Perfect Competition Quiz
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Questions and Answers

What is a perfectly competitive market?

  • A market with only one seller and many buyers with no barriers to entry
  • A market with many sellers and buyers of a homogeneous product and no barriers to entry (correct)
  • A market with few sellers and buyers of a differentiated product and high barriers to entry
  • A market with one dominant seller and many buyers with some barriers to entry

    • What is the defining characteristic of a perfectly competitive market?

  • High barriers to entry
  • Homogeneous product (correct)
  • Dominant seller
  • Few sellers

    • What is the short-run supply curve for a perfectly competitive firm?

  • The portion of the average total cost curve that lies above the marginal cost curve
  • The portion of the marginal cost curve that lies above the average total cost curve
  • The portion of the average variable cost curve that lies above the marginal cost curve
  • The portion of the marginal cost curve that lies above the average variable cost curve (correct)

    • What is the long-run supply curve for an increasing-cost industry?

    <p>Sloping upward</p> Signup and view all the answers

    What happens in the long run if there is an increase in demand in a perfectly competitive market?

    <p>New firms enter the market, increasing supply and lowering prices</p> Signup and view all the answers

    In a perfectly competitive market, what is the defining characteristic of the product being sold?

    <p>Homogeneous product</p> Signup and view all the answers

    What is the primary factor that distinguishes a perfectly competitive market from other market structures?

    <p>Presence of many sellers and buyers</p> Signup and view all the answers

    What is the typical number of firms in a perfectly competitive market?

    <p>Hundreds or even thousands</p> Signup and view all the answers

    What is the key characteristic of the entry into a perfectly competitive market?

    <p>No barriers to entry</p> Signup and view all the answers

    What is the impact of economic profit in the long run for firms in a perfectly competitive market?

    <p>Economic profit attracts new firms, increasing competition and reducing profit</p> Signup and view all the answers

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