Question

s Reler will happen in the long run? to Fgure 3 which shows an increasing-cost, perfectly competitive industry in short-run equilibrium. Which of the following A. The B. The C. The D. The short-run industry E. The short-run short-run industry supply curve (S) will shift to the right, and the ATC and MC curves will shift up short-run industry supply curve (S) will shift to the right, and the ATC and MC curves will shift down. short-run industry supply curve (S) will shift to the let, and the ATC and MC curves will shift down supply curve (S) will shift to the left, but the ATC and MC curves will not shift. industry supply curve (S) will shift to the left, and the ATC and MC curves will shift up. s 26. Refer to Figare 4 which shows a decreasing-cest, perfectly com petitive industry in short-rua equilibrium. Which of the following will happen in the long run? A. The short-run industry supply curve (S) will shift to the right, and the ATC and MC curves will shift up. The short-run industry supply curve (S) will shift to the right and the ATC and MC curves will shift dowr C The shon-run industry supply curve (S) will shift to the lett, and the ATC and MC curves will shift up D. The short-run industry supply curve (S) will shift to the left, and the ATC and MC curves will shift down. E. The The short-run industry supply curve (S) will shift to the right, but the ATC and MC curves will not shift. 27, Refer to Figure 4 which shows an increasing-cost, perfectly competitive industry in short-run equilibrium. Which of the following will happen in the long run? A. The short-nun industry supply curve (S) will shift to the right, and the ATC and MC curves will shift down. I. The short-run industry supply curve (S) will shift to the left, and the ATC and MC curves will shit up C. The short-run industry supply curve (S) will shift to the left, and the ATC and MC curves will shift down. D. The short-run industry supply curve (S) will shift to the right, but the ATC and MC curves will not shift E. The short-run industry supply curve (S) will shit to the right, and the ATC and MC curves will shift up. 28. Refer to Figure 4 which shows a constant-cost, perfectly competitive industry in short-run equilibrium. Which of the following will A. The short-run industry supply curve (S) will shift to the right, but the ATC and MC curves will not shift. happen in the long run? shorl-rum industry supply curve (S) will shift to the left, but the ATC and MC curves will not shift C. The short-run industry supply curve (S) will shift to the right, and the ATC and MC curves will shit up. D. The short-run industry supply curve (S) will shift to the left, and the ATC and MC curves will shift up. E. The short-run industry supply curve (S) will shift to the right, and the ATC and MC curves will shift down. Figure 3 Figure 4 l, 4 29. Assume a perfectly increase in demand? A. P docreases and Q increases. B. P decreases and Q decreases. D. P increases and Q decreases competitive, constant-cost industry is initially in long-rua equilibrium. What is the long-run effect of an C. Q decreases but P remains unchangod E P increases and Q increases F. Q increases but P remains unchanged Asume a perfectly competitive, decreasing-cost industry is in long-rum equilibriam. What is the long-run effect of a decrease in demand? P decreases and Q increases CQdecreases but P remains unchanged 30. E P increases and Q increases B. P decreases and Q decreases. D. P increases and Q decreases 31. Assume a perfectly competitive, incresing-cost industry is in long-run equilibrium. What is the long-run effect of an increase in A. P F. Q increases but P remains unchanged increaes C decreases but P remains unchangod decreases. D. P increases and Q decrease E. Pincreases and Q increases F. Q increases but P remains unchanged Qvestions 32-41 are on the back ef this page

Answer 1

(25) (E)

In increasing cost industry, while exit caused by short run loss (since ATC is higher than price, there is a loss) decreases market supply shifting supply curve to left, MC and ATC increases, shifting these curves upward and to left.

(26) (B)

In decreasing cost industry, while entry caused by short run profit (since ATC is lower than price, there is a profit) increases market supply shifting supply curve to right, MC and ATC decreases, shifting these curves downward and to right.

(27) (E)

In increasing cost industry, while entry caused by short run profit (since ATC is lower than price, there is a profit) increases market supply shifting supply curve to right, MC and ATC increases, shifting these curves upward and to left.

(28) (A)

In constant cost industry, while entry caused by short run profit (since ATC is lower than price, there is a profit) increases market supply shifting supply curve to right, MC and ATC does not change, causing no shift in these curves.

NOTE: As per Answering Policy, 1st 4 questions are answered.