Question

The characteristics of perfect competition are:

___________________, _____________________, ________________________

___________________, ___________________

2. The demand curve in perfect competition is: ______________ (Shape or slope)

3. The firm operates at the quantity where _________ equals ___________.

4. Total profit is equal to ___________ minus ________________.

5. The marginal revenue curve in perfect competition is: ______________ (Shape or slope)

6. The entrance of one or two new firms (in perfect competition) does what to market price?

_______________________________________,

7. For a firm to operate, price must at least cover: ____________________________

8. In the long run, (in perfect competition) a firm will always: ______________ (make profits, break even, operate at a loss)

9. The marginal revenue curve in perfect competition is equal to: ______________ (curve)

10.The entrance of one or two new buyers (in perfect competition) does what to market price?

_______________________________________,

11. In the long run, given increasing costs, the supply curve for the firm will be __________ (slope)

12. In the long run, given constant costs, the supply curve for the firm will be ____________ (slope)

13. In the long run, given decreasing costs, the supply curve for the firm will be __________ (slope)

14. The profit maximizing quantity is where marginal costs equal ___________

Answer 1

1.Characteristics are perfect competition are- large number of buyers and sellers,homogenous products,free entry and exit ,perfect information,no selling costs.

2.The demand curve of a perfectly competitive market is infinitely elastic in slope.

This is because the demand curve is horizontal at price level.

3.The firm operates at a quantity where P=MC=AC.

4.Total Profit=Total revenue-total cost.

Please note that we are under obligation to answer only the first four questions.