Question 1

Which of the following will not hold true for a competitive firm in long-run equilibrium?

Accepted Answer

A)   P equals AFC.
B)   P equals minimum ATC.
C)   MC equals minimum ATC.
D)   P equals MC.E) None of the above
F) B) and D)

Question 2

After all long-run adjustments have been completed,a firm in a competitive industry will produce that level of output where average total cost is at a minimum.

Accepted Answer

A) True 
 B)False

Question 3

Assume a purely competitive,increasing-cost industry is in long-run equilibrium.If a decline in demand occurs,firms will:

Accepted Answer

A)   leave the industry,price will decrease,and quantity produced will increase.
B)   enter the industry and price and quantity will both increase.
C)   leave the industry and price and output will both increase.
D)   leave the industry and price and output will both decline.E) B) and C)
F) None of the above

Question 4

A decreasing-cost industry is one in which:

Accepted Answer

A)   contraction of the industry will decrease unit costs.
B)   input prices fall or technology improves as the industry expands.
C)   the long-run supply curve is perfectly elastic.
D)   the long-run supply curve is upsloping.E) All of the above
F) A) and C)

Question 5

Suppose a firm in a purely competitive market discovers that the price of its product is above its minimum AVC point but everywhere below ATC.Given this,the firm:

Accepted Answer

A)   minimizes losses by producing at the minimum point of its AVC curve.
B)   maximizes profits by producing where MR = ATC.
C)   should close down immediately.
D)   should continue producing in the short run but leave the industry in the long run if the situation persists.E) C) and D)
F) B) and D)

Question 6

The primary force encouraging the entry of new firms into a purely competitive industry is:

Accepted Answer

A)   normal profits earned by firms already in the industry.
B)   economic profits earned by firms already in the industry.
C)   government subsidies for start-up firms.
D)   a desire to provide goods for the betterment of society.E) B) and C)
F) C) and D)

Question 7

The long-run supply curve for a decreasing-cost industry is downsloping.

Accepted Answer

A) True 
 B)False

Question 8

Assume a purely competitive increasing-cost industry is initially in long-run equilibrium and that an increase in consumer demand occurs.After all economic adjustments have been completed,product price will be:

Accepted Answer

A)   lower,but total output will be larger than originally.
B)   higher and total output will be larger than originally.
C)   lower and total output will be smaller than originally.
D)   higher,but total output will be smaller than originally.E) None of the above
F) All of the above

Question 9

A constant-cost industry is one in which:

Accepted Answer

A)   resource prices fall as output is increased.
B)   resource prices rise as output is increased.
C)   resource prices remain unchanged as output is increased.
D)   small and large levels of output entail the same total costs.E) A) and D)
F) A) and C)

Exam 11: Pure Competition in the Long Run

The long-run supply curve for a decreasing-cost industry is downsloping.

Correct Answer
verified

A constant-cost industry is one in which:

Correct Answer
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Which of the following will not hold true for a competitive firm in long-run equilibrium?

Correct Answer
verified

Suppose a firm in a purely competitive market discovers that the price of its product is above its minimum AVC point but everywhere below ATC.Given this,the firm:

Correct Answer
verified

A decreasing-cost industry is one in which:

Correct Answer
verified

Assume a purely competitive increasing-cost industry is initially in long-run equilibrium and that an increase in consumer demand occurs.After all economic adjustments have been completed,product price will be:

Correct Answer
verified

Assume a purely competitive,increasing-cost industry is in long-run equilibrium.If a decline in demand occurs,firms will:

Correct Answer
verified

After all long-run adjustments have been completed,a firm in a competitive industry will produce that level of output where average total cost is at a minimum.

Correct Answer
verified

The primary force encouraging the entry of new firms into a purely competitive industry is:

Correct Answer
verified

Exam 11: Pure Competition in the Long Run

The long-run supply curve for a decreasing-cost industry is downsloping.

Correct AnswerverifiedShow Answer

A constant-cost industry is one in which:

Correct AnswerverifiedShow Answer

Which of the following will not hold true for a competitive firm in long-run equilibrium?

Correct AnswerverifiedShow Answer

Suppose a firm in a purely competitive market discovers that the price of its product is above its minimum AVC point but everywhere below ATC.Given this,the firm:

Correct AnswerverifiedShow Answer

A decreasing-cost industry is one in which:

Correct AnswerverifiedShow Answer

Assume a purely competitive increasing-cost industry is initially in long-run equilibrium and that an increase in consumer demand occurs.After all economic adjustments have been completed,product price will be:

Correct AnswerverifiedShow Answer

Assume a purely competitive,increasing-cost industry is in long-run equilibrium.If a decline in demand occurs,firms will:

Correct AnswerverifiedShow Answer

After all long-run adjustments have been completed,a firm in a competitive industry will produce that level of output where average total cost is at a minimum.

Correct AnswerverifiedShow Answer

The primary force encouraging the entry of new firms into a purely competitive industry is:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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