Question 1
Which of the following industries is most likely to exhibit the characteristic of free entry?
Question 2
If a firm is operating in a perfectly competitive market in which the market price equals $12, then its
Question 3
In a competitive market the current price is $11, and the typical firm in the market has ATC - $11.50 and AVC = $11.15.
1. Option 3. T-shirt silkscreening
Explanation: The remaining three industries require huge amount of capital investment.
2. Option 1. Marginal revenue is $12
Explanation: For a perfectly competitive firm, the price equals the marginal revenue.
3. Option 1. In the short-run, firms will shut down and in the long-run firms will exit
Explanation: The price is lower than the lowest AVC and ATC.
Which of the following industries is most likely to exhibit the characteristic of free entry?