Perfect Competition

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Perfect competition quiz
2016: Nicolas Cr
Quiz by 2016: Nicolas Cr, updated more than 1 year ago
2016: Nicolas Cr
Created by 2016: Nicolas Cr about 9 years ago
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Resource summary

Question 1

Question
Why doesn´t an individual have the power to affect the price of a product in a perfectly competitive market?
Answer
  • Because no individual has a part big enough of the market to affect it
  • Because an enterprise is the owner of the market
  • Because there is no competition
  • Because the market is unfair

Question 2

Question
In a perfect competition market, who determines the prices?
Answer
  • The owners of firms
  • Consumers, by market supply and market demand
  • The product being produced
  • The availability of the product in the market

Question 3

Question
Why can´t a firm set its prices below market price?
Answer
  • Because they would not have costumers, as they prefer other brands and would remain loyal to this other brands
  • The firm wouldn´t be able to acomodate all of the new costumers they would have, making demand to increase, costs to sky rocket and the firm having to raise prices to remove certain costumers
  • The market would see a decrease in the demand of the product, as it would become less exclusive so a shift in consumption towards homogenous products would be seen
  • As consumers are very inelastic, they would wan´t to see even a higher drop in the price, thus for waiting until that happens to consume

Question 4

Question
What can a firm in a perfectly competitive market choose?
Answer
  • Price of the good
  • Demand for the good
  • Supply of the good
  • Output produced

Question 5

Question
What is revenue
Answer
  • Demand divided units sold
  • Units sold minus supply
  • Price charged times units sold
  • Income times supply

Question 6

Question
Why is revenue usually higher in the short run?
Answer
  • Because the firm is more motivated to work
  • Because the firm is highly recursive
  • Because there is less competition
  • Because the owner pays more attention

Question 7

Question
When does the entry to a market stop?
Answer
  • When supply is low and demand is high
  • When demand is high and supply is low
  • Until a new market appears
  • Until price is average to total cost

Question 8

Question
Are the following characteristics of perfect competition? There are a large number of sellers, price can be changed by individual firms, and consumers have perfect knowledge
Answer
  • True
  • False

Question 9

Question
Perfect competition markets mean no profit
Answer
  • True
  • False

Question 10

Question
P=D
Answer
  • True
  • False
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