Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 11, Problem 1RQ
To determine
New entry in the long run.
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In the table below, the firm;
Output Total Revenue Total Cost
$0
$30
$60
$90
$120
$150
$180
$25
$49
$69
$91
$117
$147
$180
O a. cannot be in a perfectly competitive industry, because its short-run economic profits
are greater than zero.
O b. must be in a perfectly competitive industry, because its marginal cost curve
eventually rises.
O c. cannot be in a perfectly competitive industry, because its long-run economic profits
are greater than zero
O d. must be in a perfectly competitive industry, because its marginal revenue is constant.
123 456
Suppose that the paper clip industry is perfectly competitive. Also assume that the market price for paper clips is 2 cents per paper clip. The demand curve faced by each firm in the industry is: LO10.3 a. A horizontal line at 2 cents per paper clip. b. A vertical line at 2 cents per paper clip. c. The same as the market demand curve for paper clips. d. Always higher than the firm’s MC curve.
What are the three conditions for a market to be perfectly competitive?
For a market to be perfectly competitive, there must be
O A. many buyers and a small number of firms that compete, selling identical products, and barriers to new firms entering the market.
O B. many buyers and one seller, with the firm producing a product that has no close substitutes, and barriers to new firms entering the market.
OC. many buyers and a few sellers, with all firms selling identical products, and no barriers to new firms entering the market.
O D. many buyers and sellers, with all firms selling identical products, and no barriers to new firms entering the market.
O E. many buyers and sellers, with firms selling similar but not identical products, with low barriers
new firms entering the market.
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