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:

Weighted-Average Method

An inventory costing method that assigns a weighted average cost to each unit of inventory on hand.

Equivalent Unit

An accounting measure used to compute the number of units produced during a reporting period, converting partially completed units into an equivalent number of fully completed units.

Equivalent Units

A concept used in process costing that converts work-in-process inventory to a number of fully finished units.

Process Costing

A costing method used in manufacturing where costs are assigned to batches or production runs, typically for homogeneous products.