Exam (elaborations)
Econ 1B03 - Firms in Competitive Markets questions and answers
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Econ 1B03 - Firms in Competitive Markets
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1-27 of 27In the short run, an increase in demand...
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> raises prices
> leads to profits
In the short run, when the firm cannot recover its fixed costs....
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the firm will choose to shut down temporarily if P < AVC
constant cost industry
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no change in minLRAC regardless of amount produced
firms will exist in long run if...
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P < minATC
In the long-run equilibrium, perfectly competitive firms produce the level of output
such that
A) marginal cost is minimized.
B) average total cost is minimized.
C) marginal cost equals the price.
D) Both answers B and C are correct.
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D)
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