Question

In: Economics

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

?


Related Solutions

Compare  the short run and long run for perfectly competitive firms. How do perfectly competitive firms...
Compare  the short run and long run for perfectly competitive firms. How do perfectly competitive firms adapt to market changes in the short run? What can perfectly competitive firms expect in the long run in terms of profits?
In the long run in a perfectly competitive industry, price equals marginal cost and firms earn...
In the long run in a perfectly competitive industry, price equals marginal cost and firms earn no economic profits. The following two equations describe this long-run situation for prices and costs, where the numbers indicate the amounts of each input (labor and land) needed to produce a unit of each product (wheat and cloth): P wheat = 60w + 40r P cloth = 75w + 25r If the price of wheat is initially 100 and the price of cloth is...
3. In the long run in a perfectly competitive industry, price equals marginal cost and firms...
3. In the long run in a perfectly competitive industry, price equals marginal cost and firms earn no economic profits. The following two equations describe this long-run situation for prices and costs, where the numbers indicate the amounts of each input (labor and land) needed to produce a unit of each product (wheat and cloth): P wheat = 60w + 40r P cloth = 75w + 25r If the price of wheat is initially 100 and the price of cloth...
1.In the long run, a firm in a perfectly competitive industry will supply output only if...
1.In the long run, a firm in a perfectly competitive industry will supply output only if its total revenue covers Select one: accounting costs opportunity costs 2.The defining characteristic that makes a good a public good is that Select one: it is provided by government it is rival in consumption it is non-excludable all of the answers are correct 3. If the marginal rate of substitution (MRS) of an indifference curve increases the indifference curve will Select one: become flatter...
Consider a perfectly competitive industry with a large number of identical firms. Each firm’s long-run average...
Consider a perfectly competitive industry with a large number of identical firms. Each firm’s long-run average total cost curve reaches a minimum at $4, where output is 100 units. The current market price of the good is $4. a. Is this industry in long-run equilibrium? Why or why not? b. Suppose that the industry is a constant-cost industry. The government announces that this product is harmful to consumer health, so aggregate consumer demand falls (but not to zero!). How does...
10. A perfectly competitive industry consists of many identical firms, each with a long-run average total...
10. A perfectly competitive industry consists of many identical firms, each with a long-run average total cost of LATC = 800 – 10Q + 0.1Q2 and long-run marginal cost of LMC = 800 – 20Q + 0.3Q2. a. In long-run equilibrium, how much will each firm produce? b. What is the long-run equilibrium price? c. The industry's demand curve is QD = 40,000 – 70P. How many units do consumers buy in long-run equilibrium? How many firms are in the...
Why is there no economic profit for perfectly competitive firms in the long run? Why is...
Why is there no economic profit for perfectly competitive firms in the long run? Why is there no economic loss? Answer this question by using an example of a market or industry where perfectly competitive or close to perfectly competitive firms operate (or run their businesses) in close to 'no economic profit or no economic loss' situation.
A)-For a perfectly competitive industry, as long as an economic profit is attainable, new firms will...
A)-For a perfectly competitive industry, as long as an economic profit is attainable, new firms will enter the market. True False B)- If firms in an industry are experiencing economic losses, firms will ______ the industry and the price of the good will ______. enter; decrease enter; increase leave; increase leave; decrease
Why will profits for firms in a perfectly competitive industry tend to vanish in the long...
Why will profits for firms in a perfectly competitive industry tend to vanish in the long run? Would this be true of losses also? Why or why not?
All firms in a perfectly competitive industry have a long-run total cost function of T C(Q)...
All firms in a perfectly competitive industry have a long-run total cost function of T C(Q) = 36Q − 4Q2 + 2Q3. The market demand curve is QD = 640 − 10P. The price of inputs is not affected by the industry output. a) Find the (long-run) average cost and marginal cost curves. b) What quantity will each firm produce in the long run? c) What will be the market price in the long run? d) What will be the...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT