Pure Competition in the Short Run Quiz
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Questions and Answers

What is the characteristic of a firm in pure competition in the short run?

  • Price manipulator
  • Price taker (correct)
  • Price controller
  • Price maker

    • If a firm in pure competition is making economic losses in the short run, what will happen in the long run?

  • Firms will enter the industry, increasing supply and driving prices down
  • Consumers will reduce demand for the product
  • Firms will exit the industry, reducing supply and driving prices up (correct)
  • The government will intervene to stabilize the market

    • In pure competition in the short run, what happens to a firm if its total revenue is less than its total variable costs?

  • The firm will continue operating as long as total fixed costs are covered
  • The firm will reduce the prices to increase revenue
  • The firm should increase production to cover the costs
  • The firm should shut down in the short run (correct)

    • In pure competition in the short run, what happens to a firm's economic profit if its total revenue is equal to its total variable costs?

    <p>The firm earns normal profit</p> Signup and view all the answers

    What is the characteristic of the short run supply curve for a firm in pure competition?

    <p>It is the portion of the marginal cost curve that lies above the average variable cost curve</p> Signup and view all the answers

    If a firm in pure competition is making economic losses in the short run, what will happen in the long run?

    <p>Firms will exit the industry, shifting the market supply curve to the left</p> Signup and view all the answers

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