Question

2. In a perfectly competitive industry, an individual firm's demand curve will be: a) Perfectly elastic. b) Perfectly inelastic. c) Downward sloping to the right. d) Upward sloping to the right. 3. A firm in a competitive market will seek to... a) Minimize total costs. b) Maximize total revenue. c) Minimize marginal cost. d) Maximize the difference between total revenue and total cost. e) Maximize the difference between marginal revenue and marginal cost. In the short-run, if a firm's marginal product of labor is rising, it must be true that.. a) its MC is also rising. b) its MC is falling c) its ATC is rising. d) its FC is rising. e) its VC is falling

Answer 1

2. a

Firm's demand curve is perfectly elastic in perfect competition.

3. d

Profit is the difference between total revenue and total cost and firm tries to maximize this difference.

4. b

As long as marginal product is rising its MC is falling.