1 A market with a large number of sellers A can only be a mo

1) A market with a large number of sellers A) can only be a monopolistically competitive market. B) might be a monopolistically competitive or a perfectly competitive market. C) can only be a perfectly competitive market. D) might be a perfectly competitive, monopolistically competitive, oligopoly or monopoly market E) might be an oligopoly or a perfectly competitive market. 2) Perfect competition is characterised by all of the following EXCEPT A) a large number of buyers and sellers. B) firms can set their own prices. C) no restrictions on entry into or exit from the industry. D) buyers and sellers are well informed about prices. E) firms produce an identical product 3) The market demand curve in a perfectly competitive market is_and the demand curve for a perfectly competitive firm\'s output is A) horizontal; downward sloping B) downward sloping; upward sloping C) downward sloping; horizontal D) downward sloping: downward sloping E) horizontal; horizontal 4) A firm\'s marginal revenue is A) the change in total revenue that results from employing one more worker. B) the change in total revenue that results from an increase in the demand for the good or service. C) the change in total revenue minus the change in total cost D) total revenue minus total cost. E) the change in total revenue that results from a one-unit increase in the quantity sold.

Solution

1) (B) A market with a large number of sellers might be a monopolistically cometitive market or perfectly competitive market.

2) (B) A perfect competitive market is not characterised by firms that can set their own prices.

3) (C) The market demand curve in a perfectly competitve market is downward sloping and the demand curve for a perfectly competitve firm\'s output is horizontal.

4) (E) A firm\'s marginal revenue is the change in total revenue that results from a one unit increase in the quantity sold.

5) (E) For a perfectly competitve firm the market price of a good is given which it cannot change and is also equal to firm\'s marginal revenue.