Holt 7525-9 S15_IT

Multiple Choice:
___ 1. A perfect competitor:
a. is one of many sellers in a market
b. sells a product identical to its competitors’ product
c. is unable to affect the market price
d. All of the above
___ 2. A perfect competitor:
a. has maximum market power
b. has only a small amount of market power
c. has no market power
d. All of the above are possible
___ 3. In a perfectly competitive market:
a. entry of new firms is difficult due to economies of scale
b. exit of existing firms is difficult due to high fixed costs
c. there is freedom of entry and exit
d. Both a. and b. above
___ 4. If a perfect competitor decreases its output:
a. the market price will increase
b. the market price will be unaffected
c. the market price will decrease
d. All of the above are possible
___ 5. By producing the quantity of output where marginal revenue equals marginal cost, a firm
will:
a. maximize total revenue
b. maximize profits
c. minimize costs
d. All of the above
___ 6. For a perfect competitor:
a. the demand curve and the marginal revenue curve are the same
b. price equals marginal revenue
c. Both of the above
d. Neither of the above
Complete the table below to answer questions 7. through 10.:
Price Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost Profit
$10 0 $0 X $13 X $-13
10 1 10 $10 15 $2 -5
10 2 20 10 19 4 1
10 3 30 __ 25 __ __
10 4 40 __ 33 __ __
10 5 50 __ 43 __ __
10 6 60 __ 55 __ __
10 7 70 __ 69 __ __
___ 7. What is the marginal revenue of the 5 th unit of output?
a. $4
b. $6
c. $8
d. $10
FOR REVIEW ONLY - NOT FOR DISTRIBUTION
21 - 11 Perfect Competition