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