Question

There is a tendency for economic profit in all competitive industries to go to zero.

Question 25 options:

	a) True
	b) False

If the market price in a competitive market is $10, and a firm's marginal cost (MC) is given by MC = 0.50Q, where Q is units of output, this firm should produce 20 units of output to maximize profit.

Question 14 options:

	a) True
	b) False

As entrepreneurs move resources into and out of industries seeking higher profit rates, the total value of production gets maximized.

Question 10 options:

	a) True
	b) False

Answer 1

a) True, of the market is competitive and there is free entry and exit in the market then the economic profit will go to zero.

b) True, if they are producing 20 unit then the marginal cost and the price in the market will be equal.

c) True, in the long run the industry will be producing at the point where the ATC is the lowest.