In the perfectly competitive market structure, the demand curve for the industry

Question

In the perfectly competitive market structure, the demand curve for the industry is a prefect elastic curve a prefect inelastic curve an upward sloped curve a downward sloped curve A barrier to entry is a term used to explain why monopolies always make economic profits a restriction on the profits that a monopoly can make the situation when government produces a good instead of relying on private forms to produce the good a restriction on who can start a business A monopolist faces a perfect elastic demand curve a perfect inelastic demand curve a market demand curve a two-tiered demand curve A monopolist would not be able to make a profit at any price output combination when marginal cost is less than the average total cost for one more unit of output the average variable cost curve is everywhere above the marginal revenue curve the minimum point on the average total cost curve lies to the right of the minimum point of the average variable cost curve The model of perfect competition and the model of monopolistic competition differ in that perfect competition assumes many buyers and sellers while monopolistic competition assumes many buyers but few sellers perfect competition assumes easy entry of new firms while there are more significant barriers to entry in monopolistic competition perfect competition assumes firms make zero profits in the long run and monopolistic competition assumes make a positive profit perfect competition assumes the product is homogeneous and monopolistic competition assumes product is differentiated

Explanation / Answer

5. A is Correct

In perfect competition, each individual firm faces a perfectly elastic demand curve (i.e., it can sell as many units of output as it desires at the given market price). The firm has no impact on market price, and is referred to as a pricetaker.

6. A is Correct

An unregulated monopoly can earn economic profits in the long run as it is protected by substantial barriers to entry.

7. C is Correct.

The price that is charged by Monopolist is derived from the market demand curve.

8. A is Correct

If demand facing an individual firm lies below its ATC curve, the firm will make economic losses.

9. B is Correct

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