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ECN 101 Lecture Notes - Lecture 9: Perfect Competition, Competitive Equilibrium, Longrun

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amberwasp628
23 Apr 2023
School
Ryerson University
Department
Economics
Course
ECN 101
Professor
Thomas Barbiero

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Document Summary

Econ chapter 10: perfect competition in the long run. The long run versus the short run in perfect competition: profit maximization in the long run, three assumptions: The only long run adjustment we consider. All firms in the industry have identical costs. Entry and exit do not affect factor prices. The long-run adjustment process in perfect competition: after all long-run adjustments in a perfectly competitive industry: Price will equal to each firm"s min atc. Production will also occur at min atc: this conclusion follows from two basic facts: Firms seek profits and avoid losses and. Under perfect competition, firms are free to enter and leave an industry: entry eliminates profits (p>atc, exit eliminates losses (p

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Related Questions

Assume that in a purely competitive industry: (1) the entry and exodus of firms are the only long-run adjustments; (2) firms in the industry have identical cost curves; and (3) the industry is a constant cost industry. Explain how long-run equilibrium (p = minimum ATC) is eventually achieved in the industry when there are initially economic profits. (Answer in 2-4 sentences)

13. Consider the following three statements about perfect competition: In the long run, firms enter or exit a perfectly competitive industry in search of higher profits II. Every firm in long run equilibrium will be exactly the right size to deliver the lowest possible average costs of production III. As we move to the right along the long-run supply curve of the perfectly competitive industry, each firm is supplying more output to the market Which of the above statements are true about a perfectly competitive industry? (A) I only (B) II only (C) III only (D) I and II (E) I and III (F) II and III (G) I and II and III (H) none of the above

True or False?

1. The demand curve of a perfectly competitive firm is perfectly inelastic. True or False?

2.Total profit of a competitive firm can be found by multiplying profit per unit times the quantity sold. True or False?

3.A monopolistically competitive firm can expect to make no more than a fair rate of return (i.e, zero profits) in the long run.True or False?

4.Monopolistic competition has at least one similarity to perfect competition: firms are free to enter and leave the industry. True or False?

5.An oligopolist cares very much what other firms in his industry are doing. True or False?