A Perfectly Competitive Industry with Constant Costs Initially Operates in Long-Run

question 192

Multiple Choice

A perfectly competitive industry with constant costs initially operates in long-run equilibrium.When demand increases,in the long run and the short run:

• A)positive economic profits will result for all firms.
• B)higher prices will result.
• C)output will increase.
• D)negative economic profits will result for some firms.

Explain entry and exit dynamics in long-run market equilibrium.

Understand the concept of short-run and long-run equilibria in monopolistic competition.

Determine the efficient scale of production for a monopolistically competitive firm.

Assess the impact of firm behavior on profits in different market structures.

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