Deck 9: Perfect Competition: Part A

Question 1

One of the defining characteristics of a perfectly competitive market is

A) both buyers and sellers are well informed about the market
B) a small number of buyers
C) high barriers to entry
D) a small number of buyers but a large number of sellers
E) buyers are better informed about the market than sellers

Answer 1

both buyers and sellers are well informed about the market

Question 2

Diminishing marginal returns are the reason why some industries have positively-sloped long-run average cost curves.

Answer 2

False

Question 3

In a perfectly competitive market,a technological advance allows all firms to earn higher economic profits in the long run.

Answer 3

False

Question 4

In perfect competition,technological advances will allow economic profits for

A) all firms.
B) only the firm developing the new technology.
C) early adopters.
D) none of the firms,as the advance will be immediately adopted by all of them.

Question 5

Which of the following is not a characteristic of a perfectly competitive market

A) buyers and sellers are well informed about the market
B) standardized product
C) many buyers and few sellers
D) easy exit out of the industry
E) easy entry into the industry