Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

AP Economics > Pure Competition Quiz > Flashcards

Pure Competition Quiz Flashcards

1
Q

What type of product is in a purely competitive market?

A

Standardized (perfect subs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

In a purely competitive market, is there any ability to set price?

A

No, market determines price and the seller is the price taker

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Is there any product differentiation in a purely competitive market?

A

No. Products are identical

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the ease of entry in a purely competitive market?

A

Relatively easy to start a new business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Are there any non-price competition (advertisements, warranties) in a purely competitive market?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Is there allocative/ productive efficiency in a purely competitive market?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Are there any long run profits in a purely competitive market?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are some examples of a purely competitive market?

A
  • agriculture
  • stock market
  • currency exchanges
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

The demand curve of the individual firm is

A

Perfectly elastic

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Why does P=MR?

A

Because each additional sale brings the price as revenue- never more, never less

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is normal profit?

A

The minimum income that the entrepreneur must receive to continue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the 3 characteristics of the MR=MC rule?

A
  1. Firm will choose to produce rather than to shut down
  2. Profit maximizing rule for all firms
  3. PC firms can sell as much or as little as they choose
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Firms maximize their profits where?

A

Where MR=MC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

How do you find the loss or profit?

A

Price- ATC • quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

MC intersects AVC and ATC where?

A

At lowest points

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

MC comes from where?

A

TC not ATC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

How long will the firm choose to produce at a loss?

A

As long as it covers its variable costs and at least some of its fixed costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What does it mean when the ATC curve is above the AVC curve?

A

Producing at a loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What happens if the price is below AVC?

A

Shut down

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

In the marginal cost and SR supply curve, what is the MR curve?

A

The demand curve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

In the marginal cost and SR supply curve what is the MC curve above shutdown point?

A

The supply curve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

If the MR=MC point is exactly at the shutdown point, what happens?

A

The company still produces

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are the determinants that cause the supply curve to shift?

A
  • cost of resources
  • # of firms
  • advances in technology
  • government regulation
  • taxes
  • price expectations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is market price determined by?

A

Demand and supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What are the three assumptions of profit maximization in the long run?
- only adjustment in this analysis is the entry and exit of new firms - all firms have identical cost curves - industry is constant (entry and exit will not affect resource prices)
26
Socially optimal production=?
Allocative efficiency
27
Allocative efficiency?
Using resources deemed by society as most optimal means of production
28
Productive efficiency?
Production of goods in least costly way
29
In the long run, after all changes in the market, what happens?
Long run equilibrium is established
30
In the long run?
A purely competitive firm wants only normal profit
31
In a purely competitive market, what is the number of firms?
Very large number of firms (many many)
32
In a monopolistic competitive market, how many firms are there?
Large number of firms (many)
33
What type of product is in a monopolistic competition?
Differentiated (similar)
34
What is the ability to set price in a monopolistic competitive market?
Some
35
Product differentiation in a monopolistic competitive market?
Varies depending on the industry
36
Ease of entry in a monopolistic competitive market?
Relatively easy to start a new business
37
Examples in monopolistic competitive market?
Fast food | Retail
38
Barriers to exit/entry in monopolistic competitive market?
None
39
Non price competition in monopolistic competitive market?
Heavily advertised
40
Allocative/productive efficiency in monopolistic competitive market?
No
41
Long run profits in monopolistic competitive market?
None
42
Number of firms in oligopoly?
A few (3-5)
43
Type of product in oligopoly?
Standardized or differentiated
44
Ability to set price in oligopoly?
Mutual interdependence
45
Product differentiation in oligopoly?
Varies. Some industries may be identical, others may be differentiated
46
Ease of entry in oligopoly?
Difficult. High start up costs
47
Examples of oligopoly?
Auto industry Cell phones Cereals
48
Barriers to exit/entry in oligopoly?
Extensive
49
Non-price competition in oligopoly?
Heavily advertised
50
Allocative/productive efficiency in oligopoly?
No
51
Long run profits in oligopoly?
Yes
52
Number of firms in pure monopoly?
Single producer
53
Type of product in pure monopoly?
Unique, no substitution
54
Ability to set price in pure monopoly?
Most. Seller is only source of product and can act like price maker
55
Product differentiation in pure monopoly?
None. Product is unique
56
Ease of entry in pure monopoly?
Very difficult. Significant barriers to entry
57
Examples of pure monopoly?
NFL | Gulf Power
58
Barriers to exit/entry in pure monopoly?
Extensive
59
Non price competition in pure monopoly?
Yes
60
Allocative/productive efficiency in pure monopoly?
No
61
Long run profits in pure monopoly?
Yes

AP Economics (19 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions