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:

Supply

The total quantity of a good or service that market participants are willing and able to sell at a given price over a specific time period.

Demand

The quantity of a good or service that consumers are willing to buy at a given price over a specified period.

Deadweight Loss

A loss in economic efficiency that occurs when the optimal quantity of a good is not produced, often due to market distortions.

Daily Demand

The total amount of a good or service that consumers are willing and able to purchase at a particular price in a single day.