In the Short Run, There Are 500 Identical Firms in a Competitive

question 554

Multiple Choice

In the short run, there are 500 identical firms in a competitive market. The firms do not use any resources that are available in limited quantities, and each of them has the following cost structure: Which of the following is a point on the long-run supply curve?

• A)P=$10, Q=500.
• B)P=$6, Q=1,000.
• C)P=$5, Q=500.
• D)P=$5, Q=1,500.

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Definitions:

Long-Run Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices and optimal resource allocation over time.

Expected Price Level

This term indicates the average of current and anticipated prices for goods and services in an economy.

Short-Run Aggregate-Supply Curve

A graphical representation that shows the relationship between the total production of goods and services at different price levels in the short term, assuming some input prices are fixed.

Unemployment Rate

The measure of individuals in the labor force who are without jobs but are actively trying to find employment.