Question

The type of market structure most likely to be allocatively efficient is

pure monopoly.

monopolistic competition.

a purely price discriminating auction.

Which of the following changes will not affect the market supply or the market demand in a purely competitive industry?

a change in the number of firms

a change in the number of buyers

a change in fixed costs

a change in marginal costs

The prices of raw materials increase in a purely competitive industry. This change will result in a(n)

decrease (downward shift) in the average total cost curve for firms in the industry.

increase (rightward shift) in the short-run supply curve for firms in the industry.

increase (upward shift) in the marginal cost curve for firms in the industry.

decrease (downward shift) in the marginal revenue curve for firms in the industry.

As long as its total revenues are greater than its total costs, a firm will earn positive economic profits.

True

False

A purely competitive firm is producing at the point where its marginal cost equals the price of its product. If the firm increases its output, then total revenue will

decrease and profits will decrease.

decrease and profits will increase.

increase and profits will decrease.

increase and profits will increase.

Answer 1

QA) option C)

Purely price discrimination auction

Since no deadweight loss exists

QB) option C)

If fixed cost changes , then no effect in perfect competition

QC) option c)

As inputs got costly, so ATC rise.

As MC of production rise, so as rising segment of MC above minimum of AVC ,is short run supply curve, so supply falls, supply curve shifts upwards.

No effect on demand curve, so no effect on MR

QD) option A)

As π = TR - TC

QE) option C)

As P = MC

If price rise, Revenue will rise, but total cost will rise, so profit falls