For a firm in a perfectly competitive industry a

73) For a firm in a perfectly competitive industry
A) short-run economic profits must be zero.
B) short-run and long-run economic profits must be zero.
C) short-run economic profits may be positive, but long-run economic profits must be zero.
D) both short-run and long-run economic profits may be negative.
Answer: C
Diff: 1
Topic: 23.5 The Long-Run Industry Situation: Exit and Entry
Learning Outcome: Micro-13: Explain the relationship between production and profits under
perfect competition
AACSB: Analytical thinking
74) Firms in a perfectly competitive industry are producing goods efficiently in the long run if
each is producing at the minimum point of the
A) AVC curve.
B) MC curve.
C) LAC curve.
D) AFC curve.
Answer: C
Diff: 1
Topic: 23.5 The Long-Run Industry Situation: Exit and Entry
Learning Outcome: Micro-13: Explain the relationship between production and profits under
perfect competition
AACSB: Analytical thinking

75) In long-run equilibrium, the perfectly competitive firm will
A) go out of business.
B) produce to the point at which marginal cost is at its minimum.
C) produce to the point at which marginal cost equals average total cost.
D) produce on the upward sloping portion of its ATC curve.
Answer: C
Diff: 1
Topic: 23.5 The Long-Run Industry Situation: Exit and Entry
Learning Outcome: Micro-13: Explain the relationship between production and profits under
perfect competition
AACSB: Analytical thinking
76) Price equals the minimum of long-run average cost
A) in a long-run equilibrium.
B) in a short-run equilibrium as well as in a long-run equilibrium.
C) whenever average revenue equals marginal cost.
D) along a horizontal long-run supply curve, but not along an upward sloping long-run supply
curve.
Answer: A
Diff: 2
Topic: 23.5 The Long-Run Industry Situation: Exit and Entry
Learning Outcome: Micro-13: Explain the relationship between production and profits under
perfect competition
AACSB: Analytical thinking
77) Which of the following is NOT a characteristic of a perfectly competitive long-run
equilibrium?
A) Firms are earning zero profits.
B) Price equals marginal cost.
C) Price equals long-run minimum average cost.
D) Firms are producing on the downward sloping portions of their short-run average cost curves.
Answer: D
Diff: 2
Topic: 23.5 The Long-Run Industry Situation: Exit and Entry
Learning Outcome: Micro-13: Explain the relationship between production and profits under
perfect competition
AACSB: Analytical thinking