Question

One characteristic of a perfectly competitive market is that individual firms engage in product differentiation are...

One characteristic of a perfectly competitive market is that individual firms

engage in product differentiation

are free to enter or exit an industry in the long run

earn positive economic profits in the long run

advertise to increase market share

face a downward-sloping demand curve

Homework Answers

Answer #1

In a perfect competitive market there are no barriers to entry and exit i.e. there is free entry and exit in the long run. So, option (b) is the correct answer

All firm in a perfect competitive market sells homogeneous goods and because there are full information available in the market they cannot increase their market share by advertising. Thus option (a) and (d) are incorrect.

If in the long run they earn positive profit then new firm enters which result in increase in market supply and thus resulted in decrease in market price till they each starts earning zero profit. Also each perfect competitive firm faces perfect elastic or horizontal demand curve. Thus option (c) and (e) are incorrect.

Hence, the correct answer is (b) are free to enter or exit an industry in the long run.

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
Which of the following is NOT a characteristic of a perfectly competitive industry? Question 19 options:...
Which of the following is NOT a characteristic of a perfectly competitive industry? Question 19 options: Economic profits must be positive in the short run. There is free entry and exit in the long run. The industry demand curve is downward sloping. Each firm produces the same homogeneous product.
1. All of the following are characteristics of perfectly competitive markets, except: A: No barriers to...
1. All of the following are characteristics of perfectly competitive markets, except: A: No barriers to entry or exit (fully mobile) B: Large number of buyers & sellers C: A homogeneous product (not differentiated) D: Individual firms have the power to control price. 2. The individual firm's demand curve (as compared to the market demand curve) in a perfectly competitive market is: A: Perfectly inelastic (vertical) B: Downward sloping, but inside of the market demand curve. C: Perfectly elastic (horizontal...
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
32.   The relationship that indicates that the perfectly competitive firm in long-run equilibrium is economically efficient...
32.   The relationship that indicates that the perfectly competitive firm in long-run equilibrium is economically efficient is that A.   long-run marginal cost equals long-run average cost at long-run average cost’s lowest value. B.   the typical firm earns neither economic profits nor economic losses. C.   marginal benefit equals long-run marginal cost. D.   demand equals marginal revenue equals average revenue equals price. 33.   The perfectly competitive lobster market is in long-run equilibrium. Following an increase in demand we would expect the typical...
If firms in a perfectly competitive industry are making zero economic profit, then a some of...
If firms in a perfectly competitive industry are making zero economic profit, then a some of those firms will leave the industry because firms cannot persistently go without making economic profit. b new firms will enter the industry, because the new entrants would be ensured of doing as well as in their best foregone alternative. c there is no incentive for either entry or exit. d some of the firms will temporarily shut down. e The supply curve shifts to...
2. If perfectly competitive firms earn economic profit in the short run, then we would expect...
2. If perfectly competitive firms earn economic profit in the short run, then we would expect that in the long run Multiple Choice supply will decrease. existing firms will leave the market demand will decrease. new firms will enter the market. 3. Which of the following is consistent with a perfectly or monopolistically competitive market? Multiple Choice marginal revenue lower than price for each firm exit of small firms when profits are high for large firms a small number of...
If economic profits are currently being earned by firms in a perfectly competitive market, in the...
If economic profits are currently being earned by firms in a perfectly competitive market, in the long run we can expect: Group of answer choices new firms to enter the business the market supply curve to shift to the left the market price to rise a substantial economic profit to be earned by firms
If economic profits are currently being earned by firms in a perfectly competitive market, in the...
If economic profits are currently being earned by firms in a perfectly competitive market, in the long run we can expect: Group of answer choices new firms to enter the business the market supply curve to shift to the left the market price to rise a substantial economic profit to be earned by firms
If all firms in a perfectly competitive industry earn zero economic profits, in the long run,...
If all firms in a perfectly competitive industry earn zero economic profits, in the long run, the: Select one: a. industry supply curve will shift to the right. b. number of firms in the industry will decrease. c. number of firms in the industry will increase. d. industry supply curve will not shift.
19.   Assume a competitive firm is charging a price of $20 and is selling 275 units....
19.   Assume a competitive firm is charging a price of $20 and is selling 275 units. It has an ATC (incorporating opportunity cost) of $14 per unit. Calculate their level of economic profits. (Hint: Go back to your notes and find the equation for profits...plus in what you know. You have to do some calculations to get tot the answer.) $   20.   If a competitive industry is enjoying economic profits > 0, also called supranormal profits. We learned that in...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT