1) A technology advance in a perfectly competitive market will, in the long run, lead to_____.
A) Greater profit at each firm
B) Higher prices charged by each firm
C) A leftward shift of the market supply curve
D) None of these
2) A perfectly competitive firm should shut down in the short run whenever, at the best possible output _____
A) P < AVC
B) P < ATC
C) P < MR
D) P < ATC + AVC
3) In a competitive industry, a rightward shift of the demand curve will cause ______
A) economic profit for each firm in the short run, and entry in the long run
B) economic profit for each firm in the long run
C) economic loss for each firm in the long run
D) economic profit for each firm in the short run, and exit in the long run
E) economic loss for each firm in the short run, and exit in the long run
4) A perfectly competitive firm should shut down whenever the market price is lower than the minimum point on the AVC curve. (TRUE/FALSE)
5) In a perfectly competitive market, an increase in the price of a variable input will cause an upward shift in each firm's ____
A) MC curve
B) ATC curve
C) AVC curve
D) All of these
6) Which of the following statements about perfect competition is FALSE?
A) In the short run, the number of firms in the industry is fixed.
B) Each firm determines the rice at which it will sell its output
C) All firms in the industry produce a stardardized product.
D) For a perfectly competitive firm, marginal revenue is the same as market price.
E) There are no significant barriers to entry or exit
7) Under perfect competition, in long run equilibrium, accounting profit ma be greater than zero. (TRUE/FALSE)
8) Which of the following is a condition for profit-maximization in a perfectly competitive firm?
A) TR = TC
B) P = AVC
C) P = MC
D) All of these