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If firms can easily enter and exit a market, then

A. firms will produce at minimum average cost in the short run.

B firms will produce where the price is greater than marginal revenue.

C. firms will produce at a minimum average fixed cost in the long run.

D. firms will earn zero economic profit in the long fun.

E. firms will produce where the price is greater than marginal cost.

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Divya Singh
Divya SinghLv10
22 Oct 2020

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Related questions

1.) The minimum feasible long-run average cost for firms in a perfectly competitive industry is $58 per unit. IF every firm in the industry currently is producing an output consistent with a long-run equilibrium, calculate the marginal cost incurred by each firm and the market price.

Marginal cost is $___ and market price is $___ .

How I calculate this?

2.) A perfectly competitive increasing cost industry is in long-run equilibrium. Due to a change in tastes and preferences, there is a decrease in demand. Which of the following best describes the effect on the industry?

The price will

A.) decrease, firms will produce more, profits will decrease, and more firms will enter until profit returns to zero.

B.) decrease, firms will produce less, profits will increase, and more firms will enter until profit returns to zero.

C.) decrease, firms will produce less, profits will be below zero, and firms will exit until profit returns to zero.

D.) increase, firms will produce more, profits will increase, and more firms will enter until profit returns to zero.

Are perfectly competitive markets productively efficient in the long run?

A. Yes, because firms produce at the lowest average cost possible.

B. Yes, because firms produce where the marginal benefit to consumers equals the marginal cost of production.

C. No, because firms earn zero economic profits.

D. No, because firms will not shut down unless the price is less than the average variable cost of production.

E. Both a and b.

Are perfectly competitive markets productively efficient in the long run?

a. Yes, because firms produce at the lowest average cost possible.

b. Yes, because firms produce where the marginal benefit to consumers equals the marginal cost of production.

c. No, because firms earn zero economic profits.

d. No, because firms will not shut down unless price is less than the average variable cost of production.

e. Both a and b.

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