A Firns The Market k --MR B C D 10. C onsider the perfectly competitive firm dep

Question

A Firns The Market k --MR B C D 10. C onsider the perfectly competitive firm depicted in the right hand graph above. In the short run it will produce the output quantity a. A b. B c. C d. D 11. Consider the perfectly competitive firm depicted in the right hand graph above. The firm is: a. Making an economic profit. b. Is making economic losses. c. Is making accounting losses d. Making normal profits 12· Consider the perfectly competitive firm depicted in the right hand graph above. In the long run it will produce the output quantity: a. A c. C d. D Consider the perfectly competitive market depicted in the left hand graph above. In the long run: a. Firms will exit the market and the price will rise. b. Firms will enter the market and the price will rise. . Firms will exit the market and the price will fall. 12. d. Firms will enter the market and the price will fall.

Explanation / Answer

Ans)

10.

C. c

Int he short run the firm would produce where MC equals MR.

11.

A.Makinf an economic profit

This is because the price is above the ATC.

12.

B. B

The firm will produce at the minimum of the ATC in the long run.

13.

D. Firm will enter the market and the price will fall.

This is because in long run in a perfectly competitive market there are zero economic profits.

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