Suppose That Each of 10,000 Perfectly Competitive Firm in an Industry

question 186

Essay

Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10.In the long run,definitely
A) each firm increases its production above 1,000 units.
B) the number of firms is more than 10,000.
C) consumer surplus decreases.
D) producer surplus increases.
E) the number of firms is less than 10,000.

• A) each firm increases its production above 1,000 units.
• B) the number of firms is more than 10,000.
• C) consumer surplus decreases.
• D) producer surplus increases.
• E) the number of firms is less than 10,000.

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Definitions:

Money Income

The total amount of monetary earnings received by an individual or household, including wages, salaries, and investment returns.

Fixed

Relates to assets or costs that do not change with the level of production or business activity in the short term.

Linear

A term describing something arranged in or extending along a straight or nearly straight line.

Indifference Curves

Graphical representations used in microeconomics to show combinations of two goods that give a consumer equal satisfaction and utility.