True or false ? why ? 1. In the long run, a perfectly competitive firm with diseconomies of scale is expected to continue increasing its output as firms exiting the market pushing the market price higher, and eventually reaching the long run equilibrium. 2.A perfectly competitive firm should shut down if the price is below the break-even level. 3.The graph on the right shows a perfectly competitive firm with the market price of $30. The firm should stay in the market because the profit is -$60, which is better than the shut-down profit of -$150 (you need to show your work and calculate the two profits).
True or false ? why ? 1. In the long run, a perfectly competitive firm with diseconomies of scale is expected to continue increasing its output as firms exiting the market pushing the market price higher, and eventually reaching the long run equilibrium. 2.A perfectly competitive firm should shut down if the price is below the break-even level. 3.The graph on the right shows a perfectly competitive firm with the market price of $30. The firm should stay in the market because the profit is -$60, which is better than the shut-down profit of -$150 (you need to show your work and calculate the two profits).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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True or false ? why ?
1. In the long run, a
2.A perfectly competitive firm should shut down if the price is below the break-even level.
3.The graph on the right shows a perfectly competitive firm with the market price of $30. The firm should stay in the market because the profit is -$60, which is better than the shut-down profit of -$150 (you need to show your work and calculate the two profits).
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