Suppose That Each of 8,000 Firms in a Perfectly Competitive

question 241

Essay

Suppose that each of 8,000 firms in a perfectly competitive industry produces 1,000 units of a good and maximizes profits when the price of the good is $10.If there is a permanent increase in demand,in the short run each firm produces ________ 1,000 units and in the long run the number of firms is ________ 8,000.
A) more than; more than
B) less than; more than
C) less than; less than
D) more than; less than
E) exactly; more than

• A) more than; more than
• B) less than; more than
• C) less than; less than
• D) more than; less than
• E) exactly; more than

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Definitions:

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