Answer the following statement true (T) or false (F)
1) After all long-run adjustments have been completed, a firm in a competitive industry will
produce that level of output where average total cost is at a minimum.
2) The long-run supply curve for a decreasing-cost industry is downsloping.
3) Marginal cost is a measure of the alternative goods that society forgoes in using resources to
produce an additional unit of some specific product.
4) Because the equilibrium position of a purely competitive seller entails an equality of price and
marginal costs, competition produces an efficient allocation of economic resources.
5) When entrepreneurs in competitive industries successfully innovate to lower production costs,
it usually results in long-run economic profits for the firm.
1) T
2) T
3) T
4) T
5) F
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