Competitive Markets

question 24

Short Answer

Competitive Markets. Indicate whether each of the following statements is true or false and why.
A. In long-run equilibrium, every firm in a perfectly competitive industry earns an economic profit.
B. Pure competition exists in a market when firms are price makers as opposed to price takers.
C. A natural monopoly results when the profit-maximizing output level occurs at a point where long-run average costs are decreasing.
D. Downward-sloping industry demand curves characterize monopoly markets; horizontal demand curves characterize perfectly competitive markets.
E. A decrease in the price elasticity of demand would follow an increase in monopoly power.

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Definitions:

False Identification

The incorrect recognition or naming of a person or object, often relevant in legal contexts.

Eyewitnesses

Individuals who have directly seen an event occur, whose accounts can provide crucial information for investigations.

Source Misattribution

A memory error where a person remembers the information but forgets the source of that information, leading to potential misinformation.

Partial Loss

A situation where there is a reduction or diminishment in quantity, quality, or extent of something, but not a complete loss.