Question

TRUE/FALSE
1. A perfectly competitive market is characterized by highly advertised goods.
2. If a firm is producing an output level at which marginal revenue exceeds marginal cost, the firm will increase profits by reducing its output level.
3. When faced with an economic loss, a competitive firm will shut down its operations in the short run.
4. In the short run, the supply curve for a perfectly competitive firm is its marginal cost curve for all levels of output.
5. In long - run equilibrium, a perfectly competitive firm will produce an output level at which its long - run average cost curve is upward sloping.

Answer 1

1. A perfectly competitive market is characterized by highly advertised goods - false.
2. If a firm is producing an output level at which marginal revenue exceeds marginal cost, the firm will increase profits by reducing its output level - false.
3. When faced with an economic loss, a competitive firm will shut down its operations in the short run - false.
4. In the short run, the supply curve for a perfectly competitive firm is its marginal cost curve for all levels of output - true.
5. In long - run equilibrium, a perfectly competitive firm will produce an output level at which its long - run average cost curve is upward sloping - false.