ECON 201 Introduction to Microeconomics LAB 7 EXAM QUESTIONS AND CORRECT ANSWERS (marked yellow color) Concordia University

ECON 201 Introduction to Microeconomics LAB 7 EXAM QUESTIONS AND CORRECT ANSWERS (marked yellow color) Concordia University 1. Perfectly competitive firms do not have competitive behaviour because a. government legislation prevents it. b. the firms are regulated. c. the actions of any one firm would have no effect on any other firm. d. None of the above. 2. The market power the firms have, the competitive the market structure is. a. more; more b. less; less c. less; more d. None of the above. 3. Fill in the blanks to make the following statements correct. In addition to the key assumption that firms maximize profits, there are four more assumptions about the theory of perfect competition. They are: a. The firms in the industry produce a product that is homogeneous. b. Consumers have full information about the product and they know its price. c. Each firm is small relative to the size of the industry. d. The industry is characterized by freedom of entry and exit. 4. Fill in the blanks to make the following statements correct. a. The demand curve faced by a single firm in a perfectly competitive market is horizontal. b. The demand curve faced by a single firm in a perfectly competitive industry coincides with the firm's average and marginal revenue curves. c. Total revenue is calculated as Price X quantity. Average revenue is calculated as total revenue / output quantity. Marginal revenue is calculated as change in total revenue / change in output quantity. d. A firm's loss when it produces no output is equal to its total fixed cost.