Question

Could someone please help me with these questions!

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Question 8 (1 point) Which of the following statements is true for a perfectly competitive market in the short run? I. It is possible that existing firms make positive profit. II. It is possible that existing firms make negative profit. Both are false. Only II. is true. Only I. is true. Both are true. Question 9 (1 point) Suppose that a firm in a perfectly competitive market has sunk fixed cost and avoidable fixed cost. If the market price is above the minimum point on the short-run average variable cost curve, the firm will necessarily produce a positive quantity. True False Question 10 (1 point) In a long-run competitive market equilibrium, existing firms produce at the efficient scale of production and make zero profit. True False

Answer 1

8) D. Yes in short run, positive and negative profit can be achieved. When price>min of AC, positive profit is achieved and when price is les than AC but greater than AVC then firm incurs a loss.

9)False. When revenue covers its variable cost as well as avoidable cost then firm produce in short run. otherwise if price is greater than AVC and excess revenue over TVC is less than avoidable cost then firm should shut down even if price > min of AVC.

10)True. In long run, all firms in perfect competition will earn only normal profit and makes zero profit