of 11. In perfect competition, short run economic profits are met by lo of firms
ID: 1120124 • Letter: O
Question
of 11. In perfect competition, short run economic profits are met by lo of firms, short run economic losses are met by long rumarks) firms, but in either case, economic profits in the long run are a) Entry; exit; greater than zero b) Entry; exit; equal to zero c) Exit; entry; equal to zero d) Entry; entry; less than zero e) Entry; exit; less than zero 12. Suppose the market for milk is perfectly competitive. The demand curve for any one producer of milk is (2 marks) a) Downward sloping b) Upward sloping c) Perfectly inelastic d) Horizontal e) Vertical 13. When a firm sells the same product to different consumers and charges different prices, the firm is said to be engaging in (2 marks) a) Price utilization b) Price discrimination c) Price minimization d) Predatory pricing e) Price maximization 1a. The monopolistic aspect of monopolistic competition refers to the fact that a) There are legal barriers to producing a good that could compete with firms (2 marks) already in the market b) Like monopolies, firms in these industries earn positive LR economic proft c) Firms in a M-C industry choose MR=MC as their profit maximising choice of output, just as monopolies do d) Like monopolists, M-C firms have an incentive to advertise e) Firms in a M-C industry have, in a sense, a monopoly over their own good, which is slightly different from other goods in the market 15. Using the back of this sheet, carefully and neatly draw a diagram of short run equilibrium for a perfectly competitive firm making short run economic profits. Make sure to carefully label the diagram and to carefully position the various curves and lines. Label everything, show equilibrium output, price and cost and indicate the area that constitutes profit. (6 marks. Marks will not be given for carelessly drawn, tiny diagrams that are not labeled accurately and do not show clearly what is asked for in the question)Explanation / Answer
11. b is correct ans
In the perfectly competitive market entry and exit of firm ensures zero economic profit when there is positive profit lots of form enter into the market reducing the price which leads to zero economic profit. Similarly when there is a loss lots of forms exit from the market which leads to increase in prices and hence profit is zero.
12 d. horizontal
In perfectly competitive market there are lots of sellers and buyers so everyone is price taker not maker and price is constant so demand curve is on the horizontal line.
13. b price discrimination
Price discrimination refers to the situation when different prices are demanded for the same product from different consumers.
14 c is correct answer
In monopolistic competition due to free exit and entry the economic profit of the firm in long run is zero ,The profit maximization condition is established in the same manner as of monopoly that is MC is equal to MR.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.