Good W Is Produced in a Competitive Industry with Increasing

question 52

Multiple Choice

Good W is produced in a competitive industry with increasing costs of production.The figure below shows how a typical firm's long-run average cost curve shifts upward as industry output of good W expands.With 50 firms in the industry,each firm faces an identical long-run average cost curve given by LAC.With 80 firms in the industry,each firm faces an identical long-run average cost curve given by LAC'.And with 120 firms in the industry,each firm faces an identical long-run average cost curve given by LAC''. When there are 80 firms in the industry in long-run competitive equilibrium,the long-run average cost (LAC) of producing good W is $_________,and each firm earns $__________ of economic profit.

• A)$0; $0
• B)$10; $0
• C)$10; $10,000
• D)96,000; $16
• E)none of the above

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