Question

What general comments can be made about price, quantity, and efficiency as an industry becomes less...

What general comments can be made about price, quantity, and efficiency as an industry becomes less competitive? What do we know about the likelihood of a firm earning economic profit in the long run as an industry becomes less competitive?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Perfect competition is the most efficient market where prices are comparatively low, the output is higher and there is productive as well as allocative efficiency.

As. industry becomes less competitive, equilibrium prices increase, equilibrium output decrease and efficiency also decrease.

Less competitive industry like monopolistic competition also earns zero economic profit just like perfect competitive firm due to free entry and exit of firms.

But industry like oligopoly and monopoly (zero competition) earns a positive economic profit in the long run.'

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
This question asks you to analyze how the ideal conditions that influence the motives and decision-making...
This question asks you to analyze how the ideal conditions that influence the motives and decision-making of firms in Pure Competition cause differences in the efficiency outcomes and total profit levels that occur in the short run and the long run. Make a distinction between accounting profit and economic profit. Then explain why a purely competitive firm who earns a Zero Total Economic Profit is actually earning a normal profit, as viewed by economists. In the short run, explain how...
We can use the Cournot model to derive an equilibrium industry structure. For this purpose, we...
We can use the Cournot model to derive an equilibrium industry structure. For this purpose, we will define an equilibrium as that structure in which no firm has an incentive to leave or enter the industry. If a firm leaves the industry, it enters an alternative competitive market in which case it earns zero (economic) profit. If an additional firm enters the industry when there are already n firms in it, the new firm’s profit is determined by the Cournot...
Which of the following is true about a monopoly? Its demand curve is generally less elastic...
Which of the following is true about a monopoly? Its demand curve is generally less elastic than in more competitive markets. It will always earn economic profit. It will always produce the same as a perfectly competitive firm. If a perfectly competitive firm incurs an economic loss, it should shut down immediately. try to raise its price. shut down in the long run. shut down if this loss exceeds fixed cost. It will always be subject to government regulation. None...
If a competitive firm can sell a bushel of soybeans for $25 per bushel and it...
If a competitive firm can sell a bushel of soybeans for $25 per bushel and it has an average variable cost of $20 per bushel, and the marginal cost is $22 per bushel, the firm should: expand output. reduce output. increase price. cut output to zero. In the long run, the competitive firm always produces at the: minimum of the average variable cost curve. minimum of the average total cost curve. maximum possible point of production. minimum of the marginal...
8. Short-run and long-run effects of a shift in demand Suppose that the turkey industry is...
8. Short-run and long-run effects of a shift in demand Suppose that the turkey industry is in long-run equilibrium at a price of $5 per pound of turkey and a quantity of 250 million pounds per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in turkey is causing bacterial infections to spread around the world. The CDC’s announcement will cause consumers to demandless/more turkey at every price. In the short run, firms will respond...
A firm in a purely competitive industry has a typical cost structure. The normal rate of...
A firm in a purely competitive industry has a typical cost structure. The normal rate of return in the economy is 12 percent. The firm is earning $25 on every $150 invested by it’s founders. a. What is the percentage rate of return? b. Is the firm earning an economic profit? If so, how large? _____________percent c. Will this industry see exit or entry? d. What will be the rate of return earned by firms in this industry once the...
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...
Consider a constant-cost competitive industry that is initially in long-run equilibrium. If there is an increase...
Consider a constant-cost competitive industry that is initially in long-run equilibrium. If there is an increase in demand in this industry, which of the following do we expect to observe in the new long-run equilibrium (compared to the initial equilibrium)? a. Firms are making positive economic profits. b.Each firm in the market is producing a larger quantity. c. The market price will be higher. d. There will be a larger number of firms in the industry. e. None of the...
Eventually this competitive market reaches long-run equilibrium. Remember: C = 3.5Q^2 + 20Q + 224 What...
Eventually this competitive market reaches long-run equilibrium. Remember: C = 3.5Q^2 + 20Q + 224 What quantity will this firm produce in long-run equilibrium? What is the market price for this competitive industry in long-run equilibrium? What is the profit for this competitive firm in long-run equilibrium?
Hot air balloons are made in Nairobi by a number of perfectly competitive identically – sized...
Hot air balloons are made in Nairobi by a number of perfectly competitive identically – sized firms, each with the following total cost function, TC = 4q2 + 100q + 100. Market demand for hot air balloons is given by QD = 1000 – P, where QD represents total quantity demanded and P is the price per balloon. What is the long run equilibrium price in this industry? What is the equilibrium number of firms? If this is a constant...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT