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1. Which of the following is not necessarily a characteristic of perfect competition? (Points: 1) low prices a large number of buyers and sellers a homogeneous product perfect information 2. In the short run, a perfectly competitive ball bearing manufacturer will continue to produce at a loss if (Points: 1) it is covering all of its fixed cost it is covering all of its variable cost plus part of its fixed cost variable cost is less than fixed cost fixed cost is zero 3. The golden rule of profit maximization states that any firm maximizes profit by producing where (Points: 1) marginal revenue equals marginal cost demand is unit elastic, and total revenue is greatest price equals marginal revenue price equals marginal cost 4. Which of the characteristics of perfect competition assures that economic profit will be zero in the long run? (Points: 1) There is easy entry and exit in the market. Each firm is a price taker. Each firm has access to perfect information. Each firm is small relative to the market. 5. A constant-cost industry is distinguished by the fact that (Points: 1) firms' short-run average total costs are horizontal firms' short-run marginal cost curves are horizontal the long-run industry supply curve is perfectly elastic the short-run industry supply curve is perfectly elastic 6. Commodity products are (Points: 1) pasteurized bland perceived by consumers to be identical made by one manufacturer 7. In a perfectly competitive industry we are likely to find (Points: 1) firms producing a wide variety of products barriers to entry no profit possible in the short run firms that do not advertise 8. Perfectly competitive firms are price takers because (Points: 1) all small firms must take the price set by the largest firm in the market firms take the price that government determines is a "fair" price each firm is small and goods are perfect substitutes for one another free entry and exit in the short run creates a constant market price in the long run 9. In perfect competition, if one firm raises its price, (Points: 1) others will follow that firm will increase its revenues that firm will lose revenues because other firms will not follow all consumers will be adversely affected 10. Suppose, at its present rate of output, a perfectly competitive firm's marginal revenue exceeds both its marginal cost and its average variable cost. To maximize profit, the firm should (Points: 1) lower the price raise the price increase output reduce output

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