Lesson 6.4: Competition in the Long Run

question

The industry of good X is cost-constant. At first, the market demand function is Q = 1000 - 15P and the industry is at the long run equilibrium, with each firm producing 30 units and the price of X is P = 20. There is an increase in the demand, that is now Q = 1200 - 15P. What is the price of X at the new long run equilibrium?

answer

question

A decreasing-cost industry has a downward-sloping

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long-run industry supply curve.

question

Firm A is one of the firms in the long run equilibrium of the competitive industry of good X. The market demand function is Q = 1200 - 7PX. Firm A's total revenue is 350 and PX = 70. How many firms are there in this industry at equilibrium? (Note this number doesn't have to be integer.)

answer

142

question

In long-run competitive equilibrium, a firm that owns factors of production will have an

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economic profit = $0 and accounting profit > $0.

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Each firm in an industry has long run cost function C = 2q3 - 30q2 + 180q. The market demand function of this industry Q = 150 - 2P. What is the quantity that each firm produces in the long run Equilibrium?

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7.5

question

Each firm in an industry has long run cost function C = 0.5q3 - 25q2 + 430q. The market demand function of this industry Q = 1000 - 3.5P. What is the quantity (level of production) that each firm produces in the long run Equilibrium?

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question

Consider the following statements when answering this question
I. In the long run, if a firm wants to remain in a competitive industry, then it needs to own resources that are in limited supply.
II. In this competitive market our firm's long-run survival depends only on the efficiency of our production process.

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I is false, and II is true.

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Refer to Figure 8.2. If the firm expects $80 to be the long-run price, how many units of output will it plan to produce in the long run?

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question

Each firm in an industry has long run cost function C = 0.25q3 - 10q2 + 150q. The market demand function of this industry Q = 520 - 3P. What is the equilibrium number of firms in this industry? (Note this number doesn't have to be integer.)

answer

18.5

question

Firm A is one of the firms in the long run equilibrium of the competitive industry of good X. The market demand function is Q = 700 - 20PX. Firm A's total revenue is 570 and PX = 19. How many firms are there in this industry at equilibrium? (Note this number doesn't have to be integer.)

answer

10.6667

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If there are no barriers to entry into an industry,

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long-run economic profits must be zero.

question

Firm A is one of the firms in the long run equilibrium of the competitive industry of good X. The market demand function is Q = 150 - 3.7P. Firm A produces 15 units of good X and its marginal cost is 25. What is Firm A's total revenue?

answer

375

question

What happens in a perfectly competitive industry when economic profit is greater than zero?
A) There may be pressure on prices to fall.
B) New firms may enter the industry.
C) Existing firms may get larger.
D) Firms may move along their LRAC curves to new outputs.
E) All of the above may occur.

answer

E) All of the above may occur.

question

1) Consider the following statements when answering this question
I. If the cost of producing each unit of output falls $5, then the short-run market price falls $5.
II. If the cost of producing each unit of output falls $5, then the long-run market price falls $5.

answer

I is false, and II is true.

question

2) Consider the following statements when answering this question
I. Increases in the demand for a good, which is produced by a competitive industry, will raise the short-run market price.
II. Increases in the demand for a good, which is produced by a competitive industry, will raise the long-run market price

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I is true, and II is false.

question

3) Each firm in an industry has long run cost function C = 0.25q3 - 10q2 + 150q. The market demand function of this industry Q = 150 - 2P. What is the quantity (level of production) that each firm produces in the long run Equilibrium?

answer

question

4) Each firm in an industry has long run cost function C = 0.5q3 - 25q2 + 430q. The market demand function of this industry Q = 1000 - 3.5P. What is the equilibrium number of firms in this industry? (Note this number doesn't have to be integer.)

answer

23.55

question

5) Each firm in an industry has long run cost function C = 2q3 - 30q2 + 180q. The market demand function of this industry Q = 150 - 2P. What is the long run Price of Equilibrium?

answer

67.5

question

6) Refer to Figure 8.2. At P = $80, the profit-maximizing output in the short run is

answer

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7) Firm A is one of the firms in the long run equilibrium of the competitive industry of good X. What is Firm A's profit?

answer

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8) In a constant-cost industry, an increase in demand will be followed by

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an increase in supply that will bring price down to the level it was before the demand shift.

1 of 21

question

answer

question

A decreasing-cost industry has a downward-sloping

answer

long-run industry supply curve.

question

answer

142

question

In long-run competitive equilibrium, a firm that owns factors of production will have an

answer

economic profit = $0 and accounting profit > $0.

question

answer

7.5

question

answer

question

answer

I is false, and II is true.

question

Refer to Figure 8.2. If the firm expects $80 to be the long-run price, how many units of output will it plan to produce in the long run?

answer

question

answer

18.5

question

answer

10.6667

question

If there are no barriers to entry into an industry,

answer

long-run economic profits must be zero.

question

answer

375

question

answer

E) All of the above may occur.

question

answer

I is false, and II is true.

question

answer

I is true, and II is false.

question

answer

question

answer

23.55

question

5) Each firm in an industry has long run cost function C = 2q3 - 30q2 + 180q. The market demand function of this industry Q = 150 - 2P. What is the long run Price of Equilibrium?

answer

67.5

question

6) Refer to Figure 8.2. At P = $80, the profit-maximizing output in the short run is

answer

question

7) Firm A is one of the firms in the long run equilibrium of the competitive industry of good X. What is Firm A's profit?

answer

question

8) In a constant-cost industry, an increase in demand will be followed by

answer

an increase in supply that will bring price down to the level it was before the demand shift.

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Lesson 6.4: Competition in the Long Run

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