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Unformatted text preview: y competitive industry.
(a) Using two correctly labeled graphs, show the long-run equilibrium price and output levels for each of these
(b) Compare the long-run equilibrium price and output levels for these two firms.
(c) What level of economic profit will each firm earn in the long run? Why do these results occur?
(d) For each of the two firms at the equilibrium quantity, indicate whether the firm’s demand curve is perfectly
elastic, elastic, unit elastic, inelastic or perfectly inelastic. How can you tell? Copyright © 2002 by College Entrance Examination Board. All rights reserved.
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