Question :
15.3 Output, Price, and Profit in the Long Run
1) When : 1241202
15.3 Output, Price, and Profit in the Long Run
1) When new firms enter the perfectly competitive Miami bagel market, the market
A) supply curve shifts leftward.
B) supply curve does not change.
C) demand curve shifts rightward.
D) supply curve shifts rightward.
E) demand curve shifts leftward.
2) If new firms enter a perfectly competitive industry, the market supply
A) does not change.
B) becomes more price elastic.
C) becomes more price inelastic.
D) increases.
E) decreases because each firm produces less than before the entry.
3) Alice, Bud, and Celia can produce rubber bands in a perfectly competitive market. If they enter the market, the minimum average total cost for a bundle of rubber bands, for the three of them is $2, $3, and $4, respectively. If the market price is $2.10 per bundle, then
A) all three of them will enter the market.
B) only Alice will enter the market.
C) Alice and Bud will enter the market.
D) Bud and Celia will enter the market.
E) Alice and Celia will enter the market.
4) Suppose a perfectly competitive market is in long-run equilibrium and then there is a permanent increase in the demand for that product. The new long-run equilibrium will have
A) fewer firms in the market.
B) more firms in the market.
C) the same number of firms in the market.
D) probably a different number of firms, but it is not possible to determine if there will be more or fewer firms.
E) a permanent decrease in supply.
5) When firms in a perfectly competitive market are earning an economic profit, in the long run
A) no new firms will enter the market.
B) new firms will enter the market.
C) firms will exit the market.
D) the long-run average cost curve shifts downward.
E) the initial firms continue to earn an economic profit.
6) If perfectly competitive lawn care firms are making an economic profit, then
A) wages will be bid up until the economic profit are gone.
B) the firms must be superior and will continue to make an economic profit.
C) new firms will enter the industry.
D) they are not equating marginal revenue to marginal cost.
E) government regulation will be imposed to decrease their profit.
7) If perfectly competitive firms are making an economic profit, then
A) the market must be in long-run equilibrium but cannot be in a short-run equilibrium.
B) some firms will exit the market.
C) new firms will enter the market.
D) the market might be in a long-run equilibrium but not a short-run equilibrium.
E) the market cannot be in either a short-run or a long-run equilibrium.
8) The corn market is perfectly competitive, with thousands of corn farmers. In the 2000s, the price of corn soared so that new farmers entered the corn market. Initially, entry ________ the economic profit of the initial corn farmers and in the long run the initial corn farmers ________.
A) increased; made an even greater economic profit than initially
B) decreased; made zero economic profit
C) increased; made zero economic profit
D) decreased; incurred an economic loss
E) increased; made an economic profit
9) If firms in a perfectly competitive industry are earning an economic profit, then in the ________, firms will ________ the industry.
A) short run; enter
B) long run; enter
C) short run; exit
D) long run; exit
E) More information about the firms’ costs and the price of the product is needed to determine if firms enter or exit the industry.
10) When new firms enter a perfectly competitive market, the market supply curve shifts ________ and the price ________.
A) rightward; falls
B) rightward; rises
C) leftward; falls
D) leftward; rises
E) rightward; does not change
