There Are A Large Number Of Firms In Perfect Competitionwhat

There Are A Large Number Of Firms In Perfect Competitionwhat Is The There Are A Large Number Of Firms In Perfect Competition. What Is The significance of that? a. Each firm has great deal of discretion in setting prices. b. Whether there are 100 or 101 firms in the industry, the market price will be the same. c. That automatically makes goods the same (homogenous). d. That makes necessary a good deal of communication and coordination among firms. Therefore there tend to be strong trade associations in perfectly competitive industries. 2. In perfect competition, the marginal revenue line is the same as the _________, and is a _______ line. a. price – negative b. price – positive c. average cost curve – vertical line d. price – horizontal line 3. In short-run equilibrium, a perfectly competitive firm produces 150 pencils at an average cost of 12 cents each and receives $30 from selling them. Which of the following statements is INCORRECT ? a. The firm's average revenue equals 20 cents. b. The firm's economic profit equals $12 c. The firm's price is greater than its average cost. d. The firm's total cost equals $16. 4. Profits are maximized where MR = MC. However, sometimes MR = MC shows where losses are minimized. a. true b. false 5. A firm is still in the increasing returns portion of its short-run marginal cost curve. Therefore it has in this region a. an increasing marginal cost curve. b. a decreasing marginal cost curve. c. a constant marginal cost curve. d. an inverted average total cost curve. 6. In a pure monopoly, there are a. many firms selling the same product. b. barriers to entry. c. always economic profits, even if no one wants the good. d. all of the above. e. both b) and c) are correct. 7. The marginal revenue curve in monopoly is __________. The implication of this is that ________. a. constant -- there are the possibility of economic profits b. constant – there are no economic profits, only normal profits c. downward sloping -- there are the possibility of economic profits d. downward sloping – the monopoly industry will produce less than the perfectly competitive industry 8. Imagine a monopoly firm is making economic profits to start with. Then the average total cost curve shifts upward, but the demand curve does not shift. The cost curve shifts so far up that now Price = Average Total Cost. Now the monopoly firm, which still has barriers to entry a. is still making an economic profit since it is a monopoly. b. is no longer making an economic profit but is now making a normal profit c. is now a perfectly competitive firm. d. both b) and c) are correct. 9. In a famous antitrust case, the government charged the DuPont Company with attempting to monopolize the cellophane industry. The company argues that, while it was the major producer of cellophane, it was competing in the broader market of "Flexible packaging", a very competitive industry. Waxed paper, glassine, and aluminum foil all had sizable shares of the flexible packaging market. To determine whether DuPont was, in fact, competing in the flexible wrap industry, one