Mod 60: Long-Run Outcomes in Perfect Competition

In the long run, a perfectly competitive firm will earn:

• normal profit

• positive profit

• negative profit (loss)

• dividends for investors

• accounting profit

Compared to the short-run industry supply curve, the long-run industry supply curve will be more

• steeply sloped

• inelastic

• elastic

• profitable

• downward-sloping

In the long-run there is sufficient time for the industry supply curve to adjust because of:

• wages

• fixed inputs

• variable inputs

• entry and exit of firms

• economic profit

For each unit, profit can be determined as the difference between:

• marginal revenue and product price

• average variable cost and product price

• marginal revenue and marginal cost

• market price and demand

• product price and average total cost

Which of the following is true in a decreasing-cost industry?

• As more suppliers enter the industry, input costs go down.

• There are barriers to entry.

• There are barriers to exit.

• Firms are experiencing diseconomies of scale.

• There are diminishing returns to supply.

Which of the following is true in an increasing-cost industry?

• Demand is constantly increasing.

• Producers use a significant amount of an input that is in limited supply.

• Supply is perfectly elastic.

• It is not affected by diminishing returns.

• Supply is constantly increasing.