Q18 and q19 MarketRepresentative FirmMCMR = P$7ATC$5AVC$2D,70100 11518,000Quantity (Q)Output (Q)The diagram above shows a Perfectly Competitive market on the left, and a representative firm supplying in thatmarket on the right. If the entry of new firms into the market caused the equilibrium Price to decrease to $5, therepresentative firm would:Select one:O a.earn a positive Economic Profit.O b. shut down in the short-run.O c.earn a negative Economic Profit.O d.earn zero Economic Profit.Price$$$ MarketRepresentative FirmMCA.aMR P$7ATC$5AVC$2D,70100 11518,000Quantity (Q)Output (Q)The diagram above shows a Perfectly Competitive market on the left, and a representative firm supplying in thatmarket on the right. In the long run we would expectthe market and the Price toSelect one:O a. existing firms to exit; decreaseOb.new firms to enter; increaseO c. existing firms to exit; increaseO d. new firms to enter; decreasePrice$$$

Q18AnswerThe firm produces at MC=PP=$5 then MC=P at Q=100 and…

Market Representative Firm MC A MR = P $7 ATC $5 AVC $2 70 100 115 18,000 Quantity (Q) Output (Q) The diagram above shows a Perfectly Competitive market on the left, and a representative firm supplying in the market and the Price to market on the right. In the long run we would expect Select one: Oa. existing firms to exit; decrease Ob. new firms to enter; increase c. existing firms to exit; increase d. new firms to enter; decrease Price $$$