Question

1. Which of the following statements is correct?

	a.	In a perfectly competitive market, if the entry of new firms has no effect on input prices, the long-run supply curve is horizontal at the long-run equilibrium price.
	b.	In a perfectly competitive market, if the entry of new firms increases input prices, the long-run supply curve is upward sloping.
	c.	In a perfectly competitive market, if the entry of new firms reduces input prices, the long-run supply curve is downward sloping.
	d.	All of the above.

2. Individual 1 Marshallian demand for good x is given by: p = 30 – 2x₁. Individual 2 Marshallian demand for good x is given by: p = 50 – 2 x₂. Assume individuals 1 and 2 are the only two individuals in the marketplace. Further assume that everyone in this marketplace faces the same prices for good x. At price p = $10, the quantity demanded at the market level is [q]. (NOTE: Write your answer in number format, with 2 decimal places of precision level; do not write your answer as a fraction. Add a leading zero and trailing zeros when needed. )

Answer 1