A Competitive Industry Has 10,000 Identical Firms

question 22

Multiple Choice

A competitive industry has 10,000 identical firms.For each firm in the industry, the long-run cost of producing y units of output is c(y) = $100 + y2 if y > 0 and c(0) = 0.The government imposes a lump sum tax of $300 on each firm in the industry.Firms can avoid this tax only by going out of business.There is free entry and exit into this industry.In the long run, the number of firms

• A)stays constant and the price of output rises by $30.
• B)doubles and the price of output doubles.
• C)is halved and the price of output is doubled.
• D)stays constant and the price of output rises by less than $30.
• E)None of the above.

---

Definitions:

Predatory Behavior

Actions or strategies employed by predators to catch their prey, often involving stalking, camouflage, and ambush.

Color Seeing

The ability of organisms, particularly humans, to distinguish objects based on the wavelengths of the light they reflect, emit, or transmit.

Amniotic Egg

An egg that contains an amnion, allowing the embryo to develop independently of water, characterizing reptiles, birds, and mammals.

Cartilaginous Fish

Fish that have skeletons made entirely of cartilage, such as sharks and rays, distinguished from bony fish.