Lesson 4.1.5.3
4.1.5.3 Perfect competition Quiz: AQA Economics, Unit 1
20 questions
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Lesson 4.1.5.3, Perfect competition: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.
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The 20 questions
-
What shape is the short-run demand curve for an individual firm in perfect competition?
- Downward sloping
- Perfectly elastic
- Perfectly inelastic
- Upward sloping
-
Why are firms in a perfectly competitive market described as price takers?
- Homogeneous products
- High entry barriers
- High market share
- Product differentiation
-
A perfectly competitive firm maximises profit at the output level where price equals what?
- Total revenue
- Marginal cost
- Average cost
- Fixed cost
-
What type of profit do firms in a perfectly competitive market make in the long run?
- Subnormal profit
- Supernormal profit
- Normal profit
- Economic loss
-
Which feature is NOT a characteristic of a perfectly competitive market structure?
- Freedom of entry
- Product differentiation
- Perfect information
- Homogeneous goods
-
What type of efficiency is achieved when a firm produces at minimum average total cost?
- Allocative efficiency
- Productive efficiency
- X-efficiency
- Dynamic efficiency
-
What condition is satisfied when price equals marginal cost in a market?
- X-inefficiency
- Allocative efficiency
- Dynamic efficiency
- Productive efficiency
-
A perfectly competitive firm sells 60 units at a price of £10, with average total cost of £12. Its position is:
- A loss of £120
- Break-even
- A profit of £120
- A profit of £600
-
What happens to market supply when short-run supernormal profits attract new firms?
- Supply increases
- Demand decreases
- Supply decreases
- Supply stays constant
-
Why is the theoretical model of perfect competition useful in economic analysis?
- Profit forecasting
- Real-world realism
- Price fixing
- Efficiency benchmark
-
Which assumption must hold for perfect competition to deliver total allocative efficiency?
- High tariffs
- Monopoly power
- No externalities
- Economies of scale
-
What happens to demand for a perfectly competitive firm if it raises its price?
- Falls to zero
- Increases slightly
- Stays unchanged
- Falls by 5%
-
Why are individual firms in perfect competition price takers?
- Product differentiation
- Government price controls
- Many small firms
- High entry barriers
-
Where does a firm in perfect competition produce in long-run equilibrium?
- Average revenue peak
- Maximum average cost
- Maximum marginal cost
- Minimum average cost
-
What does perfect knowledge assume about consumers and firms in perfect competition?
- Equal market shares
- Full market information
- Guaranteed profit margins
- Identical production costs
-
A competitive firm has marginal revenue of £6. At what marginal cost is profit maximised?
- £6
- £12
- £8
- £4
-
Which factor prevents real-world markets from achieving perfect competition?
- Product differentiation
- Homogeneous products
- Zero entry barriers
- Perfect information
-
If competitive firms earn short-run supernormal profit, what happens in the long run?
- Prices rise
- Costs increase
- New firms enter
- Firms leave market
-
What happens to market price when loss-making competitive firms leave an industry?
- Price decreases
- Demand decreases
- Price increases
- Price remains unchanged
-
What market outcome results from setting a price floor above competitive equilibrium?
- Market shortage
- Equilibrium price
- Excess demand
- Excess supply
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