Question

D Question 12 1 pts A purely competitive market at equilbrium will do which of the following? Earn economic profits Evolve into a monopoly in an increasing cost industry Minimue total cost Maximine the consumer surplus and producer surphas Question 13 1 pts If there is a decrease in demand for a product in a purely competitive industry, the industry will get smaller: weaker firms will exit the industry; supply will decline As part of this long run adjustment process, where will the product price end up when we reach equilibrium? Price ends up less than its marginal cost Price ends up greater than marginal cost Price ends up equal to marginal cost Price ends up greater than its average cost D | Question 14 1 pts An industry with a large number of sellers that make a standard product is known as:

Answer 1

12 )

In purely competitive market, equilibrium Maximizes consumer surplus and producer surplus.   Zero economic profit occurs where profit is zero. But in competitive market, positive profit also can be earned in short run.

Right answer: Maximizes consumer surplus and producer surplus.

13)

Right answer: Price ends up equal marginal cost.

Fall in demand reduces price of good and many inefficient firms move out of market. Only efficient firms remain in market. In long run, P= MC =AC=MR.