A perfectly competitive constant cost industry is in long-run equilibrium. Due to a change in tastes and preferences, there is a decrease in demand. Which of the following best describes the effect on the industry? The price will O A. decrease, firms will produce less, profits will be below zero, and firms will exit until profit returns to zero. O B. increase, firms will produce more, profits will increase, and more firms will enter until profit returns to zero. Oc. decrease, firms will produce less, profits will increase, and more firms will enter until profit returns to zero. OD. decrease, firms will produce more, profits will decrease, and more firms will exit until profit returns to zero.

A perfectly competitive constant cost industry is in long-run equilibrium. Due to a change in tastes and preferences, there is a decrease in demand. Which of the following best describes the effect on the industry? The price will O A. decrease, firms will produce less, profits will be below zero, and firms will exit until profit returns to zero. O B. increase, firms will produce more, profits will increase, and more firms will enter until profit returns to zero. Oc. decrease, firms will produce less, profits will increase, and more firms will enter until profit returns to zero. OD. decrease, firms will produce more, profits will decrease, and more firms will exit until profit returns to zero.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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red 1.00 pn ge Firm A operates in perfect competition, and the price the firm faces is greater than its average variable cost and less than its average total costs. If the firm does not expect price to change, firm A should: O a Shut down in the short run but operate in long run O b. Shut down in short run and in long run Oc. Operate in short run but shut down in long run Od. Shut down immediately Jump to O a. Increase production/output Ob. Shut down business Oc. Decrease production/output Od. Keep current production level Under perfect competition, if firm A's marginal revenue is greater than its marginal cost, what should firm A do to maximize its profit: AVAAN LUV1000 Evaluations Test 2-July 14th Which of the below is the difference between economic profit and accounting profit O a. Opportunity Cost O b. Revenue difference Oc: Explicit cost O d. Fixed cost Next page O e. Variable cost Next Activity Next Activity
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