Table of contents | |
Multiple Choice Questions | |
Match the Following | |
True or False | |
Very Short Answers | |
Short Answers | |
Long Answers |
Q2: What is the primary goal of a firm operating under perfect competition?
(a) Maximize Profit
(b) Increase Market Share
(c) Minimize Costs
(d) Set the Highest Price Possible
Q3: In perfect competition, which of the following is true regarding the demand curve faced by a firm?
(a) Perfectly Elastic
(b) Downward Sloping
(c) Upward Sloping
(d) Horizontal at Market Price
Q4: What happens to the price and output level of a firm in the short run if it incurs losses?
(a) Price Decreases, Output Decreases
(b) Price Increases, Output Decreases
(c) Price Increases, Output Increases
(d) Price Decreases, Output Increases
Q5: Which of the following statements is true about a firm in perfect competition in the long run?
(a) Firms can earn economic profit in the long run.
(b) Firms can only cover their explicit costs in the long run.
(c) Firms can earn normal profit in the long run.
(d) Firms can only survive if they make supernormal profit.
Q2: In perfect competition, each firm has some degree of market power.
Q3: Perfectly elastic demand curve implies that the firm can sell any quantity of output at the market price.
Q4: Firms in perfect competition can engage in non-price competition to increase sales.
Q5: Normal profit is the minimum level of profit necessary to keep a firm in operation.
Q2: Define Marginal Revenue (MR).
Q3: Why is the demand curve facing a perfectly competitive firm perfectly elastic?
Q4: What is the significance of the price being equal to marginal cost for a firm in perfect competition?
Q5: State one condition necessary for a firm to achieve profit maximization in perfect competition.
Q2: Role of Perfect Competition in Promoting Consumer Welfare
Q3: Short-Run and Long-Run Equilibrium of a Firm in Perfect Competition
Q4: Importance of Price Elasticity of Demand for Perfectly Competitive Firms
Q5: Challenges Faced by Firms in Perfect Competition
Q2: Efficiency of Perfectly Competitive Markets
Q3: Price Determination in Perfect Competition
Q4: Benefits of Perfect Competition for Consumers and Society
Q5: Importance of Perfect Competition in the Economy
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1. What is the theory of the firm under perfect competition? |
2. What are the characteristics of a perfectly competitive market? |
3. How does a firm determine its profit-maximizing level of output in perfect competition? |
4. What is the relationship between a firm's short-run and long-run profits in perfect competition? |
5. How does perfect competition benefit consumers? |
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