Problem 1) A perfectly competitive firm:
a) sells a product that has perfect substitutes
b) has a perfect inelastic demand
c) has a perfectly elastic supply
d) all of the above
Problem 2) In the short run, a perfectly competitive firm____ earn an economic profit and ____ incur an economic loss
a) might' will never
b) will never'might
c) might; might
d) will never; will never.
Problem 3) If a perfectly competitive firm finds that the price exceeds its ATC, then the firm.
a) will raise its price to increase its economic profit
b) will lower its price to increase its economic profit
c) is earning an economic profit
d) is incurring an economic loss
Problem 4) For a perfectly competitive syrup producer whose average total cost curve does not change, an economic profit could turn into an economic loss if the :
a) market demand for syrup decreases
b) marginal cost curve shifts downwards
c) market demand for syrup does not change.
d) market demand for syrup increases.