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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In the short run, profits when a competitive firm shuts down are-$8200, and they are -$350 when the firm continues to produce. This firm will minimize losses in the short run by Choose one: A. either shutting down or continuing to produce. O B. continuing to produce. O C. shutting down.
A perfectly competitive firm should shut down in the short-run if price falls below the minimum of A) average variable costs. B) marginal revenue. C) fixed costs. O D) average total cost. E) marginal cost.
What are the three conditions for a market to be perfectly competitive? For a market to be perfectly competitive, there must be O A. many buyers and a small number of firms that compete, selling identical products, and barriers to new firms entering the market. O B. many buyers and one seller, with the firm producing a product that has no close substitutes, and barriers to new firms entering the market. OC. many buyers and a few sellers, with all firms selling identical products, and no barriers to new firms entering the market. O D. many buyers and sellers, with all firms selling identical products, and no barriers to new firms entering the market. O E. many buyers and sellers, with firms selling similar but not identical products, with low barriers new firms entering the market.
Is my answer correct? i think you need information about the AVC to answer this question. I know the firm is productive at a loss, but in order to decide whether or not the firm should shut down, you have to know whether or not price is above or below AVC, right?
this question is too confusing for me please help
Looking to see how to resolve
Suppose a perfectly competitive firm is experiencing short run economic losses. The firm will remain in the industry as long as a) marginal revenue equal to marginal cost b) price is greater than its minimum average variable cost O c) total revenue and total cost d) total revenue and average total cost
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