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3 Written questions

2 Multiple choice questions

  1. is minimum of AVC curve
  2. • In the long-run, if there's a profit to be made, firms will enter the market
    • In the long-run, if firms are operating at a loss, they'll shut down
    • Therefore, at the long-run competitive equilibrium, all firms will be earning zero economic profits

2 True/False questions

  1. Perfectly Competitive Markets1. Many buyers and many firms, all of which are small relative to the overall market
    2. Products sold are identical
    3. No barriers to new firms entering (or on firms exiting)

          

  2. The long-run market supply curve is a horizontal lineThis means perfectly competitive firms are price takers
    • This means the individual firm faces perfectly elastic demand
    • Be able to calculate the profit maximizing output and quantity from a table (MR = MC)
    • Know how to recognize the profit maximizing point on a graph
    o Is the firm making a profit? Operating at a loss? Breaking even?