Question

1. Under the perfectly competitive market structure, the demand curve of an individual firm is    [ Select ]    ["downward sloping", "unit-elastic", "perfectly inelastic", "perfectly elastic"]       meaning that the demand curve is also the [ Select ]   ["Marginal Cost curve", "average cost", "marginal revenue = Marginal costs", "marginal revenue curve"]      

2. With a perfectly competitive firm the supply curve is:

a) Marginal Product

b) the marginal cost curve above the Average fixed Cost curve

c) it has a positive accounting profit to cover opportunity costs.

d) the marginal cost curve above the Marginal Revenue Curve

3. When a firm earns zero economic profits, aka breaks even

a) it has a positive accounting profit to cover opportunity costs.

b) it cannot continue to produce.

c) it has average revenue that is less than average cost.

d) it has not covered its opportunity costs.

Answer 1

Solution :

1. Under the perfectly competitive market structure, the demand curve of an individual firm is

Hence option "D","Perfectly, elastic" is correct answer.

meaning that the demand curve is also the

Hence option "D","marginal revenue curve" is correct answer.

2. With a perfectly competitive firm the supply curve is:

Hence option "B","the marginal cost curve above the Average fixed Cost curve" is correct answer.

3. When a firm earns zero economic profits, aka breaks even

Hence option "A" "it has a positive accounting profit to cover opportunity costs" is correct answer.