Which of the following will occur in the industry in the long run?

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5) Which of the following indicates that a perfectly competitive firm is Show more Type your question here 5) Which of the following indicates that a perfectly competitive firm is in long-run equilibrium? a) Price equals marginal cost. b) Price equals average revenue. c) Price equals marginal cost which equals average total cost. d) Price equals average revenue which equals marginal revenue. e) Price equals average fixed cost. 6) At its current output level a perfectly competitive firms marginal revenue exceeds marginal cost and average variable cost. To maximize profit the firm should a) Maintain its current output level b) Increase its price c) Increase its output level d) Decrease its price e) Decrease its output level 8) Which of the following will occur in the industry in the long run? a) New firms will enter the industry b) The market price will increase c) Existing firms price will increase d) Some firms will leave the industry e) The market quantity will decrease 9) Assume that a profit-maximizing firm is perfectly competitive in both the output and the factor markets and is at its long-run equilibrium. The firms output is 100 units its total revenue is $600.00 and the fixed cost of production is $50.00. Based on this information which of the following is true for the firm? a) Its marginal cost is $5.50 and its average total cost is $5.50. b) Its marginal cost is $5.50 and its average variable cost is $5.50. c) Its marginal cost is $6.00 and its average total cost is $5.50. d) Its marginal cost is $6.00 and its average fixed cost is $5.50. e) Its marginal cost is $6.00 and its average variable cost is $5.50 A profit-maximizing firm minimizes its loss by shutting down in the short run if the market price for its product is a) Greater than its average total cost b) Less than its average total cost c) Greater than its average variable cost d) Less than its average variable cost e) Greater than its marginal cost 11) A perfectly competitive firm is currently in long run equilibrium. Its total revenue is $100000 and the average total cost of production is $100. Which of the following can be concluded from this information? a) The firms marginal cost is $1000 and its profit is positive. b) The firms marginal cost is $1000 and its profit is zero. c) The firms output is 1000 units and its profit is negative. d) The firms output is 1000 units and its profit is zero. e) The firms output is 1000 units and its profit is positive 13) In the short run in perfect competition the industrys demand curve and a firms demand curve have which of the following slopes? Industrys demand curve Firms demand curve a) Horizontal Downward sloping b) Horizontal Horizontal c) Downward sloping Horizontal d) Downward sloping Downward sloping e) Vertical Horizontal In the short run if a firm produces the level of output at which marginal revenue is equal to marginal cost but price is less than average total cost the firm will a) Shut down production b) Expand output to lower its average fixed cost c) Continue to operate as long as price is greater than its average variable cost d) Decrease output until price equals its average total cost e) Increase output to increase revenue In most cases the supply curve for a perfectly competitive industry can be described as which of the following? a) More elastic in the short run than in the long run b) More elastic in the long run than in the short run c) Downward sloping in the short run d) Perfectly inelastic in the long run e) Perfectly elastic in the short run For a perfectly competitive firm in long-run equilibrium all of the following are true EXCEPT: a) Marginal revenue equals average total cost. b) Marginal revenue equals marginal cost. c) Marginal revenue equals price. d) Marginal cost equals price. e) Marginal cost equals average variable cost Which of the following is true for a perfectly competitive firm in long-run equilibrium? a) It earns above-normal profit. b) It is allocatively efficient. c) It experiences economic losses. d) It is productively inefficient. e) It maximizes revenues Assume that soap is produced in a perfectly competitive constant-cost industry that is currently in long-run equilibrium. If the market demand for soap increases due to an increase in population the market price the output of each firm and the number of firms in the industry will most likely change in which of the following ways in the short run? Price Output Number of Firms a) Increase increase Increase b) Increase increase no change c) Increase decrease decrease d) Decrease no change no change e) No change No change no change When a profit-maximizing firm is operating at a loss in the short run it should a) Shut down as soon as possible b) Shut down when its loss is less than its fixed cost c) Shut down if its fixed costs are a small percentage of total cost d) Continue to operate as long as it can cover its variable cost e) Continue to operate as long as it can cover its fixed cost Which of the following is true if a perfectly competitive market is in long-run equilibrium? a) Market price will eventually decrease b) New firms will enter the industry c) Marginal revenue is equal to average total cost d) Price is not equal to marginal revenue e) Average variable cost is decreasing Assume that olive oil is produced in a perfectly competitive constant-cost industry. If the current price of olive oil is $5 per quart and the demand for olive oil increases then the price of olive oil will change in which of the following ways? Short run Long run a) Increase Be more than $5 b) Increase Be equal to $5 c) Be equal to $5 Be equal to $5 d) Decrease Be less than $5 e) Decrease Be equal to $5 Agro Products Inc. a perfectly competitive producer of processed rice products is currently in long run equilibrium. If its total revenue is $45000 marginal cost equals $3 and average variable cost equals $2.20 Agro Products total output and total fixed costs are equal to which of the following? Units of output Total fixed Cost a) 12000 $12000 b) 12000 $15000 c) 15000 $8000 d) 15000 $12000 e) 15000 $15000 a) Maintain its current output level b) Increase its price c) Increase its output level d) Decrease its price e) Decrease its output level Show less

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