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In a perfectly competitive market, the firms are observed to make positive economic profits in the short run. Due to the positive profits, new firms enter the market. Hence supply _(39), causing the equilibrium price level to _(40). This will corresponds to the minimum of the |(41) profits. The process will continue until the market equilibrium price _(42) function. 39. a) increases b) decreases 40. a) increase b) decrease 41. a) drive up b) drive down 42. a) long run average cost b) long run marginal cost

In a perfectly competitive market, the firms are observed to make positive economic profits in the short run. Due to the positive profits, new firms enter the market. Hence supply _(39), causing the equilibrium price level to _(40). This will corresponds to the minimum of the |(41) profits. The process will continue until the market equilibrium price _(42) function. 39. a) increases b) decreases 40. a) increase b) decrease 41. a) drive up b) drive down 42. a) long run average cost b) long run marginal cost

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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For Questions 39 to 42, consider the following paragraph on long run dynamics of a perfectly competitive market. Choose the option that best fills the blanks.

In a perfectly competitive market, the firms are observed to make positive economic profits in the short run. Due to the positive profits, new firms enter the market. Hence supply _(39), causing the equilibrium price level to (40). This will (41) profits. The process will continue until the market equilibrium price _(42) function. corresponds to the minimum of the 39. a) increases b) decreases 40. a) increase b) decrease 41. a) drive up b) drive down 42. a) long run average cost b) long run marginal cost
Transcribed Image Text:In a perfectly competitive market, the firms are observed to make positive economic profits in the short run. Due to the positive profits, new firms enter the market. Hence supply _(39), causing the equilibrium price level to (40). This will (41) profits. The process will continue until the market equilibrium price _(42) function. corresponds to the minimum of the 39. a) increases b) decreases 40. a) increase b) decrease 41. a) drive up b) drive down 42. a) long run average cost b) long run marginal cost
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