Solved by verified expert :27)
In Figure 6.6 if price is P2 then the
industry will
A)
expand.
B)
contract.
C)
stay the same size.
D)
cease to exist.
28)
In Figure 6.6 if price is P1 then the
industry will
A)
expand.
B)
contract.
C)
stay the same size.
D)
merge.
Recall the Application about the price and supply of
wine to answer the following question(s).
29)
Recall the application. The supply of wine in the short run is ________, so an
increase in demand causes the price to ________.
A)
flexible; rise
B)
flexible; fall
C)
inflexible; rise
D)
inflexible; fall
30)
Recall the application. As the quantity of wine demanded increases, prices
________ in the short-run and ________ as supply catches up with demand.
A)
rise; stabilize
B)
fall; stabilize
C)
rise; fall
D)
fall; rise
31)
If perfectly competitive firms are earning positive economic profits in the
short run, then in the long run other firms will enter the market.
32)
In the long-run perfectly competitive equilibrium, firms produce at the minimum
of average total cost.
33)
An increase in demand will lead to a decrease in supply in the long run.
34)
An increase in demand will induce entry by firms in the long run.
35)
If firms make a profit in the short run, firms will exit the market in the long
run.
36)
It is possible that a firm in a perfectly competitive market earns a negative
profit in the long run.
