Questions are referring to No. 5-18
For a perfectly competitive industry in the long run, which of the following is false? Price equals average total cost. Average total cost equals marginal cost. Average fixed cost equals price Average total cost is at its minimum O O O There is allocative efficiency.
Homework Answers
Answer:
Q1: Answer: Average fixed cost is equal to the price.
Q2: In the long run decreasing cost industry has an upwards supply curve
Q3: All of the above, since everything helps market power for an exiting firm
Q4:Engaging in rent seeking
Q5:All of the above, as DWL is also an form of an inefficiency and welfare loss
Q6: Be the only selller in the market. As other firm would undercut the market by charging lower price.
Q7:Has decreasing average toatal cost curve along the total production level as marginal cost is very low under natural monopoly.
Q8: No consumer prefer price discrimination over one price pricing.
Q9: Homogeneous product, as each firm has monopoly in there brands.
Q10:Decrease the elasticity of demand faced by that firm.
Q11: Where marginal revenue is equal to the marginal cost.
Q12: Produces at a price where demand curve is a tangent to the average total cost.
Q13: Each firm acts an independent of other.
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For a perfectly competitive industry in the long run, which of the following is false?
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1. (5 points) Assume that a perfectly competitive industry is in long run equilibrium. Then an improvement in technology reduces the average total cost and marginal cost of all firnis. In the long run what happens to price, economic profits, and number of firms in the industry? Please give an explanation.
In comparing the long-run equilibrium of a monopolistically competitive firm and a perfectly competitive firm, which of the following is incorrect? Select one: a. they both produce at the minimum point of the average cost curve ob. the both produce at point where price equals average costs c. they both produce where MR = MC od. the both make zero economic profits e. none of the above. o
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