The Long-Run Supply Curve for a Competitive Industry May Be

question 542

Multiple Choice

The long-run supply curve for a competitive industry may be upward sloping if

• A)there are barriers to entry.
• B)firms that enter the industry are able to do so at lower average total costs than the existing firms in the industry.
• C)some resources are available only in limited quantities.
• D)accounting profits are positive.

Associate the concepts of average variable cost (AVC), average total cost (ATC), and minimum efficient scale to firm's short-run and long-run decisions.

Identify scenarios where firms should continue operating or shut down in the short run based on comparisons of price with AVC and ATC.

Recognize how profit maximization is reflected on graphs and tables relating to cost, revenue, and output levels.

Evaluate the effects of changes in market prices on the profit-maximization condition and firm behavior.

---

Definitions:

Regional Trade Agreements (RTAs)

Treaties between two or more geographically close countries that facilitate trade by reducing tariffs and import quotas, enhancing economic integration.

Order Cycle Time

The total time taken from the moment a customer places an order until the product is delivered, reflecting the efficiency of a supply chain.