AAEC 2580 EXAM 3 UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

AAEC 2580 EXAM 3 UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS

Question:
1. perfect competition
Answer:
a market in which no buyer or seller has market power

Question:
2. 6 common characteristics of perfect competition
Answer:
many firms, identical products, low entry barriers, perfect information, MC=p, zero economic profit

Question:
3. describe market demand curve
Answer:
always downward or negative sloping

Question:
4. describe demand curve confronting a perfectly competitive firm
Answer:
always horizontal

Question:
5. shutdown decision
Answer:
short-run response

Question:
6. investment decision
Answer:
long-run decision

Question:
7. short-run supply curve for a competitive firm
Answer:
marginal cost curve

Question:
8. determinants of a firms supply
Answer:
the price of factor inputs, technology, expectations, taxes and subsides, number of firms in the industry

Question:
9. when economic profits disappear