#1
What is the long-run equilibrium condition for firms in a perfectly competitive market?
Price equals marginal cost
ExplanationPerfectly competitive firms achieve long-run equilibrium when price equals marginal cost.
#2
What is a key assumption of perfect competition in the long run?
Homogeneous products
ExplanationHomogeneous products are a key assumption of perfect competition in the long run.
#3
In the long-run equilibrium of a competitive industry, what is true regarding economic profits?
Economic profits are always zero.
ExplanationLong-run competitive equilibrium ensures zero economic profits.
#4
Which of the following is NOT a characteristic of a competitive industry in long-run equilibrium?
Entry and exit of firms are restricted
ExplanationCompetitive industries in long-run equilibrium allow free entry and exit of firms.
#5
In the long-run equilibrium of a competitive industry, what happens if firms are making economic profits?
New firms will enter the industry, driving down profits.
ExplanationEconomic profits attract new firms in long-run competitive equilibrium, reducing profits.
#6
In long-run equilibrium, what is the relationship between price and marginal cost for firms in a perfectly competitive market?
Price equals marginal cost.
ExplanationPrice equals marginal cost in long-run equilibrium for perfectly competitive firms.
#7
What is the long-run outcome for a monopolistically competitive firm in terms of economic profits?
Zero economic profits
ExplanationMonopolistically competitive firms achieve zero economic profits in the long run.
#8
Which of the following best describes the long-run supply curve in a competitive industry?
It is perfectly elastic at the minimum average total cost.
ExplanationLong-run supply in competitive industries is perfectly elastic at the minimum average total cost.
#9
What does the concept of allocative efficiency refer to in the context of long-run equilibrium?
Producing the quantity of goods most desired by consumers.
ExplanationAllocative efficiency in long-run equilibrium means producing the quantity most desired by consumers.
#10
What is the relationship between long-run equilibrium and the minimum efficient scale of production?
Long-run equilibrium occurs at the minimum efficient scale.
ExplanationLong-run equilibrium in a competitive market occurs at the minimum efficient scale of production.
#11
Which condition characterizes long-run equilibrium in a perfectly competitive market?
Price equals marginal cost equals average total cost.
ExplanationLong-run equilibrium in a perfectly competitive market is characterized by price equaling marginal cost and average total cost.
#12
Which condition characterizes long-run equilibrium in monopolistic competition?
Price equals marginal cost equals average total cost.
ExplanationLong-run equilibrium in monopolistic competition is characterized by price equaling marginal cost and average total cost.