If a Perfectly Competitive Market Is in a Short- Run

question 18

Multiple Choice

If a perfectly competitive market is in a short- run equilibrium and each firm has P > SRATC,then

• A)new firms will enter the market because existing firms are earning economic profits.
• B)price will fall in the short run as it is too high and firms are making economic profits.
• C)individual firms in the industry will increase their output.
• D)the market supply curve will become less elastic.
• E)existing firms will continue to earn economic profits in the long run.

Compare and contrast different types of rationing mechanisms beyond price such as queuing and ration coupons.

Understand the role of opportunity cost in assessing the true cost of commodities or services.

Grasp the concept of supply and demand elasticity and how changes in these affect market outcomes.

Evaluate the effects of externalities and government policies on domestic production and consumption.

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Definitions:

Testamentary Trust

A trust created by a will that becomes effective upon the death of the person who created it.

Settlor's Death

The event of the death of an individual who has established a trust, potentially triggering changes in the management or distribution of the trust's assets.

Spendthrift Trust

A type of trust that is created to prevent the beneficiary's assets from being squandered or from being claimed by creditors by providing restricted access to the trust assets.

Personal Representative

An individual appointed to administer the estate of a deceased person.