Which of the Following Statements Is Not Characteristic of a Perfectly

question 23

Multiple Choice

Which of the following statements is not characteristic of a perfectly competitive industry in long-run equilibrium?

• A)A profit-maximizing firm may produce any output level at which P < LRATC.
• B)Every firm produces at an output level at which MC = LRATC.
• C)Ceteris paribus, there is no tendency for firms to either enter or exit the industry.
• D)No firm earns an economic profit.
• E)All of the above statements are characteristic of a perfectly competitive industry in long-run equilibrium.

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Definitions:

Employee Shirking

Refers to employees putting in less effort than agreed upon or expected, often when they believe their lack of effort will not be noticed or punished.

Specialization

The process of focusing on and becoming expert in a particular area of production or knowledge to increase efficiency.

Falling Costs

A situation where the expenses associated with producing a good or service decrease, often leading to lower prices for consumers.

Economies of Scale

The cost advantage that arises with increased output of a product, where average costs start to fall as production scales up.