Question

When all firms and potential firms in a market have the same cost curves, the long-run...

When all firms and potential firms in a market have the same cost curves, the long-run equilibrium of a competitive market with free entry and exit will be characterized by firms

Group of answer choices

facing the prospect of future losses.

operating at the efficient scale.

earning small but positive economic profits.

that work together to raise market prices.

Homework Answers

Answer #1

Because this is an example of a perfectly competitive market they will not have positive profits in the long run where they will have normal profits and they cannot cooperate in raise market prices as market prices is dependent on supply and demand and there are also no future prospects losses because they would be running at normal profit level

Therefore (a,c,d) are wrong

All the firms would be running at an Efficient scale because they operate at normal level where the marginal cost meets the demand curve and that's why

(b) is the answer to this question

Please Upvote

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume a competitive industry is in long-run equilibrium and firms in the industry are earning normal...
Assume a competitive industry is in long-run equilibrium and firms in the industry are earning normal profits. Now assume that production technology improves such that average total costs decline by $5 per unit. How will the industry move to a new long-run equilibrium? a. The fall in costs will result in economic profits and firms will enter the market causing the price to fall until all firms only have normal profits. b. The new long-run equilibrium will be where each...
Monopolistic competition in a market is characterized by: Select one: a. many firms, downward-sloping demand curves,...
Monopolistic competition in a market is characterized by: Select one: a. many firms, downward-sloping demand curves, and zero economic profit in the long run. Monopolistic competition is a: Select one: a. group of suppliers that try to act as if they were a monopoly. b. market that is dominated by a small number of firms. c. market with a large number of firms selling similar but not identical products. d. group of suppliers that try to act as if they...
The firms in a price-taker market are incurring short-run losses. In the long-run, these economic losses...
The firms in a price-taker market are incurring short-run losses. In the long-run, these economic losses will be _____ (sustained/eliminated) through the exit and entry decisions of firms.
Why don’t firms in a competitive market have excess capacity in the long run? A. A...
Why don’t firms in a competitive market have excess capacity in the long run? A. A competitive firm always produces as much as it can, because it knows that other firms will also produce at their maximum capacity. B. For the types of goods produced in competitive markets, it is difficult to store any goods that cannot be sold immediately, so it does not make sense to invest in capital that provides the potential to produce more than the market...
Which of the following explains why profits are zero in the long-run for perfectly competitive firms?...
Which of the following explains why profits are zero in the long-run for perfectly competitive firms?                         a) since firms allowed to enter and exit the market, firms earning negative profits will leave the market,                         while new firms enter the market to take up the positive profits                         b) since firms all produce the same good, they must have the same cost so they all earn zero profits                         c) firms cannot raise price so it is not possible...
In a competitive market with free entry and exit, which of the following is NOT true?...
In a competitive market with free entry and exit, which of the following is NOT true? Group of answer choices In the long run, firms determine the price at which goods are sold At the end of the process of entry and exit, all firms make zero economic profit At the end of the process of entry and exit, price is equal to average total cost In the long run, firms operate at the efficient scale
In the short run, if firms in a perfectly competitive market are experiencing economic loss, then...
In the short run, if firms in a perfectly competitive market are experiencing economic loss, then in the long run, firms will _____ the market and economic profits will _____. enter, decrease enter, increase exit, decrease exit, increase
Consider a competitive market with identical firms that is in long-run equilibrium. Which of the following...
Consider a competitive market with identical firms that is in long-run equilibrium. Which of the following statements captures the sequence of events from the short run to the long run after demand increases? a.When demand increases, price rises in the short run, causing each firm to produce more and earn a profit. The profit induces entry of new firms into the market until price returns to its initial value and each firm earns zero profit. b.When demand increases, price falls...
Question 1: In a competitive industry a. firms produce a product or service with very close...
Question 1: In a competitive industry a. firms produce a product or service with very close substitutes b. the firms products have a very elastic demand c. the firms have many rivals d. all of the above Question 2: In the long-run, a perfectly competitive firm will achieve a. An average rate of return b. Economic Profits c. Above average profits d. Losses Question 3: In a competitive industry a. the industry has high barriers to entry b. the industry...
1.) Fill in the blank from the choices inside the parentheses: If a firm the profit...
1.) Fill in the blank from the choices inside the parentheses: If a firm the profit maximizing level of output results in total revenue less than total cost, describe the long run effect on the market. Existing firms in the market are earning (economic losses, 0 economic profits, or economic profits). This will result in (existing firms exiting, new firms entering, or existing firms shutting down). Due to the above, market supply will (increase, decrease, or remain unchanged). and equilibrium...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT