AP Microeconomics Perfect Competition — practice questions
48 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice AP Microeconomics Perfect Competition in the app →According to the source, which four conditions define a perfectly competitive market?The source calls a perfectly competitive firm a 'price taker.' What does this term mean?According to the source, what happens if a firm in a perfectly competitive market raises the price of its prodThe short run for a perfectly competitive firm. What defines this period?According to the source, how do perfectly competitive firms react to losses and to profits in the long run?The source writes profit as total revenue minus total cost, and also as (Price)(Quantity produced) minus (AverAccording to the source, what kind of demand curve does a perfectly competitive firm face for its own product?How is marginal revenue defined in the source?For a perfectly competitive firm, marginal revenue equals what?A raspberry farm sells frozen raspberries at a constant price of $4 per pack. According to Table 8.2 in the soUsing Table 8.1 in the source, at which output levels does the raspberry farm make losses rather than profits?According to Table 8.1 in the source, at which output level does the raspberry farm earn its highest total proIn the raspberry farm example, marginal revenue exceeds marginal cost at an output around 40 or 50 packs. AccoIn the raspberry farm example, marginal cost exceeds marginal revenue at an output around 90 or 100 packs. AccAccording to the source, what is the profit-maximizing rule for a perfectly competitive firm, stated in terms Because marginal revenue equals price for a perfectly competitive firm, the profit-maximizing rule MR = MC canIn the raspberry farm example, at what price and quantity do the marginal revenue and marginal cost curves croAccording to the source, if the market price a firm receives is higher than its average total cost of productiAccording to the source, if the market price a firm receives is lower than its average total cost of productioAt a price of $5 per pack, the raspberry farm produces 90 packs where P = MR = MC, and average cost at that quAt a price of $3.00 per pack, the raspberry farm produces 70 packs where P = MR = MC, and average cost at thatAccording to the source, why might a firm continue producing at a loss in the short run instead of shutting doA rule for the shutdown decision: 'price < minimum average variable cost, then firm shuts down.' What does it At a price of $2.20 per pack, the raspberry farm produces 50 packs and loses $56, but price is above average vAt a price of $1.80 per pack, the raspberry farm would produce 40 packs by the P = MR = MC rule, giving total According to Table 8.6 in the raspberry farm example, at what quantity is average variable cost at its minimumAccording to the source, for a perfectly competitive firm, what does the marginal cost curve become above the The Yoga Center pays $10,000 per month in fixed rent. If it has no clients and earns no revenue, it faces a loThe Yoga Center earns $10,000 in revenue for the month, but hiring instructors to cover classes costs $15,000 The Yoga Center earns $20,000 in revenue for the month, with $15,000 in variable costs for instructors and $10A firm's price is above its minimum average variable cost but below its average total cost. According to the sThe source defines 'entry' as which process?The source defines 'exit' as which process?According to the source, what defines a long-run equilibrium in a perfectly competitive market?Demand for a good rises, and existing firms in a perfectly competitive market start earning economic profits. Demand for a good falls, and existing firms in a perfectly competitive market start facing economic losses. AcThe source classifies industries into three types based on how costs change as the industry expands. What are According to the source, agricultural markets are generally good examples of which type of industry, where an According to the source, what happens to production costs in an increasing cost industry as the market expandsAccording to the source, what happens to production costs in a decreasing cost industry as the market expands,According to the source, how does the long-run supply curve differ across the three industry types?How does the source define productive efficiency?How does the source define allocative efficiency in a perfectly competitive market?In the wholesale flower market example, suppose firms produce a smaller quantity than the allocatively efficieSuppose firms in the wholesale flower market instead produce more than the allocatively efficient quantity, soThe source cautions that calling perfect competition 'efficient' should be taken with a grain of salt. What exAccording to the source, do market structures such as monopoly, monopolistic competition, and oligopoly generaBetween 1997 and 2014, the source reports that North Dakota corn acreage more than doubled while wheat acreage