Question : 41) If perfectly competitive firms making an economic profit, the : 1238771

41) If perfectly competitive firms are making an economic profit, the economic profit

A) attracts entry by more firms, which lowers the price.

B) can be earned both in the short run and the long run.

C) is less than the normal profit.

D) leads to a decrease in market demand.

E) generally leads to firms exiting as they seek higher profit in other markets.

42) If perfectly competitive firms are making an economic profit, then

A) the market is in its long-run equilibrium.

B) new firms enter the market and the equilibrium profit of the firms already in the market decreases.

C) new firms enter the market and the equilibrium profit of the firms already in the market increases.

D) firms exit the market and the economic profit of the surviving firms in the market decreases.

E) firms exit the market and the economic profit of the surviving firms in the market increases.

43) As a result of firms leaving the perfectly competitive frozen yogurt market in the early 2000s, the market

A) supply curve shifted leftward.

B) supply curve did not change.

C) demand curve shifted rightward.

D) supply curve shifted rightward.

E) demand curve shifted leftward.

44) Firms exit a competitive market when they incur an economic loss. In the long run, this exit means that the economic losses of the surviving firms

A) increase.

B) decrease until they equal zero.

C) decrease until economic profits are earned.

D) do not change.

E) might change but more information is needed about what happens to the price of the good as the firms exit.

45) If firms in a perfectly competitive market are incurring economic losses, then as time passes firms ________ and the market ________.

A) enter; demand curve shifts leftward

B) enter; supply curve shifts rightward

C) exit; demand curve shifts leftward

D) exit; supply curve shifts rightward

E) exit; supply curve shifts leftward

46) In the long run, a firm in a perfectly competitive market will

A) make zero economic profit, so that its owners earn a normal profit.

B) make zero normal profit but its owners will make an economic profit.

C) remove all competitors and become a monopolistically competitive firm.

D) incur an economic normal loss but not earn a positive economic profit.

E) remove all competitors and become a monopoly.

47) Technological change brings a ________ to firms that adopt the new technology.

A) permanent economic profit

B) temporary economic profit

C) permanent economic loss

D) temporary economic loss

E) temporary normal profit

48) Perfect competition ________ an efficient outcome because ________.

A) achieves; total surplus is maximized

B) achieves; marginal benefit equals marginal cost

C) does not achieve; firms do not get to choose their price

D) does not achieve; firms produce goods with perfect substitutes

E) Both A and B are correct.

49) In a perfectly competitive market, a(n) ________ occurs because ________.

A) efficient outcome; total surplus is maximized

B) deadweight loss; firms minimize average minimum cost

C) efficient outcome; the fair rules condition is met

D) deadweight loss; firms must be price takers

E) deadweight loss; total surplus is minimized

50) Perfect competition ________ a fair outcome ________.

A) achieves; because both the fair rules and fair results conditions are met

B) achieves; because total surplus is maximized

C) does not achieve; because entrepreneurs only earn a normal profit

D) does not achieve; because firms must be price takers

E) may achieve; if average total costs are minimized