1. Which of the following is NOT a characteristic of a perfectly competitive market?

A) a large number of firms in a market

B) selling a standardized product

C) substantial barriers to entry

D) an individual firm having no control over price

2. The Firm’s Short-Run Output Decision using the Marginal Approach states the following:

Marginal Revenue is the increase in revenue from selling one more unit. For a perfectly competitive firm, marginal revenue is equal to the price of the good because it is a price taker. The marginal principle suggests that the firm should pick the level of output at which marginal revenue equals marginal cost. For a perfectly competitive firm, this is equivalent to price equals marginal cost.

A) True

B) False

3. Recall the Application called "Wireless Women in Pakistan." What makes the wireless telephone market in the US NOT perfectly competitive?

A) many buyers and many sellers in the US.

B) it is very expensive to enter the market in the US.

C) wireless phone calls are standardized product.

D) all of the above are correct.

4. Recall the Application called "Wireless Women in Pakistan." Because the average earnings of the "wireless women" in Pakistan is three times the average wage rate, then we would expect that in the long-run:

A) more entrepreneurs would exit the market.

B) more entrepreneurs would enter the market.

C) the earnings of wireless women would increase.

D) the cost of making a wireless call in Pakistan would increase.

5. How do entry costs affect the number of firms in a market?