When a Perfectly Competitive Industry Is in Long-Run Equilibrium, Its

question 85

Multiple Choice

When a perfectly competitive industry is in long-run equilibrium, its firms are:

• A) earning more than zero economic profits.
• B) combining their variable and fixed resources inefficiently.
• C) not in short-run equilibrium.
• D) allocating all their resources efficiently.

Evaluate the effects of demand and supply elasticities on tax-induced distortions in the market.

Discuss the principles underlying the Laffer curve and supply-side economics.

Identify the role of market elasticity in determining the deadweight loss and tax revenue.

Understand the change in consumer and producer surplus due to taxes.

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Definitions:

Shareholders

Individuals or entities that own one or more shares in a corporation, making them partial owners and giving them certain rights and responsibilities.

Labor Costs

Labor costs refer to the total amount spent by employers on wages, benefits, and taxes for their employees.

Hold Down Costs

Strategies or actions taken to minimize or reduce expenses and financial outlays in a business or personal budget.

Perception

The process by which individuals interpret and understand their environment through sensory information.