Question

Determine whether the following statements are TRUE OR FALSE.

Statement 1: Competitive firms can still earn positive accounting profits in the long run.

Statement 2: A higher total cost to a firm must imply a lower level of output.

Determine whether the following statements about a perfectly competitive market are TRUE OR FALSE.

Statement 3: Competitive firms can still earn positive accounting profits in the long run.

Statement 4: A higher total cost to a firm must imply a lower level of output.

Suppose the government reduces a commercial registration fee for all firms in a competitive industry. Evaluate whether the following statements are TRUE or FALSE.

Statement 5: A typical firm of the industry will raise its output.

Statement 6: A typical firm of the industry will see an increase in producer surplus.

Answer 1

statement 1- TRUE- This statement is true , because it is possible for the firm in the long run to earn positive accounting profits.
Statement 2-- TRUE- This statement is true, because total output is low only when the total cost is high. Total cost includes both fixed cost and the variable cost.
B- Statement 3- - TRUE- This statement is true , because it is possible for the firm in the long run to earn positive accounting profits
Statement 4 - TRUE- This statement is true, because total output is low only when the total cost is high. Total cost includes both fixed cost and the variable cost.
C- Statement 5- TRUE- yes it is true that if government reduces a commercial registration fee for all firms in a competitive industry then the total production cost will decrease and it raises the production.
D- Statement 6- TRUE- a producer surplus is only possible when the producer is able to produce more goods at a lower cost and it can only be possible when government reduces the a commercial registration fee.