1.In the long run, firms in a perfectly competitive industry are most likely to: A)suppress innovative...

1.In the long run, firms in a perfectly competitive industry are most likely to: A)suppress innovative products to earn a positive economic profit. B)continue to earn positive economic profit because of barriers to entry. C)have a positively sloped average revenue curve. D)earn zero economic profits and produce at minimum cost. E)earn negative economic profits and exit the market.

2.Generally, ______ motivate firms to enter an industry while ______ motivate firms to exit an industry. A)accounting profits; economic losses B)economic profits; economic losses C)accounting profits; normal profits D)accounting profits; accounting losses E)economic profits; accounting losses

3. In the long run, perfectly competitive firms are in equilibrium when: A)long-run average cost is at its maximum. B)price is equal to the long-run marginal cost. C)price exceeds long-run marginal cost. D)the long-run average cost curve slopes upward. E)price is less than the long-run average cost.

Solutions

Expert Solution

Q1
Answer
option D
the perfectly competitive firm produces at P=ATC and earns zero economic profit in the long run because of the free entry and exit in the market if there is economic profit firm enter in the market and if there are economic losses then firm exit the market up to the economic profit is zero.
the perfectly competitive firm produces at P=min(ATC)=long run marginal cost
Q2
Option B
the perfectly competitive firm produces at P=ATC and earns zero economic profit in the long run because of the free entry and exit in the market if there is economic profit firm enter in the market and if there are economic losses then firm exit the market up to the economic profit is zero.
Q3
Option B
the perfectly competitive firm produces at P=ATC and earns zero economic profit in the long run because of the free entry and exit in the market if there is economic profit firm enter in the market and if there are economic losses then firm exit the market up to the economic profit is zero.
the perfectly competitive firm produces at P=min(ATC)=long run marginal cost

Rahul Sunny answered 1 year ago

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