Question

multiple choice
1. Which of the following is true of a perfectly competitive market?
a. If economic profits are earned then the price will fall over time.
b. In long-run equilibrium P = MR = SRMC = SRATC = LRAC.
c. A constant-cost industry exists when the entry of new firms has no effect on their cost
curves.
d All of these.
e None of the above.

2. When an industry is described as a decreasing-cost, increasing-cost, or constant-cost industry, the "cost" that is being referred to is
a. marginal cost.
b. average total cost.
c. average variable cost.
d. sunk cost.
e. fixed cost.

Answer 1

1. Which of the following is true of a perfectly competitive market?
d All of these.
2. When an industry is described as a decreasing-cost, increasing-cost, or constant-cost industry, the "cost" that is being referred to is
b. average total cost.