A . A perfectly competitive firm\'s long-run supply curve is its __________ cost
ID: 1128305 • Letter: A
Question
A . A perfectly competitive firm's long-run supply curve is its __________ cost curve above its __________ cost curve.
average total, marginal
average variable, marginal
marginal, average variable
marginal, average total
B. In the long-run, a firm in a perfectly competitive industry has the ability to freely enter or exit the market. Therefore, the firm will exit the market when __________. Whereas, the firm will enter the market when __________.
P > AVC; P < AVC
P > ATC; P < ATC
P < AVC; P > AVC
P < ATC; P > ATC
average total, marginal
average variable, marginal
marginal, average variable
marginal, average total
B. In the long-run, a firm in a perfectly competitive industry has the ability to freely enter or exit the market. Therefore, the firm will exit the market when __________. Whereas, the firm will enter the market when __________.
P > AVC; P < AVC
P > ATC; P < ATC
P < AVC; P > AVC
P < ATC; P > ATC
Explanation / Answer
1) Marginal and variable
under perfect market competition, the long-run supply curve will be Marginal cost curve of the firm because marginal cost refers to additional cost incurred by the firm supplying of additional goods to the market
2) P>ATC, P>ATC
In short run under perfect market firm will make a supernormal profit when the price of the goods in the make is greater than the variable cost, similarly firm will exit the market when the price of his goods is lesser than the variable cost because he is unable to recover the loses.
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