Question

In: Economics

1. The demand curve for the product of a firm in a competitive market is ________,...

1. The demand curve for the product of a firm in a competitive market is ________, and the demand curve for the product of a monopolist is ________.

perfectly inelastic; downward sloping

horizontal; perfectly inelastic

downward sloping; perfectly elastic

downward sloping; horizontal

perfectly elastic; downward sloping

2. When firms enter a market, the ________-run market supply curve shifts ________, causing individual firms’ profits to ________.

long; right; decrease

short; left; decrease

short; left; increase

short; right; decrease

short; right; increase

3. When firms enter a market, the ________-run market supply curve shifts ________, causing individual firms’ profits to ________.

long; right; decrease

short; left; decrease

short; left; increase

short; right; decrease

short; right; increase

4. Holding all else constant, a decrease in the market demand for a product in a competitive market would cause

the average total cost (ATC) curve of the firms to decrease.

an increase in the price a firm could charge for the product.

the marginal cost (MC) curve of the firms to decrease.

the marginal revenue (MR) curve of the firms to shift downward.

an increase in profits for a firm.

5. If a competitive firm can make enough revenue to cover its variable costs, the firm will

always earn a profit.

always earn a loss.

earn a profit in the long run.

choose to remain open.

shut down.

Solutions

Expert Solution

1. The demand curve for the product of a firm in a competitive market is perfectly elastic and the demand curve for the product of a monopolist is downward sloping.

2. When firms enter a market, the short run market supply curve shifts right, causing individual firm's profits to decrease.

3. It is same as 2nd.

4. Holding all else constant, a deceased in the market demand for a product in a competitive market would cause the marginal revenue (MR) curve of the firms to shift downward.

5. If a competitive firm can make enough revenue to recover it's variable costs, the firm will choose to remain open

Rahul Sunny answered 1 year ago

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