Consider the perfectly competitive market for apples, which is currently in long-run equilibrium. Now the government increases the annual license fee, which is needed to operate the business. We would expect thatFirms increase the quantity produced in the short-runFirms decrease the quantity produced in the short-runFirms Leave the industry in the short-runFirms increase the quantity produced per firm in the long-run

Answered: Consider the perfectly competitive…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the perfectly competitive market for apples, which is currently in long-run equilibrium. Now the government increases the annual license fee, which is needed to operate the business. We would expect that

Firms increase the quantity produced in the short-run
Firms decrease the quantity produced in the short-run
Firms Leave the industry in the short-run
Firms increase the quantity produced per firm in the long-run

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In a perfectly competitive market, firms can just experience benefits or misfortunes in the short run. In the long run, profits and misfortunes are dispensed with on the grounds that a boundless number of firms are delivering limitlessly distinguishable, homogeneous products.

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