Q: Suppose the market price is $$P = 20$$, and a firm’s marginal cost is $$MC = 20 at$$ $$Q = 100. $$The firm’s average total cost at this output is $$ATC = 18. $$What is the firm’s profit?

$$ ext{Profit} = (P - ATC) \times Q = (20 - 18) \times 100 = 200$$

Question 1

Which of the following is NOT a characteristic of a perfectly competitive market?

Accepted Answer

Products are differentiated.

Question 2

In the short run, a perfectly competitive firm will shut down production if:

Accepted Answer

$$P \u003c AVC$$

Question 3

Suppose the market price is $$P = 20$$, and a firm’s marginal cost is $$MC = 20 at$$ $$Q = 100. $$The firm’s average total cost at this output is $$ATC = 18. $$What is the firm’s profit?

Accepted Answer

$$	ext{Profit} = (P - ATC) 	imes Q = (20 - 18) 	imes 100 = 200$$

Question 4

In the long run, what is the profit of a typical firm in a perfectly competitive market?

Accepted Answer

Zero economic profit

Question 5

Which equation correctly represents the profit-maximizing condition for a perfectly competitive firm?

Accepted Answer

$$MR = MC$$

Question 6

If the market price falls below a firm’s average variable cost, what should the firm do in the short run?

Accepted Answer

Shut down production immediately

Question 7

Which of the following best explains why firms in a perfectly competitive market are price takers?

Accepted Answer

Each firm’s output is small relative to the market and products are identical.

Question 8

A perfectly competitive firm’s short-run supply curve is:

Accepted Answer

The portion of its marginal cost curve above the average variable cost curve.

Question 9

If a perfectly competitive firm is producing where $$P = MC = ATC$$, what can be said about the firm’s profit?

Accepted Answer

The firm earns zero economic profit.

Question 10

Which of the following is a real-world example that best approximates a perfectly competitive market?

Accepted Answer

The market for agricultural products like wheat or corn.

Question 11

Suppose a firm in a perfectly competitive market faces the following cost structure: $$TC = 100 + 5Q + Q^2$. If the market price is P = 25$, what is the profit-maximizing output?

Accepted Answer

$$Q = 10$$

Question 12

In the long run, if firms in a perfectly competitive market are earning positive economic profits, what will happen?

Accepted Answer

New firms will enter the market, driving profits to zero.

Question 13

Which of the following best describes the demand curve faced by an individual firm in a perfectly competitive market?

Accepted Answer

Perfectly elastic at the market price.

Question 14

If a perfectly competitive firm’s marginal cost is below the market price, what should the firm do?

Accepted Answer

Increase output until $$MC = P.$$

Question 15

Which of the following is true about the long-run equilibrium in a perfectly competitive market?

Accepted Answer

$$P = MC = ATC$$

Question 16

A firm’s short-run decision to produce or shut down depends on the relationship between price and:

Accepted Answer

Average variable cost

Question 17

If the market demand for a product increases in a perfectly competitive market, what is the likely short-run effect on existing firms?

Accepted Answer

Firms will earn positive economic profits.

Question 18

Which of the following is NOT a reason why perfect competition leads to allocative efficiency?

Accepted Answer

Firms can set prices above marginal cost.

Question 19

Suppose the total cost function for a firm is $$TC = 50 + 10Q + Q^2$. If the market price is P = 30$, what is the firm’s profit-maximizing output and profit?

Accepted Answer

$$Q = 10$$, Profit = $$50$$

Question 20

Which of the following best describes the long-run supply curve in a perfectly competitive industry with constant costs?

Accepted Answer

It is perfectly elastic at the minimum average total cost.

Perfect Competition (Cạnh Tranh Hoàn Hảo) – Microeconomics Study Notes

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