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ECN 101 Chapter Notes - Chapter 10: Average Variable Cost, Perfect Competition, Economic Equilibrium

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School
Ryerson University
Department
Economics
Course
ECN 101
Professor
Tom Barbiero

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Document Summary

Chapter 10 perfect competition in the long run - learn smart answers. Competition versus friends to select output levels that which . Affirms price exceeds the firm"s minimum average total cost, the . If price is less than minimum average variable cost, resulting losses will cause firms to leave the industry. If price is less than minimum average total cost, resulting losses will cause firms to leave the industry. The long run supply curve of a constant cost industry is perfectly elastic because the exit of rooms change industry output bring the price back to its original level, where there is equal to constant minimum atc. In an increase in cost industry a decline in demand. Result in a long run equilibrium price lower than the original price. Causes factor braces to decline as firms leave the industry. The initial can expand or contract without significantly affecting factor prices.

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Related Questions

Which of the following conditions may or will cause firms to exit an industry?

a. price is more than the minimum average cost, resulting in profits

b. price is less than the minimum average cost, resulting in losses

c. Price is more than the minimum average variable cost, resulting in profits

d. Price is less than the minimum average variable cost, resulting in losses

Whether a purely competitive industry is a constant-cost industry or an increasing-cost industry, the final long-run equilibrium position of all competitive firms share which of the following characteristics?
a)  In the long run, multiple equality occurs where price equals marginal cost which equals the minimum average total cost.

b) In the long run, multiple equality occurs where price equals marginal revenue which equals the minimum average total cost.

c) Price or marginal revenue will settle where it is equal to the minimum average total cost.

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.