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An industry is in long-run competitive equilibrium. The price of a substitute good increases. Select one: a. Firms will begin earning economic profit. b. all of the answers are correct. c. The product price will rise. d. New firms will enter the market

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Raushan Raj
Raushan RajLv8
28 Sep 2019

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Related questions

When profit-maximizing firms in competitive markets are earning a negative economic profit:

a. the most inefficient firms will exit the industry.

b. market demand must exceed market supply at the market equilibrium price.

c. new firms will enter the market.

d. market supply must exceed market demand at the market equilibrium price.

If firms in a monopolistically competitive industry are making an economic profit:

a. all of the answers are correct.

b. price is higher than the marginal cost.

c. new firms will enter the industry.

d. economic profit will fall in future periods.

If a typical firm in a perfectly competitive industry is incurring losses, then

  1. some firms will exit in the long run, causing market supply to decrease and market price to fall increasing losses for the remaining firms.
  2. some firms will enter in the long run, causing market supply to increase and market price to rise increasing profit for all firms.
  3. all firms will continue to lose money
  4. some firms will exit in the long run, causing market supply to decrease and market price to rise increasing profits for the remaining firms.

Ā 

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