Question

47. During the flu season, as people try to boost their immune system believing that orange juice might aid in keeping viruses at bay, a the taste for orange juice would rise. b. the taste for orange juice would fall. c. the taste for orange juice would remain unchanged. d. the price of orange juice would fall. c. the demand for orange juice would fall.

Answer 1

47 a) The taste and demand for orange juice would increase.

48. C.

In the long run, a competitive firm is in equilibrium when MR=MC=AC. It will produce that output where LMC=LAC.

Productive efficiency occurs in perfect competition, because P=minimum ATC. This means the goods are produced at the lowest cost. When a firm is producing at the lowest minimum ATC then the firm is earning normal profits. If P> minimum ATC, then firm is making economic profit and other firms will enter the industry. If P< minimum ATC, then the firm is incurring a loss in the long run. Firms will exit the industry.

In the long run, a competitive firm is in equilibrium when MR=MC=AC. It will produce that output where LMC=LAC.