Exam 11: Pure Competition in the Long Run

When a competitive firm sees the price fall below the minimum possible average total cost in the long run, then it will decide that it could do better by moving to a different industry.

A long-run supply curve that is downward-sloping indicates that the firms' ATC curves

Assume that a decline in consumer demand occurs in a purely competitive industry that is initially in long-run equilibrium. We can

An increasing-cost industry is the result of

Entrepreneurs in purely competitive industries

An industry where a change in the number of firms does not affect the prices of the resources used in the industry will have a long-run supply curve that is

When a purely competitive firm is in long-run equilibrium, price is equal to

In the long run, pure competition forces firms to produce at the minimum possible average total cost and the firms will charge a product price equal to that cost.

If a purely competitive firm is currently facing a situation where the price of its product is lower than the average variable cost, but it believes that the market demand for its product will increase soon, then

Which of the following is not an assumption that we make in analyzing pure competition in the long run?

An underallocation of resources is occurring in a purely competitive industry whenever the price of the product is greater than marginal cost.

Assume a purely competitive, increasing-cost industry is in long-run equilibrium. If a decline in demand occurs, firms will

Productive efficiency refers to a condition where marginal cost is equal to marginal revenue in the long run.

Allocative efficiency is achieved when the production of a good occurs where

If the price in a competitive market falls and goes below the equilibrium price, then consumer surplus might increase, but producer surplus will definitely decrease.

Some economists are now proposing that patents may be detrimental to technological advance in industries with complicated multiple-component products.

Which of the following distinguishes the short run from the long run in pure competition?

If a purely competitive constant-cost industry is realizing economic profits, we can expect industry supply to

Creative destruction entails both costs as well as benefits to society.

If there is allocative efficiency in a purely competitive market for a product, the maximum price consumers are willing to pay is