Month: December 2018

In the long-run equilibrium in a perfectly competitive industry, the economic profit of the firms is ……. ?

Select ONE answer:

1. increasing.
2. negative.
3. zero.
4. positive.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 3

This work is licensed under a Creative Commons Attribution 4.0 International License.

In the long run, for a perfectly competitive market ……. ?

Select ONE answer:

1. if economic profit is equal to zero then there is no entry or exit of firms into or out of the market.
2. if economic profit is greater than zero, then some firms will enter the market and the market supply curve will shift rightward.
3. if economic profit is less than zero, then some firms will exit the market and the industry supply curve will shift leftward.
4. All of the above answers are correct.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 4

This work is licensed under a Creative Commons Attribution 4.0 International License.

In the short run, an increase in demand for a product that is sold in a perfectly competitive market will ……. ?

Select ONE answer:

1. cause more firms to shut down.
2. increase the number of firms in the market.
3. increase the profits of existing firms in the market.
4. have no effect on the price.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 3

This work is licensed under a Creative Commons Attribution 4.0 International License.

A firm’s short-run supply curve is the same as ……. ?

Select ONE answer:

1. that portion of its marginal cost curve that lies above average fixed cost.
2. that portion of its marginal cost curve that lies above average total cost.
3. its entire marginal cost curve.
4. that portion of its marginal cost curve that lies above average variable cost.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 4

This work is licensed under a Creative Commons Attribution 4.0 International License.

In the short run, a perfectly competitive firm’s economic profits ……. ?

Select ONE answer:

1. must be positive.
2. must be negative, that is the firm must incur an economic loss.
3. might be positive, negative (an economic loss), or zero (a normal profit).
4. must equal zero, that is the firm must earn a normal profit.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 3

This work is licensed under a Creative Commons Attribution 4.0 International License.