In a perfectly competitive market with identical firms, all surplus will be consumer surplus in long run equilibrium.
Answer the following statement true (T) or false (F)
True
Rationale: In such a long run equilibrium, all firms make zero profit (i.e. zero surplus). This can also be seen from the fact that the long run market supply curve is perfectly elastic in this case.
You might also like to view...
What are the benefits of intergovernmental competition? Do those benefits disappear if the mobility of individuals in the society is limited? Why or why not?
What will be an ideal response?
The fact that some resource prices are fixed by contracts help explain why firms:
a. increase output in the short run when the price level increases b. keep production levels constant in the short run when the price level decreases. c. sell output in the short run at fixed prices. d. increase output in the long run when the price level increases. e. decrease production when nominal wages fall in the long run.
Which of the following would not appear on the asset side of a commercial bank balance sheet?
a. Reserves. b. Checkable deposits. c. Loans. d. Securities.
According to Okun's law, when cyclical unemployment increases by one percentage point, the recessionary gap ________ by ________ percent of potential output.
A. closes; two B. closes; one C. widens; one D. widens; two