ARE 1150, Fall 2017, Emma Bojinova Name: Quiz 5: Chapters 8 Perfect Competition
ID: 1119539 • Letter: A
Question
ARE 1150, Fall 2017, Emma Bojinova Name: Quiz 5: Chapters 8 Perfect Competition This tke home quiz Please submit the completed bubble sheet in class on Wednesday, Dec. 6. Version 1 (Please bubble 1 in column K under Special Codes) Multiple-Choice Questions (1 point each) Identify the letter of the choice that best completes the statement or answers the question 1. Assume the market for cage-free eggs is perfectly competitive. All else equal, as more farmers choose to produce and sell cage-free eggs, what is likely to happen to the equilibrium price of the eggs and profits of these farmers in the long run? A) The equilibrium price is likely to B) The equilibrium price is likely to remain unchanged and profits are likely to increase. C) The equilibrium price is likely to decrease and profits are likely to decrease. D) The equilibrium price is likely to increase and profits are likely to increase. increase and profits are likely to remain unchanged. 2. In perfect competition A) the market demand curve and the individual's demand curve are identical. B) the market demand curve is perfectly inelastic while demand for an individual seller's product is perfectly C) the market demand curve is perfectly elastic while demand for an individual seller's product is perfectly D) the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic inelastic. elastic. 3. Which of the following is not true for a firm in perfect competition? A) Profit equals total revenue minus total cost B) Price equals average revenue. C) Average revenue is greater than marginal revenue. D) Marginal revenue equals the change in total revenue from selling one more unit.Explanation / Answer
1. Because of increase in production, supply of cage free eggs will increase. This will shift the supply curve shift to the right. This will decrease the price of cage free egg and profits will decrease in long run.
OPTION C
2. OPTION D
3.in case of perfect competition, P = MR = AR
OPTION C