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67) If the demand for the industry product increases, the total output of the industry in the new long-run equilibrium of a perfectly competitive market will be supplied by A) the initial set of existing firms producing beyond MES. B) any previously exiting firms returning to produce beyond MES. C) new entrants and the initial set of existing firms each producing at MES. D) new entrants with output beyond MES. E) new entrants and the initial set of existing firms each producing slightly below MES.

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Patrina Schowalter
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5 May 2018
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Related questions

What determines the entry and exit of firms in a perfectly competitive industry in the long run? In a perfectly competitive industry in the long run,

A. new firms cannot enter the market due to barriers but existing firms will exit if they are experiencing losses.

B. new firms will enter if market demand exceeds market supply and existing firms will exit if market supply exceeds market demand.

c. new firms will enter if existing firms are making a profit and existing firms will exit if they are breaking even or experiencing losses.

D. new firms will enter if existing firms are making a profit and existing firms will exit if they are experiencing losses.

E. new firms will enter if the price is above the shutdown point and existing firms will exit if the price is below the shutdown point.

Ā 

28. Suppose that the market for porcelain lupines in Freedonia is perfectly competitive and initially in a long run equilibrium. Porcelain lupines are normal goods in Freedonia and are produced with a computer aided technology. Porcelain lupines and ceramic roses are substitutes while porcelain lupines and glass vases are complements. Suppose that incomes rise in nearby Anviliania and in Freedonia. After adjustment to the new long run equilibrium, a. the firms in the porcelain lupine industry will each be producing more output. b. the remaining firms in the industry will each be producing less output. c. the firms in the porcelain lupine industry may each be producing more output, depending on the size of the change in income. d the firms in the porcelain lupine industry will be earning the same profit as they did before the change in income. e. the firms in the porcelain lupine industry will each be earning positive profits.

17. (From Sample Test) A perfectly competitive industry is in short run equilibrium with "n" identical firms and each firm is initially making normal profits. Under these circumstances, which one of the following statements is correct in the short run production period? With an increase in industry demand, each firm would make economic profits and would produce a larger output * With an increase in industry demand, each firm would make economic profits and new firms would enter the industry c) With an increase in fixed costs, each firm would make economic losses and some existing firms would leave the industry With a decrease in industry demand, each firm would make economic losses and would produce a higher output With a decrease in variable costs, each firm would make economic profits and would produce a lower output. d)

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