Perfect Competition Quiz: Test Your Knowledge with Flashcards

In perfect competition, what is the level of product differentiation?

What is the characteristic of the demand curve for a firm in perfect competition?

What is the long-run economic profit for firms in perfect competition?

In a monopoly market, how many sellers are there?

What is the level of entry barriers in a monopoly market?

How much control does a monopoly firm have over the price of its product?

Perfect Competition Characteristics

Product differentiation in perfect competition is nonexistent; all firms produce homogeneous products, making them perfect substitutes for one another.
The demand curve for a firm in perfect competition is perfectly elastic, meaning firms can sell any quantity at the market price but cannot influence the price themselves.

Long-run Economic Profit in Perfect Competition

In the long run, economic profit for firms in perfect competition tends towards zero as new entrants are attracted by short-term profits, driving prices down to the level of average total costs.

Monopoly Market Characteristics

A monopoly market features only one seller, controlling the entire supply of the product.
Entry barriers in a monopoly market are high, including legal restrictions, cost advantages, and control over essential resources, preventing new firms from entering.
A monopoly firm has significant control over the price of its product, as it is the only provider and can set prices above marginal cost, leading to higher profits.

Test your knowledge of perfect competition in economics with this quiz! Explore the level of product differentiation, the characteristics of the demand curve for firms, and the long-run economic profit in perfect competition. Perfect for students and enthusiasts of economics.