Econ001-Examstyle-Q2-solution-part3

The marginal-revenue curve and the marginal-cost curve cross at a quantity between 5 and 6 units Points: 1/1 Close Explanation Explanation: According to the previous graph, the marginal-revenue curve and the marginal-cost curve cross at a quantity between 5 and 6 units. See Section: The Marginal-Cost Curve and the Firm's Supply Decision. This firm is in a competitive industry, because marginal revenue is constant as quantity increases. Points: 1/1 The industry is not in a long-run equilibrium. Points: 1/1 Close Explanation Explanation: This industry is competitive because marginal revenue is the same for each quantity. The industry is not in long-run equilibrium because profit is not equal to zero. See Sections: The Revenue of a Competitive Firm; and The Firm's Long-Run Decision to Exit or Enter a Market.