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Chapter 8 Solutions: Perfect Competition

Ch08 Perfect Competition Multiple Choice Questions 1. The term _________________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product. A. price setter B. business entity C. price taker D. trend setter Answer: C Reference: Explanation: 2. ______________________ refers to the additional revenue gained from selling one more unit. A. Marginal revenue B. Total revenue C. Economic profit D. Accounting profit Answer: A Reference: Explanation: 3. If a firm’s revenues do not cover its average variable costs, then that firm has reached its _________________ . A. price taking point B.…