Economics 211

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Economics 211 Clicker Questions

• Chapter 14 - Aplia Questions

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In a perfectly competitive market, the process of entry and exit will end when firms face

1. marginal revenue equal to long-run average total
   cost.
2. accounting profits equal to zero.
3. total revenue equal to average total cost.
4. average revenue greater than marginal cost.

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Which of the following characteristics of
competitive markets is necessary for firms to be
price takers?(i) There are many
sellers.(ii) Firms can freely enter or exit the
market.(iii) Goods offered for sale are largely
the same.

1. (i) and (ii) only
2. (i), (ii), and (iii)
3. (i) and (iii) only
4. (ii) only

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Suppose a firm operating in a competitive market
has the following cost curves. If the market
price is 10, what is the firm's total cost?

1. 15
2. 50
3. 30
4. 35

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A competitive firm has been selling its output
for 20 per unit and has been maximizing its
profit, which is positive. Then, the price falls
to 18, and the firm makes whatever adjustments
are necessary to maximize its profit at the
now-lower price. Once the firm has adjusted, its

1. quantity of output is lower than it was
   previously.
2. marginal cost is higher than it was previously.
3. average total cost is lower than it was
   previously.
4. All of the above are correct.

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When firms in a competitive market have different
costs, it is likely that

1. free entry and exit in the market will be
   violated.
2. some firms will earn positive economic profits in
   the long run.
3. the market will no longer be considered
   competitive.
4. long-run market supply will be downward sloping.