Question

Long-run equilibrium for a perfectly competitive firm is expressed by which of the following equations?

a.	MC = LRAVC = SRAVC	b.	MC = MR = LRAC = SRATC
c.	MR = MC = SRAVC = SRATC	d.	MC = MR = SRTC = AFC

Free market entry is defined by which of the following?

a.	Markets do not charge firms a fee to enter.	b.	There is no cost for firms to enter into a market.
c.	Firms with sufficient capital can enter if they wish.	d.	Old firms must leave when new firms enter the market.

Which of the following does a leftward shift in the demand curve of a perfectly competitive market mean in the long run?

a.	New firms will leave the market.	b.	New firms will enter the industry.
c.	Price will increase.	d.	Short-run industry supply will increase.

What does a leftward shift in the demand curve in a perfectly competitive market mean in the long run?

a.	The price will decrease and firms will exit the market.	b.	New firms enter the market.
c.	The short-run industry supply curve shifts to the right.	d.	Price will increase.

Answer 1

Q1) Perfectly competitive firm in long run equilibrium where MR= MC = LAC= SAC.

Correct answer is B

Q2) Free Market is where firm can enter and exit freely without any intervention of anyone there is no monopoly or need for any license .

Correct answer is B when there is no cost for firm to enter

Q3) When demand curve shift leftward that mean demand for the goods has decreased. When demand decrease firm will exit the market . No longer profitable  

Correct answer is A

Q4) When demand shift leftward there is decrease is demand and price will fall . Dirm will exist the market .

Correct answer is A