs , Supply And Perfect Competition – MCQs
50 questions. Click to practice.
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Correct options are highlighted when revealed.
1.
How does the elasticity of the long-run market supply curve compare to that of the short-run market supply curve?
It is consistently more elastic than the short-run market supply curve.
It is always perfectly elastic.
It has identical elasticity to the short-run market supply curve.
It is consistently less elastic than the short-run market supply curve.
It exhibits no elasticity.
2.
Which segment of the cost curves represents the supply curve for a perfectly competitive firm in the long run?
The full marginal cost curve
The rising segment of the average total cost curve
The part of the marginal cost curve that is above the average total cost curve
The increasing section of the average variable cost curve
The section of the marginal cost curve that lies above the average variable cost curve
3.
When a competitive firm finds that its marginal revenue is greater than its marginal cost at the current output, what action should it take to maximize profit?
reduce the quantity produced
keep output unchanged
halt production for a short period
raise the level of output
4.
In a perfectly competitive market, what does the marginal revenue for a firm equal?
The total income earned divided by the amount sold
The number of units sold
The average income per unit divided by the quantity sold
The market price of the product
5.
Which of the following markets best exemplifies the characteristics of a competitive market?
Electric power industry
Subscription TV services
Soft drink industry
Dairy milk market
Every market listed here is competitive
6.
In a perfectly competitive market, what is the relationship between price and marginal revenue for a firm?
The price is equal to the marginal revenue
The price exceeds the marginal revenue
The price matches the total revenue
The price is the same as the total cost
7.
Under perfect competition, when will a firm continue to operate in the short term?
When the market price is equal to or greater than the average variable cost
When the price covers only the variable costs
When the price covers the average fixed costs
When the price is sufficient to cover fixed expenses
8.
In a perfectly competitive market, what is true about firms in the long-term equilibrium?
The market price matches the firm's total revenue
Companies do not achieve allocative efficiency
Firms operate at productive efficiency
The price is equal to the firm's total cost
9.
In a perfectly competitive market, at what point does a profit-maximizing firm produce?
When total revenue reaches its highest point
When marginal revenue is zero
When marginal revenue is equal to marginal cost
When marginal revenue matches average cost
10.
What type of demand curve do companies operating in a perfectly competitive market encounter?
A demand curve that is perfectly elastic
A demand curve that is completely inelastic
A supply curve that is perfectly elastic
A supply curve that is entirely inelastic
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