If All Existing Firms and All Potential Firms Have the Same

question 463

Multiple Choice

If all existing firms and all potential firms have the same cost curves, there are no inputs in limited quantities, and the market is characterized by free entry and exit, then the long-run market supply curve

• A)is horizontal and equal to the minimum of long-run marginal cost for each firm.
• B)must slope downward.
• C)must slope upward.
• D)is horizontal and equal to the minimum of long-run average cost for each firm.

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Definitions:

Overstated

A situation where the reported value or figures are higher than the true or accurate value, often unintentionally.

Cost of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials and labor.

Average Number

A value found by adding all numbers in a set together and then dividing by the quantity of numbers in that set.

Inventory

The unfinished materials, items in production, and completed products that form part of a company's assets, which are available for sale or will soon be.