Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 9, Problem 10MC
To determine
Profit.
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Which of the below changes in demand in the long-run would lead to entry in the perfectly competitive market for wheat?
a. a decrease in the number of buyers
b. a decrease in buyers' expected price of wheat
c. an increase in income (wheat is a normal good)
d. both a) and b) would lead to long-run entry in perfect competition
When price equals marginal cost,Select one:A.the industry is in long-run equilibrium.B.firms make positive profits.C.the marginal benefits of consuming an extra unit of the good exactly equals the marginal cost to society of producing the good.D.firms make zero profits.
Suppose the equilibrium price of a good in a perfectly competitive market is $15. A firm in the market decides to charge $20 for the good. Which of the following will happen?
a.
The firm's profit will increase.
b.
The firm will capture the entire market.
c.
The firm will not be able to sell any output.
d.
The firm's revenue will increase.
Chapter 9 Solutions
Managerial Economics: A Problem Solving Approach
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- In a perfectly competitive market Select one: a. each firm takes the good's price as given to it by the market. b. each firm sets its own price so that it is different from its competitors. c. an economic profit is certain. d. consumers are persuaded by advertising.arrow_forwardColumbia’s coffee producers operate in a perfectly competitive industry. The market price for a pound of coffee is determined by? A.the Columbian government. B.the intersection of world supply and world demand for coffee. C.the international coffee federation. D.Columbian coffee farmers.arrow_forwarda perfectly competitive market over the long run, a. an increase in market demand or a decrease in firms' costs will lead to a decrease in the number of firms operating within the market. b. an improvement in production technology will increase profits at fust, but those profits will be competed away over time as more firms enter the industry and reduce market price. c. market price will equal maximum possible average total cost in long-run equilibrium. d. an increase in demand will cause the final market equilibrium to be at the original price but at a lower output level.arrow_forward
- In a competitive market with free entry and exit from the market a permanent rise in demand will lead to Select one or more: a. normal profits being made in the long-run b. excess profits being made in the short run (before new firms can enter) c. entry by new firms d. a permanent rise in pricesarrow_forwardQuestion 28 When economic profit is positive in a perfectly competitive industry, market a. supply will increase in the long run causing firm marginal revenue to rise. b. supply will increase in the long run causing firm marginal revenue to fall. c. supply will decrease in the long run causing firm marginal revenue to fall. d. demand will increase in the long run causing firm marginal revenue to rise. e. supply will decrease in the long run causing firm marginal revenue to rise.arrow_forwardA perfectly competitive industry with constant costs initially operates in long-run equilibrium. When demand increases: A. in the long and short runs, prices and profits will be lower relative to what they were before the demand increase. B. in the short run, prices and profits will be higher, but in the long run, price will fall back to its original level and firms will again earn zero economic profit. C. in the short run, prices and profits will fall, but in the long run, price will rise back to its initial level, as will profits. D. in the long and short runs, prices and profits will be higher relative to what they were before the demand increase.arrow_forward
- #10. The market for watches is perfectly competitive and is currently in equilibrium. What will happen if watches become more popular among college students? a. In the short run, firms will experience economic profits, but in the long run, firms will leave the market, bringing economic profits back down to zero. b. In the short run, firms will experience economic profits, but in the long run, firms will enter the market, bringing economic profits back down to zero. c. In the short run, firms will incur economic losses, but in the long run, firms will leave the market, bringing economic profits back down to zero. d. In the short run, firms will incur economic losses, but in the long run, firms will enter the market, bringing economic profits back down to zero. e. In both the short run and the long run, firms will experience zero economic profits.arrow_forwardIn a kinked demand market, whenever one firm decides to lower its price, A. other firms will automatically follow. B. none of the other firms will follow. C. one half of the firms follow, and one half of the firms don't follow the price cut. D. other firms all decide to exit the industry E. all the other firms raise their prices.arrow_forwardIn perfect competition, Select one: a. the market demand for the good is perfectly elastic but the demand for the output of one firm is not perfectly elastic. b. the market demand for the good is not perfectly elastic but the demand for the output of one firm is perfectly elastic. c. both the market demand for the good and the demand for the output of one firm are perfectly elastic. d. neither the market demand for the good nor the demand for the output of one firm is perfectly elastic.arrow_forward
- A firm in a perfectly competitive market a. can increase its supply to lower the market price. b. can raise the price of its product and sell more output. C. can decrease its supply to increase the market price. d. has to accept the market price for its product. e. has to lower the price of its product to sell more output.arrow_forwardFor a perfectly competitive firm, a. demand is perfectly elastic. b. producers must lower the price of its product in order to sell additional units of the product. c. price equals marginal revenue only for the first unit of the good produced and sold. d. demand is perfectly inelastic.arrow_forwardWhat is the correct answer? In pure competition, if the market price of the product is lower than the minimum average total cost of the firms, then A. some firms will enter the industry and the industry supply will increase B. other firms will exit the industry and the industry supply will decrease C. some firms will exit the industry and the industry supply will increase D. other firms will enter the industry and the industry supply will decreasearrow_forward
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