The Long-Run Supply Curve for a Product Is Horizontal with ATC

question 19

Multiple Choice

The long-run supply curve for a product is horizontal with ATC = 400.Market demand is defined as P = 1,000 - 4Q.The market is competitive and is in long-run equilibrium with 50 firms in the industry.If demand increases to P = 1,240 - 4Q,how many firms will be in the industry at the new long-run equilibrium?

• A) 30.
• B) 40.
• C) 50.
• D) 60.
• E) 70.

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Definitions:

Static Planning Budget

A budget prepared for a single level of activity, not adjusting for changes in volume or activity.

Flexible Budget

A financial tool that adjusts according to changes in the output or activity level, providing a more accurate comparison to actual results.

Actual Level

Represents the real, measured level of activity, production, or performance, as opposed to estimated or planned levels.

Revenue Variance

Revenue variance is the difference between actual revenue and budgeted or forecasted revenue, indicating the effectiveness of a company’s sales strategies.