True or false ? why ? 1. In the long run, a perfectly competitive firm with diseconomies of scale is expected to continue increasing its output as firms exiting the market pushing the market price higher, and eventually reaching the long run equilibrium. 2.A perfectly competitive firm should shut down if the price is below the break-even level. 3.The graph on the right shows a perfectly competitive firm with the market price of $30. The firm should stay in the market because the profit is -$60, which is better than the shut-down profit of -$150 (you need to show your work and calculate the two profits).

True or false ? why ? 1. In the long run, a perfectly competitive firm with diseconomies of scale is expected to continue increasing its output as firms exiting the market pushing the market price higher, and eventually reaching the long run equilibrium. 2.A perfectly competitive firm should shut down if the price is below the break-even level. 3.The graph on the right shows a perfectly competitive firm with the market price of $30. The firm should stay in the market because the profit is -$60, which is better than the shut-down profit of -$150 (you need to show your work and calculate the two profits).

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 1CQQ

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