Microeconomics For Today (MindTap Course List)
9th Edition
ISBN: 9781305507111
Author: Irvin B. Tucker
Publisher: Cengage Learning
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Question
Chapter 8, Problem 20SQ
To determine
Long-run supply curve of a constant-cost industry.
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Students have asked these similar questions
If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will
A. keep producing in the short run but exit the market in the long run.
B. shut down in the short run but return to production in the long run
C. shut down in the short run and exit the market in the long run.
D. keep producing both in the short run and in the long run.
a perfectly competitive market over the long run,
a. an increase in market demand or a decrease in firms' costs will lead to a decrease in the
number of firms operating within the market.
b. an improvement in production technology will increase profits at fust, but those profits
will be competed away over time as more firms enter the industry and reduce market price.
c. market price will equal maximum possible average total cost in long-run equilibrium.
d.
an increase in demand will cause the final market equilibrium to be at the original price but
at a lower output level.
In a perfectly competitive industry, what mechanism that adjusts price to minimum long-run average total cost?
a. Entry and Exit
b. Diseconomies of Scale
c. Superior Management
d. Economies of Scale
Chapter 8 Solutions
Microeconomics For Today (MindTap Course List)
Ch. 8.5 - Prob. 1YTECh. 8.5 - Prob. 2YTECh. 8 - Prob. 1SQPCh. 8 - Prob. 2SQPCh. 8 - Prob. 3SQPCh. 8 - Prob. 4SQPCh. 8 - Prob. 5SQPCh. 8 - Prob. 6SQPCh. 8 - Prob. 7SQPCh. 8 - Prob. 8SQP
Ch. 8 - Prob. 9SQPCh. 8 - Prob. 10SQPCh. 8 - Prob. 11SQPCh. 8 - Prob. 12SQPCh. 8 - Prob. 1SQCh. 8 - Prob. 2SQCh. 8 - Prob. 3SQCh. 8 - Prob. 4SQCh. 8 - Prob. 5SQCh. 8 - Prob. 6SQCh. 8 - Prob. 7SQCh. 8 - Prob. 8SQCh. 8 - Prob. 9SQCh. 8 - Prob. 10SQCh. 8 - Prob. 11SQCh. 8 - Prob. 12SQCh. 8 - Prob. 13SQCh. 8 - Prob. 14SQCh. 8 - Prob. 15SQCh. 8 - Prob. 16SQCh. 8 - Prob. 17SQCh. 8 - Prob. 18SQCh. 8 - Prob. 19SQCh. 8 - Prob. 20SQ
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- If a firm in a perfectly competitive industry experiences persistent losses, in the long run it should A. exit the industry. B. continue to operate if it can raise the demand for its product through advertising and quality improvements. C. shut down temporarily and wait for market conditions to change. D. raise its price to cover average total cost.arrow_forwardA perfectly competitive industry with constant costs initially operates in long-run equilibrium. When demand increases: A. in the long and short runs, prices and profits will be lower relative to what they were before the demand increase. B. in the short run, prices and profits will be higher, but in the long run, price will fall back to its original level and firms will again earn zero economic profit. C. in the short run, prices and profits will fall, but in the long run, price will rise back to its initial level, as will profits. D. in the long and short runs, prices and profits will be higher relative to what they were before the demand increase.arrow_forwardIn the perfectly competitive guidebook industry, the market price is $35. A firm is currently producing 10,000 guidebooks; average total cost is $38, marginal cost is $30, and average variable cost is $30. The firm should: OA. raise the price of guidebooks, because the firm is losing money. B. keep output the same, because the firm is producing at minimum average variable cost. C. produce more guidebooks, because the next guidebook produced increases profit by $5. OD. shut down, because the firm is losing money.arrow_forward
- A perfectly competitive firm's short-run supply curve is the same as Selected Answer: b. the market demand curve. Answers: a. the supply curve of all the other firms in the industry. b. the market demand curve. c. the marginal cost curve. d. the portion of its average variable cost curve above the average total cost curve. e. the portion of its marginal cost curve above the minimum average variable cost.arrow_forwardWhich of the following characterizes a perfectly competitive industry? Select one: a. The industry demand curve is vertical. b. Each firm produces a product slightly different from that of its competitors. c. Each firm sets a different price. d. The demand for each individual firm is perfectly elastic.arrow_forwardIn a perfectly competitive industry, firms are likely to Multiple Choice A.) exit when there are economic profits because they know the profits will not last. B.) enter when price is equal to the minimum average total cost. C.) supply will decrease. D.) reduce the level of production when there are economic profits..arrow_forward
- Draw the short-run ATC, AVC, MC, MR and Demand graphs for a perfectly competitive market experiencing a profit. In each part, show Total Cost (TC), Total Revenue (TR), shade the profit. Clearly label Q for the equilibrium quantity point and P for market price point.arrow_forwardA perfectly competitive firm will be operating at its shutdown point if it operates at the minimum point on its ________ cost curve. a. marginal b.average total c.total d. average variablearrow_forward1)Which kind of industry would have a downward-sloping long-run supply curve? Select one: a. no industry b. a decreasing cost industry c. a constant cost industry d. an increasing cost industry 2)The market for designer jeans is a good example of a perfectly competitive market. Select one: True False 6)The long run is the period after all exit and entry has occurred. Select one: True Falsearrow_forward
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