Question

1)An example of a perfectly competitive firm would be

Dannon Yogurt

a grain farmer

a car manufacturer

a drug company

2) In the long run the profit for a Perfectly competitive firm is theoretically ["zero", "small", "large", "negative"] because of ["competition", "lack of competition", "good cost controls", "poor cost controls"]

3)in the short run a P.C. industry will see ["entries and exits", "entry only", "losses", "only exits"] to/from the market based on ["positive profits to firms", "profits and losses to firms", "losses to firms"]

4)Perfectly Competitive firms are assumed to earn ["zero", "economic rent", "high"] profit in the long run meaning they ["earn accounting profit equal to their opportunity cost", "earn economic profit equal to their opportunity cost", "earn accounting profit equal to their total cost", "earn total profit equal to their opportunities"]

5)if a Perfectly Competitive (P.C.) firm decides to sell for below market price they [ Select ] ["can sell more product that otherwise", "are foolishly giving away money", "are reasonably gaining market control", "can make larger profits"]

6)If a P.C. firm decides to sell for a price above the market prices they [ Select ] ["will be unable to sell any product", "can earn higher profits", "will be able to sell all their product", "may only be able to sell some of their product depending on the demand curve"]

7)For the P.C. firm in the long run Average Revenue is equal to the

3 answers

Group of answer choices

The price

the explicit - implicit cost

the economic cost

the Marginal cost

the accounting cost

the explicit cost

the implicit price

Answer 1

1. A grain farmer

Explanation: In a perfectly competitive market, there are a large number of small firms and each firm sells an identical product. A grain farmer is close to such a reality.

2. In the long run the profit for a Perfectly competitive firm is theoretically "zero" because of "competition".

Explanation: There is no barrier to entry in the perfectly competitive market. Therefore, presence of any positive profit attracts new firms and eventually all firms earn zero economic profit.

3. In the short run a P.C. industry will see "entries and exits" to/from the market based on "profits and losses to firms".

Explanation: There is no barrier to entry in the perfectly competitive market. Therefore, presence of any positive profit attracts new firms. Also, when existing firms incur loss, some firms would exit the marker.

4. Perfectly Competitive firms are assumed to earn "zero" profit in the long run meaning they "earn accounting profit equal to their opportunity cost".

Explanation:

Economic profit = Accounting profit - opportunity costs.

So, when when economic profit is zero, this means opportunity costs equals the accounting profit.