If a market is perfectly competitive and is in long-run equilibrium, which of the following conditions does not hold?
A) Price is equal to the minimum long-run average cost of production.
B) Economic profit equals zero.
C) The value of the last unit of output produced is equal to the value of the resources used to produce it.
D) There is an incentive for additional firms to enter the market because existing firms are earning revenues in excess of the explicit costs of production.
D
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Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
An increase in wealth ________ saving supply, and the supply of loanable funds curve ________
A) does not change; does not shift B) decreases; shifts rightward C) increases; shifts rightward D) increases; shifts leftward E) decreases; shifts leftward
Suppose that a market is currently served by a single firm protected by high entry costs from any potential competition. Then imagine fixed entry costs gradually falling in a model where any competition will be with quantity as the strategic variable. Describe how you would expect output price to evolve as entry costs fall.
What will be an ideal response?
A change in the quantity demanded of hamburgers occurs only when the price of hamburgers changes.