Lesson 3.4.2
3.4.2 Perfect competition Quiz: Pearson Edexcel Economics, Unit 3
20 questions
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Lesson 3.4.2, Perfect competition: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 3: Theme 3: Business behaviour and the labour market, written with Revision Ninja.
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The 20 questions
-
Which feature is a characteristic of a perfectly competitive market structure?
- Single seller
- High entry barriers
- Differentiated products
- Homogeneous products
-
What is the shape of the demand curve for an individual firm in perfect competition?
- Horizontal
- Upward sloping
- Vertical
- Downward sloping
-
In a perfectly competitive market, what is marginal revenue equal to for an individual firm?
- Total revenue
- Average total cost
- Marginal cost
- Average revenue
-
At what output level does a perfectly competitive firm maximise profit in the short run?
- AC equals AR
- MC equals MR
- TC equals TR
- MC equals AC
-
What type of profit do perfectly competitive firms earn in long-run equilibrium?
- Monopoly profit
- Normal profit
- Supernormal profit
- Subnormal profit
-
A firm in perfect competition charges above the market price. What happens to its quantity demanded?
- Increases slightly
- Remains unchanged
- Falls to zero
- Halves
-
A perfectly competitive firm has MC = 2 + 0.5Q. The market price is £6. What output does it produce?
- 6 units
- 12 units
- 4 units
- 8 units
-
A perfectly competitive firm has price £6 and average variable cost £4. What should it do short term?
- Shut down immediately
- Decrease price
- Increase price
- Continue producing
-
What effect does the entry of new firms have on market supply in perfect competition?
- Shifts supply right
- Shifts demand right
- Shifts supply left
- Shifts demand left
-
Which assumption of perfect competition is generally considered least realistic in real-world markets?
- Perfect information
- Free entry
- Many buyers
- Profit maximisation
-
When industry demand falls in a perfectly competitive market, what happens to a firm's output?
- It increases
- It decreases
- It remains unchanged
- It doubles
-
What term describes goods in perfect competition that are completely identical across all producers?
- Homogeneous products
- Inferior goods
- Complementary goods
- Differentiated products
-
Why do individual firms in a perfectly competitive market choose not to advertise?
- Products are identical
- Demand is inelastic
- Advertising is illegal
- High advertising taxes
-
Which curve represents a firm's short-run supply curve in perfect competition?
- MC below AVC
- AC above AVC
- MR above MC
- MC above AVC
-
What is the main theoretical purpose of the perfect competition model?
- Benchmark for efficiency
- Maximising tax revenue
- Setting price ceilings
- Predicting real prices
-
A perfectly competitive firm has MC = 2 + Q and the market price is £10. What is its total revenue at the profit-maximising output?
- £18
- £8
- £100
- £80
-
In long-run equilibrium, what type of profit is earned by a perfectly competitive firm?
- Monopoly profit
- Supernormal profit
- Subnormal profit
- Normal profit
-
If a perfectly competitive firm raises its price above market price, what happens to demand?
- Becomes inelastic
- Falls to zero
- Remains unchanged
- Falls slightly
-
What long-run effect occurs when new firms enter a profitable perfectly competitive market?
- Demand rises
- Price rises
- Costs rise
- Price falls
-
A perfectly competitive market has 40 identical firms, each supplying q = 2P - 10, and market demand Q = 400 - 20P. What is the equilibrium price?
- £6
- £12
- £10
- £8
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