Problems-
1. The firm in a competitive market faces a demand curve that is:
A) perfectly elastic.
B) downward sloping.
C) upward sloping.
D) perfectly inelastic.
2. Assume that P1>P2> AVC. If market price decreases from P1 to P2, then the competitive firm should:
A) reduce production.
B) shut down.
C) continue to produce at the same level of output.
D) increase production.
Additional Information-
These multiple choice problems belong to Economics. The first problem is about demand curve in competitive market and the second problem is about comparing the difference between prices and average variable cost.