ECON HW 14
Consider the perfectly competitive firm in the figure. At what price will long−run equilibrium occur?
$22
The figure shows the marginal revenue and long−run cost curves for a perfectly competitive firm. All other firms in the industry have identical curves. Which of the following statements is true?
The firm's average cost exceeds the price. Over time, firms will enter this industry. The firm is earning economic profit. [[None of the above is true.]]
In the long run, which of the following is present in a perfectly competitive market?
many firms in the industry
If perfectly competitive firms exit a market, the
market supply curve shifts leftward.
Suppose firms in a perfectly competitive industry are earning economic profits. As a result, I. new firms enter the industry. II. the market price falls. III. the economic profits of the existing firms eventually decreases.
I, II and III
In the long−run equilibrium in a perfectly competitive market,
the firms earn a normal profit.
If firms in a perfectly competitive industry are presently earning zero economic profit, then
there is no incentive for either entry or exit.
In the long−run equilibrium for a perfectly competitive industry,
the firms' economic profits are zero. there is no entry or exit. average total costs of production are minimized.
In the long run, the economic profit of a firm in a perfectly competitive industry
will equal zero.
Which of the following statements regarding the long−term equilibrium is true?
Entry and exit stop when firms make zero economic profit.
A perfectly competitive firm initially is earning a normal profit. Then, a decrease in demand for the firm's product occurs. Of the following, in the long run which action listed below is the firm most likely to take?
Exit the market.
For a perfectly competitive firm, in the long−run equilibrium,
P = MC = ATC = MR.
The figure shows the marginal revenue and long−run cost curves for a perfectly competitive firm. Which of the following statements is true?
The firm is producing at minimum long−run average cost.
Economic profit sends a signal to entrepreneurs by telling them where
an above normal return on investment can be earned.
In the long−run equilibrium, perfectly competitive firms produce the level of output such that
average total cost is minimized. marginal cost equals the price.
In the short run, perfectly competitive firms ________ but in the long run, perfectly competitive firms make ________.
can incur economic losses; zero economic profit
Entry in a perfectly competitive market
decreases the market price. shifts the market supply curve rightward.
If firms in a competitive industry are making ________ then there is ________ for firms to ________ the industry.
economic losses; an incentive; exit
In the long run, for a perfectly competitive market, if economic profit is
equal to zero then there is no entry or exit of firms into or out of the market. less than zero then some firms will exit the market and the industry supply curve will shift leftward. greater than zero then some firms will enter the market and the market supply curve will shift rightward.
In the long−run, if firms in a perfectly competitive industry are incurring persistent economic losses, some firms will
exit and the price will rise.
Suppose the cost curves in the figure apply to all firms in the industry. If the initial price is P1, firms are ________ and some firms will ________ the industry.
incurring an economic loss; leave
The figure shows the cost curves for a perfectly competitive firm. If all firms in the industry have the same cost curves and the price equals $16 per unit,
over time, the price will fall as new firms enter the industry.
Suppose some firms in a perfectly competitive industry are incurring an economic loss. As a result,
some firms will leave the industry and the price of the good will rise.
Suppose the cost curves in the figure apply to all firms in the industry. Then, if the initial price is P1, in the long run the market
supply will decrease.
Today, firms in a perfectly competitive industry are making an economic profit. In the long run, firms will ________ the industry until all firms in the industry are ________.
enter; making zero economic profit
When some firms enter a perfectly competitive industry in which firms are earning an economic profit, the shortminus−run industry supply curve shifts ________, the market price ________, and each firm's economic profit ________.
rightward; falls; decreases
Suppose firms in a perfectly competitive industry are incurring an economic loss. As firms exit, the price ________ and the economic loss of the surviving firms ________.
rises; decreases