What is the primary characteristic of a perfect competition market structure?

A large number of buyers and sellers compete for the same products at the same price, with firms having no ability to influence market prices.

Fill in the blank: In perfect competition, firms are considered ___ because they cannot influence the market price.

Price takers

True or False: In a perfectly competitive market, individual firms can set their own prices for the products they sell.

False. Individual firms cannot set their own prices; they must accept the market price.

What does 'perfect knowledge about the markets' imply for consumers and producers?

It implies that both consumers and producers have all the relevant information about prices and products, preventing price discrepancies and aiding in achieving market equilibrium.

Riddle: I am a market where many sellers sell the same product, and no seller can change my price. What am I?

A perfectly competitive market.

List two features of perfect competition.

1. Homogeneous products. 2. Free entry and exit of firms.

Fill in the blanks: The factors of production in a perfectly competitive market are ___ and can be easily transferred from one firm to another.

Perfectly mobile

What happens to market supply and price when new firms enter a perfectly competitive market earning abnormal profits?

Market supply increases, leading to a decrease in market price and a reduction in profits.

True or False: In a perfectly competitive market, firms can earn long-term abnormal profits.

False. Firms can only earn normal profits in the long run due to free entry and exit.

How do firms in perfect competition react when facing losses?

Firms will exit the market, which decreases market supply, causing the market price to rise until losses are eliminated.

In a perfectly competitive market, the price line is represented as ___ because firms cannot influence the market price.

A horizontal straight line

Total Revenue (TR) is calculated using the formula ___ where p represents price and q represents quantity.

TR = p × q

True or False: In a perfectly competitive market, marginal revenue (MR) is always less than the price.

False. In a perfectly competitive market, marginal revenue is equal to the price.

Fill in the blank: Average revenue is defined as ___ divided by total output.

Total Revenue

What is the significance of the total revenue curve in relation to a firm's total cost curve?

It helps determine economic profit and the profit-maximizing level of production.

Riddle: I am the revenue earned from selling one more item, what am I?

Marginal Revenue

What happens to the overall demand for a firm's product if it attempts to raise its price above the market level in a perfectly competitive market?

The overall demand falls to zero.

In a perfectly competitive market, the relationship between price and marginal revenue can be expressed as MR = ___ .

P

Profit is defined as the difference between ___ and ___.

Revenue and cost

True or False: A break-even point occurs when total revenue is greater than total cost.

False: A break-even point occurs when total revenue is equal to total cost.

What condition must be met for a producer to achieve profit maximization?

Marginal revenue (MR) must equal marginal cost (MC), and MC must be rising or cut MR from below.

Fill in the blank: The shutdown point is defined as when ___ equals ___ or average revenue equals average variable cost.

Total revenue equals total variable cost

Riddle: I define a condition where a company has no profit and no loss. What am I?

Break-even point

Short Answer: Explain what a supply schedule represents.

A supply schedule is a table that shows the quantities of a commodity that a firm is willing to sell at different prices, assuming constant technology and factor prices.

What is a supply curve?

The supply curve depicts the quantities of output a firm chooses to produce in response to varying market prices.