Question : 21) In the long run, perfectly competitive firms produce at : 1241204

21) In the long run, perfectly competitive firms produce at the output level that has the minimum

A) marginal cost.

B) average total cost.

C) average variable cost.

D) average fixed cost.

E) total revenue.

22) In a perfectly competitive industry,

i.entry by new firms shifts the market supply curve rightward.

ii.exit by existing firms shifts the market supply curve leftward.

iii.at all times existing firms make only zero economic profit.

A) ii and iii

B) ii only

C) i and iii

D) i and ii

E) i, ii, and iii

23) If it does not shut down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue

A) only in the short run.

B) only in the long run.

C) always to maximize its profit.

D) only if it is not possible to produce where price equals average variable cost.

E) only if it is not possible to produce where price is greater than average total cost.

24) In the long run, a perfectly competitive firm makes

A) a positive economic profit.

B) zero economic profit.

C) negative economic profit, that is, an economic loss.

D) zero accounting profit.

E) either a positive economic profit or a normal profit.

25) In the long run, a perfectly competitive firm will

A) be able to make an economic profit.

B) produce but incur an economic loss.

C) make zero economic profit.

D) not produce and will incur an economic loss equal to its total fixed cost.

E) not produce but not incur an economic loss.

26) In the long run, a perfectly competitive firm

A) can make either an economic profit or a normal profit.

B) incurs an economic loss.

C) makes zero economic profit.

D) can make an economic profit, zero economic profit, or incur an economic loss.

E) makes an economic profit.

27) The cranberry market is perfectly competitive. Reports that consuming cranberries can lead to improved health result in a permanent increase in the demand for cranberries and an immediate upward jump in the price of cranberries. As time passes, the price of cranberries ________ and the initial firms’ economic ________.

A) falls; profit will be eliminated

B) rises still higher; loss will be eliminated

C) rises still higher; profit will not change

D) falls; loss will be increased

E) falls; profit will not change

28) Suppose a perfectly competitive market is in long-run equilibrium with a price of $12. Then there is a permanent increase in demand. As a result, in the short run the market price ________ and in the long run the number of firms ________ and the price is ________ the price was in the short run.

A) rises; does not change; is equal to

B) rises; increases; higher than

C) rises; does not change; lower than

D) falls; decreases; is equal to

E) rises; increases; lower than

29) If perfectly competitive firms are maximizing their profit and are making an economic profit, the market ________ in a short-run equilibrium and ________ in a long-run equilibrium.

A) is; is

B) is; is not

C) is not; is

D) is not; is not

E) is; might be

30) A market is initially in a long-run equilibrium and there is a permanent increase in demand. After the new long-run equilibrium is reached, there

A) are more firms in the market.

B) are fewer firms in the market.

C) are the same number of firms in the market.

D) probably is a different number of firms in the market, but more information is needed to determine if the number of firms rises, falls, or perhaps does not change.

E) is no change in the market.