Question

28. Suppose that a monopolistically competitive firm has an economic profit in the short run. in the long run, its economic profit will be zero. In the transition from short run to long run, which curve moved which way?

Group of answer choices

The ATC curve shifted down.

The demand curve shifted left.

The ATC curve shifted up.

The demand curve shifted right.

29. The criterion for efficiency from the firm perspective is if the firm minimizes _______. The criterion from the society perspective is if the firm produces where _______.

Group of answer choices

ATC, P = MC

AFC, MR = MC

ATC, P = AVC

ATC, AVC = MR

AVC, P = MC

30. A firm must choose to produce either good X or good Y. A decrease in the price of good X will cause the firm to increase the supply of good Y.

Group of answer choices

True

False

Answer 1

Answer : 28) The answer is option B.

In monopolistically competitive market many firms enter in long run. This increase the market supply and decrease the demand of existing individual firms. As a result, the demand curve shift to leftward. Hence except option B other options are not correct. Therefore, option B is the correct answer.

29) The answer is option A.

According to firm the efficiency occur if ATC is minimum at production level. But according to society the efficiency occur at firm's production level if P = MC occur. Hence except option A other options are not correct. Therefore, option A is the correct answer.

30) The answer is "True".

A firm always try to maximize profit. Based on given information if price of good X fall then firm's profit decrease. Hence firm will increase the production of good Y to earn more profit. This will increase the supply of good Y. Therefore, the given statement is true.