In long-run perfectly competitive equilibrium, which of the following is false? There is efficient, low-cost production at the minimum efficient scale. |
Firms earn economic profit. |
If, in a perfectly competitive industry, the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost, then: New firms are attracted to the industry. |
New firms are attracted to the industry. |
If a typical firm in a perfectly competitive industry is earning profits, then: The number of firms in the industry will remain constant in the long run. New firms will enter in the long run causing market supply to increase, market price to fall, and profits to decrease. All firms will continue to earn profits. New firms will enter in the long run causing market supply to decrease, market price to rise, and profits to increase. |
New firms will enter in the long run causing market supply to increase, market price to fall, and profits to decrease. |
A firm could continue to operate for years without ever earning a profit as long as it is producing an output where: ATC > AVC. |
MR > AVC. |
If a typical firm in a perfectly competitive industry is incurring losses, then: All firms will continue to lose money. Some firms will exit in the long run, causing market supply to decrease and market price to rise, increasing profits for the remaining firms. Some firms will enter in the long run, causing market supply to increase and market price to rise, increasing profit for all firms. Some firms will exit in the long run, causing market Supply to decrease and market price to fall, increasing losses for the remaining firms. |
Some firms will exit in the long run, causing market supply to decrease and market price to rise, increasing profits for the remaining firms. |