Jump to. Question 11 of 40 Sapling Learni In a perfectly (or purely) competitive

Question

Jump to. Question 11 of 40 Sapling Learni In a perfectly (or purely) competitive industry, all firms have the same costs. All firms have a minimum average total oguantity of 200 and a minimum average variable cost of $46 at a quantity of 100. Initially, the industry is in long run equilibrium. below in the returns to long run equilibrium. Note, not all of the events need be placed. that each occurs after de decreases until price At the long run equilibrium, the price is: Demand Decreases until the market reaches the long run equilibrium price Supply Increases Firms Exit Supply Decreases Fims Enter Price Increases Price Decreases Hint

Explanation / Answer

Long run equilibrium price is always min of AC=100

When demand decreases then in short run there will be decrease in prices whoch leads to some firm into losses due to which in long run some firm will exit the market and supply decreases and price imcreases i.e. Supply curbe will shift leftward and equilibrium once again achieved at 100 but with less quantity.

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