Purchase Solution

Long-run perfectly competitive firms

Not what you're looking for?

Ask Custom Question

In long-run equilibrium a perfectly competitive firm will operate where the price is:

Select one:
a. greater than MR but equal to MC and minimum ATC
b. equal to MR, MC and minimum to ATC
c. greater than MC and minimum ATC, but equal to MR
d. greater than MR and MC, but equal to minimum ATC

For firms in perfectly competitive industries:

Select one:
a. Profit maximization occurs at Q where MR = ATC
b. Profit maximization occurs where TR attain a maximum
c. Profit maximization occurs at Q where P = MC
d. None of the above are true

Which of the following is NOT a characteristic of the perfectly competitive market structure:

Select one:
a. The product the firm produces is homogeneous or standardized
b. The firm can sell all it wants at the market clearing price
c. Consumers are assumed to have complete (perfect) information regarding the producers in the market
d. The firm may raise the price of the product it sells incurring small declines in sales

Purchase this Solution
Solution Summary

This solution shows the relationship between different cost functions and profit maximization in a perfectly competitive market

Solution Preview

1. Answer is b. In the long run Price has to be equal to MR, and MC and the minimum of ATC.

Explanation:

For a perfectly competitive firm, Prices are given (firms cannot set prices), thus price is ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

View More Free Quizzes
Related BrainMass Solutions

  • Perfectly competitive firms

    186029 Economic profit Why do perfectly competitive firms make zero economic profit in the long run?

  • Short and Long Run equilibrium

    Solution: Draw graphs showing a perfectly competitive firm and industry in long-run equilibrium. The above graph represents perfectly competitive firm and industry in long run equilibrium. a).

  • perfectly competitive market

    *In the long run, equilibrium price is equal to long-run average cost, short run marginal cost, and short run average cost. profits are driven to zero. No, in a perfectly competitive market, a firm cannot earn any economic profit in the long run.

  • Equilibrium Price and Quantity in Perfect Competition

    Graph the perfectly competitive industry of market. Graph the perfectly competitive individual firm. Note that the perfectly competitive market is initially in long-run equilibrium with price equal to P1.

  • Perfectly competitive firms

    19717 Perfectly competitive firms In the long run, firms will exit a perfectly competitive industry if: a. excess profits exceed zero., b.excess profits are less than zero., c.total profit equals zero., d.excess profits equal zero.

  • Long-Run Equilibrium in Perfectly Competitve Markets

    501888 Long-Run Equilibrium in Perfectly Competitve Markets Suppose at present, firms in a perfectly competitive market are earning negative economic profits (losses). Explain the process by which this industry will reach long-run equilibrium.

  • A monopolistically competitive market

    Free entry and exit of firms drive long-run profits to zero in both monopolistically competitive and perfectly competitive markets.

  • Long run equilibrium of a perfectly competitive industry

    389127 Long run equilibrium of a perfectly competitive industry 1- characterize the long run equilibrium of a perfectly competitive industry in which average costs are U-shaped as output increases, under both restricted and free entry. 2-Discuss the

  • 3 Review Questions about Competition and Market Power

    Perfectly competitive and monopolistically competitive firms will have zero economic profits in the long run because there are no barriers to entry for new firms.

View More Related Solutions