Question

1. Suppose, under Perfect Competition, firms are earning an economic profit. What will happen in the Long-Run?

Group of answer choices

Firms will enter the industry in the Long-Run

There will be no change in the number of firms in the industry in the Long-Run

Some firms will exit the industry in the Long-Run

There isn’t enough information to determine what will happen in the Long-Run

2. Which of the following situations would cause an increase in supply in the market for cleaning wipes?

Group of answer choices

The number of producers of cleaning wipes increases

The price of cleaning wipes increases

Cleaning wipes are a normal good and incomes decrease

The number of people cleaning a lot increases

Answer 1

1. Firms will enter the industry in the long run.

When firms are earning economic profit, many firms get attracted to this positive profits. Many firms will enter the market and this inturn reduces the profit of each firms. As a result, in the long run, firms will earn normal profits.

2. The price of cleaning wipes increases.

As the price of cleaning wipes increases, more of cleaning wipes will be supplied. Price and supply are positively related to each other.