Question 1

Which of the following is a requirement for a perfectly competitive market?

Accepted Answer

In a perfectly competitive market, buyers and sellers are price takers, meaning they cannot influence the market price through their actions. This is a necessary condition for perfect competition. The presence of barriers to entry, indivisible setup costs, or a focus on maximizing sales by sellers would all prevent a market from being perfectly competitive.

Question 2

Suppose the dry cleaning industry is initially in long-run equilibrium but then experiences a sharp increase in the price of its inputs. Assuming that the industry is perfectly competitive, the increase in costs should:

Accepted Answer

In a perfectly competitive market, an increase in the cost of inputs makes the industry less profitable, leading some firms to exit the market in the long run. This reduction in supply raises the market price to a new equilibrium where remaining firms can cover their higher costs.

Question 3

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D₀ to D₁, the firm will:

Accepted Answer

The answer of Refer to the graphs shown, which depict...

Question 4

In a perfectly competitive market, a decrease in market demand in a long-run constant-cost industry causes:

Accepted Answer

DIn a perfectly competitive market, a decrease in market demand leads to a decrease in price, quantity, and profit in the short run as firms adjust to the lower demand. In the long run, firms exit the industry due to lower profits, which decreases supply, stabilizing the price and quantity at a new equilibrium. However, in a constant-cost industry, the exit of firms does not affect the costs of the remaining firms, so the long-run adjustments result in a new equilibrium with decreased quantity and price, maintaining zero economic profit for firms.

Question 5

In a perfectly competitive constant-cost industry:

Accepted Answer

In a perfectly competitive constant-cost industry, factor prices do not change as industry output increases. This is because the industry's production technology does not involve increasing costs or decreasing returns to scale. Therefore, the equilibrium prices of the factors of production remain constant.

Question 6

How would an economist determine graphically the output and profit of a perfect competitor?

Accepted Answer

The answer of How would an economist determine graphically the...

Question 7

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand decreases from D₀ to D₁, the firm will:

Accepted Answer

The answer of Refer to the graphs shown, which depict...

Question 8

A perfectly competitive market is a market in which economic forces operate unimpeded.The six conditions necessary to have a perfectly competitive market are: (1. )Both buyers and sellers are price takers.(2. )The number of firms is large.(3. )There are no barriers to entry.(4. )Firms' products are identical.(5. )There is complete information.And (6. )selling firms are profit maximizing entrepreneurial firms.Discuss any three of these conditions.

Accepted Answer

The answer of A perfectly competitive market is a market...

Question 9

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D₀ to D₁, in the short run:

Accepted Answer

The answer of Refer to the graphs shown, which depict...

Question 10

In a perfectly competitive long-run constant-cost industry, an increase in market demand causes:

Accepted Answer

In a perfectly competitive long-run constant-cost industry, an increase in market demand initially increases price, attracting new firms due to the potential for profit. This influx of firms increases supply, which then lowers the price back to its original level. The quantity produced increases due to the higher number of firms, but the price returns to its original level, and profits normalize to zero economic profit in the long run, maintaining the characteristics of perfect competition.

Question 11

In a perfectly competitive market, an increase in market demand in a long-run constant-cost industry causes:

Accepted Answer

In a perfectly competitive market, an increase in market demand initially leads to higher prices, quantities, and profits in the short run because firms cannot immediately adjust their production capacities. However, in the long run, new firms enter the market, increasing supply, which brings prices and profits back to their original levels, but with a higher quantity of goods being produced and sold.

Question 12

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand decreases from D₀ to D₁:

Accepted Answer

The answer of Refer to the graphs shown, which depict...

Question 13

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D₀ to D₁, in the long run:

Accepted Answer

The answer of Refer to the graphs shown, which depict...

Question 14

In a perfectly competitive market:

Accepted Answer

In a perfectly competitive market, price adjustments occur more rapidly in the short run in response to changes in supply and demand. Over the long run, adjustments in the quantity produced by firms, through entry or exit from the market, are more significant as they adapt to achieve economic equilibrium.

Question 15

In determining the supply curve of a perfectly competitive firm,what cost information do you need? Explain.

Accepted Answer

The answer of In determining the supply curve of a...

Question 16

Describe how a market supply curve relates to a firm's supply curve.How does the short-run market supply curve differ from the long run market supply curve?

Accepted Answer

The answer of Describe how a market supply curve relates...

Question 17

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀, the:

Accepted Answer

The answer of Refer to the graphs shown, which depict...

Question 18

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand increases from D₀ to D₁, in the long run:

Accepted Answer

The answer of Refer to the graphs shown, which depict...

Question 19

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀:

Accepted Answer

The answer of Refer to the graphs shown, which depict...

Question 20

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀, the:

Accepted Answer

The answer of Refer to the graphs shown, which depict...

Quiz 13: Perfect Competition

Which of the following is a requirement for a perfectly competitive market?

Suppose the dry cleaning industry is initially in long-run equilibrium but then experiences a sharp increase in the price of its inputs. Assuming that the industry is perfectly competitive, the increase in costs should:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D0 to D1, the firm will:

In a perfectly competitive market, a decrease in market demand in a long-run constant-cost industry causes:

In a perfectly competitive constant-cost industry:

How would an economist determine graphically the output and profit of a perfect competitor?

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand decreases from D0 to D1, the firm will:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D0 to D1, in the short run:

In a perfectly competitive long-run constant-cost industry, an increase in market demand causes:

In a perfectly competitive market, an increase in market demand in a long-run constant-cost industry causes:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand decreases from D0 to D1:

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D0 to D1, in the long run:

In a perfectly competitive market:

In determining the supply curve of a perfectly competitive firm,what cost information do you need? Explain.

Describe how a market supply curve relates to a firm's supply curve.How does the short-run market supply curve differ from the long run market supply curve?

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0, the:

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand increases from D0 to D1, in the long run:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D0, the:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D₀ to D₁, the firm will:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand decreases from D₀ to D₁, the firm will:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D₀ to D₁, in the short run:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand decreases from D₀ to D₁:

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D₀ to D₁, in the long run:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀, the:

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand increases from D₀ to D₁, in the long run:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀:

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D₀, the: