The figure below depicts the short-run market equilibrlum In a perfectly competitive market and the cost curves for a representative firm in that market. Assume that all firms In this market have Identical cost curves. Entire Market Single Representative Firm MC ATC 8.... ............ ******** sl............ ......... 300 500 700 10 25 30 Quantity Number of Units) Quantity (Number of Units) A starting assumption about this Industry was that all of the firms In the market had Identical cost curves. This assumption is Multiple Choice unrealistic because each firm is unique. realistic because any cost-saving innovation adopted by one firm will be quickly adopted by others. unrealistic because firms closely guard the details of their production processes. realistic because firms rarely seek out cost-saving innovations. O O O O

The figure below depicts the short-run market equilibrlum In a perfectly competitive market and the cost curves for a representative firm in that market. Assume that all firms In this market have Identical cost curves. Entire Market Single Representative Firm MC ATC 8.... ............ ******** sl............ ......... 300 500 700 10 25 30 Quantity Number of Units) Quantity (Number of Units) A starting assumption about this Industry was that all of the firms In the market had Identical cost curves. This assumption is Multiple Choice unrealistic because each firm is unique. realistic because any cost-saving innovation adopted by one firm will be quickly adopted by others. unrealistic because firms closely guard the details of their production processes. realistic because firms rarely seek out cost-saving innovations. O O O O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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t of 40 40 35 55 30 25 25 20 15 10 5 MC, AC MC AC 9 0 100 200 300 400 500 The graph shows average and marginal cost curves for a typical firm in a perfectly competitive industry in LONG-RUN equilibrium. The long-run equilibrium price of the product is $ In long-run equilibrium the firm will produce units. In long-run equilibrium the firm will earn $ economic profit.
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Consider the perfectly competitive market for sports jackets. The following graph shows the marginal cost ( MCMC ), average total cost ( ATCATC ), and average variable cost ( AVCAVC ) curves for a typical firm in the industry.
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