8 In a perfectly competitive long run constant cost industry an increase in

8 in a perfectly competitive long run constant cost

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8. In a perfectly competitive long-run constant-cost industry, an increase in market demand causes: a. an increase in quantity, no change in price, and no change in profit in the long run. 9. Refer to the graph shown. What level of output should the perfectly competitive firm produce to maximize profits? a. 8 10. Refer to the following graphs. Which graph depicts a perfectly competitive firm in long-run equilibrium? (MULTIPLE GRAPHS) a. Graph II 11. Refer to the graph shown. If market price is currently $5.00 per unit, this perfectly competitive firm will maximize profit by producing: a. 650 units of output 12. The long-run industry supply curve will be upward-sloping if: a. Input prices increase with the level of output 13. Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand is D 0 : a. this market is in long-run equilibrium because the firm is earning zero economic profit. 14. Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand decreases from D 0 to D 1 , the firm will:
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a. earn negative economic profit in the short run. 15. Barriers to entry: a. restrict the number of firms in an industry. 16. During a recession, the price of restaurant meals falls by over 10 percent. The most likely cause is: a. A shift of the demand curve to the left 17. The existence of positive economic profits induces firms to: a. enter an industry, which shifts the market supply curve to the right and decreases market price. 18. In a perfectly competitive market, an increase in market demand in a long-run constant-cost industry causes: a. an increase in price, quantity, and profit in the short run. 19. Suppose there are 1,000 firms in a perfectly competitive market and each maximizes profit at 25 units of output when market price is $1.00 per unit. One of the points on the market supply curve must be at: a. price = $1 and quantity supplied = 25,000. 20. Suppose cookie sales fall as consumers become more carbohydrate-conscious. If the cookie industry is a constant-cost, perfectly competitive industry, this decline in market demand will cause market supply to: a. decrease in the long run until the equilibrium price is again equal to minimum average total cost. 21. Refer to the following graph. a. earning positive economic profit. 22. Total profit is maximized at the output level at which the: a. vertical distance between the total revenue curve and the total cost curve is maximized. 23. Refer to the graph shown. If the market price is P 4 , the firm will produce:
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a. Q 4 and earn a profit. 24. In 2009 the electronics retailer Circuit City closed its stores. If we assume this was a short- run decision, the most likely explanation for it is that the price of a typical product sold at Circuit City stores was: a. less than the average variable cost of producing the toy.
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