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Economics
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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.

 

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Chika Ilonah
Chika IlonahLv10
10 Oct 2020
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Related questions

Assume that the market for calculators is perfectly competitive and that calculator manufacturers are currently making an economic loss. As the calculator market moves to its long run equilibrium, we should see A. the entry of firms, causing a decrease in supply, an increase in market price, and an increase in losses. B. no change in the industry. Firms will keep producing the same output to minimize losses. c. the entry of firms, causing an increase in supply, a decrease in market price, and a decrease in losses D. the exit of firms, causing an increase in supply, a decrease in market price, and a decrease in losses. E, the exit of firms, causing a decrease in supply, an increase in market price, and a decrease in losses.

What determines the entry and exit of firms in a perfectly competitive industry in the long run? In a perfectly competitive industry in the long run,

A. new firms cannot enter the market due to barriers but existing firms will exit if they are experiencing losses.

B. new firms will enter if market demand exceeds market supply and existing firms will exit if market supply exceeds market demand.

c. new firms will enter if existing firms are making a profit and existing firms will exit if they are breaking even or experiencing losses.

D. new firms will enter if existing firms are making a profit and existing firms will exit if they are experiencing losses.

E. new firms will enter if the price is above the shutdown point and existing firms will exit if the price is below the shutdown point.

 

1.) The minimum feasible long-run average cost for firms in a perfectly competitive industry is $58 per unit. IF every firm in the industry currently is producing an output consistent with a long-run equilibrium, calculate the marginal cost incurred by each firm and the market price.

Marginal cost is $___ and market price is $___ .

How I calculate this?

2.) A perfectly competitive increasing cost industry is in long-run equilibrium. Due to a change in tastes and preferences, there is a decrease in demand. Which of the following best describes the effect on the industry?

The price will

A.) decrease, firms will produce more, profits will decrease, and more firms will enter until profit returns to zero.

B.) decrease, firms will produce less, profits will increase, and more firms will enter until profit returns to zero.

C.) decrease, firms will produce less, profits will be below zero, and firms will exit until profit returns to zero.

D.) increase, firms will produce more, profits will increase, and more firms will enter until profit returns to zero.

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