Discuss why normal profits are the status quo in a competitive market in the long run;...

Discuss why normal profits are the status quo in a competitive market in the long run; use the competitive market response to changes in demand for a commodity to illustrate aspects of your discussion.

Expert Solution

Rahul Sunny answered 9 months ago

Discuss why normal profits are the status quo in a competitive market in the long run:...

Discuss why normal profits are the status quo in a competitive market in the long run: use the competitive market response to change on demand for a commodity to illustrate aspects of your discussion.

Why are economic profits not possible in the long run in a purely competitive market? A....

Why are economic profits not possible in the long run in a purely competitive market? A. Each firm is too small to make profit. B. More firms will leave a profitable market, driving prices down. C. Profitable markets drive prices too high and comsumers stop buying. D. New firms will enter the matket and drive prices down.

Does a monopolistically-competitive firm have zero economic profits in the long run? Why or why not?...

Does a monopolistically-competitive firm have zero economic profits in the long run? Why or why not? How might it be different from perfect competition in the long run?

Explain why this statement is false: Competitive firms always earn zero profits in a long run...

Explain why this statement is false: Competitive firms always earn zero profits in a long run equilibrium because their marginal cost is equal to their marginal revenue at the optimal level of production.

Suppose a firm in a perfectly competitive market is earning normal profits and there is an...

Suppose a firm in a perfectly competitive market is earning normal profits and there is an increase in demand. In the short run, the firm earns A. an economic profit as prices rise. In the long run, new firms will enter and prices will rise. B. an economic profit as prices fall. In the long run, new firms will enter and prices will rise. C. an economic profit as prices rise. In the long run, new firms will enter and...

1. a. Graph a competitive firm and market in long-run equilibrium; Explain why it is a...

1. a. Graph a competitive firm and market in long-run equilibrium; Explain why it is a long run equilibrium. b. Graph and explain what happens in the short run with a supported price floor. c. Assume this is an increasing cost industry. Graph and explain each step through the LR. d. Show the same but for a price ceiling. 2. Show that whether the producers or consumers directly pay the per-unit tax does not matter. Explain what does determine who...

6) In the long run the profits for a perfectly competitive firm is theoretically zero (select)...

6) In the long run the profits for a perfectly competitive firm is theoretically zero (select) [accounting, economic] profit(s) because of competition 7) For the P.C. firm in the long run Average Revenue is equal to the: (3 answers!) a) the price b) the economic cost c) the marginal cost d) the explicit cost e) the accounting cost f) the explicit-implicit cost g) the implicit price 8) Karen runs a print shop that makes posters for large companies. It is...

A perfectly competitive market is initially in long-run competitive equilibrium. Then, market demand falls. By the...

A perfectly competitive market is initially in long-run competitive equilibrium. Then, market demand falls. By the time all adjustments have been made, price will be __________ its original level if the industry is a(n) __________ costs industry. a. above; decreasing b. at; constant c. at; increasing d. below; increasing e. a and d

1. True or False? Why? a. A monopolistically competitive market is efficient in its long -run...

1. True or False? Why? a. A monopolistically competitive market is efficient in its long -run equilibrium because all firms in the market earn a zero economic profit. b. Department stores are monopolistically competitive because stores differ in the amount of customer service they provide. c. In the long run, monopolistically competitive firms charge consumers higher prices than monopoly firms. d. An oligopoly is an industry with just one firm. e. An oligopoly the actions of one firm has a...

2. Competitive Firm Equilibrium Long run, Exit/Entry in Long Run, Explain why a competitive firm can...

2. Competitive Firm Equilibrium Long run, Exit/Entry in Long Run, Explain why a competitive firm can only earn normal economic profit (define) in long run. 3. Define monopoly, explain why the MR and P( AR) curve for a monopolist are different and why they are downward sloping and why does MR lie below the AR curve. Compute Monopoly P and Q and profits; compare monopoly price/quantity/profits with a competitive market price and quantity. Compute CS, PS, TS for monopoly as...

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