Q52 If firms in a competitive industry are earning positive economic profits, in the long run we expect a. There would be no change in the industry as long as P = MC for the individual firms. b. The industry supply curve to shift to the right as new firms enter the industry, causing industry output to increase and price to fall. c. Individual firms will lower their price to discourage new firms from entering the industry. d. The demand curve for the product will shift to the left, so that the price of the product will fall. e. The government would intervene and force the firms to lower prices.
Q52 If firms in a competitive industry are earning positive economic profits, in the long run we expect a. There would be no change in the industry as long as P = MC for the individual firms. b. The industry supply curve to shift to the right as new firms enter the industry, causing industry output to increase and price to fall. c. Individual firms will lower their price to discourage new firms from entering the industry. d. The demand curve for the product will shift to the left, so that the price of the product will fall. e. The government would intervene and force the firms to lower prices.
Chapter12: The Partial Equilibrium Competitive Model
Section: Chapter Questions
Problem 12.4P
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Q52
If firms in a competitive industry are earning positive economic profits, in the long run we expect
a.
There would be no change in the industry as long as P = MC for the individual firms.
b.
The industry supply curve to shift to the right as new firms enter the industry, causing industry output to increase and price to fall.
c.
Individual firms will lower their price to discourage new firms from entering the industry.
d.
The demand curve for the product will shift to the left, so that the price of the product will fall.
e.
The government would intervene and force the firms to lower prices.
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