8. Which one of the following statements below on a competitive industry with zero entry costs and identical technologies of firms is definitely correct? a) If the competitive price is smaller than the average cost of a firm, the firm shuts down both in the short-run and the long-run. b) The long-run profits of the industry are always strictly positive. c) There will be no entry in the market if the competitive price remains below average cost in the short-run. d) The long-run average cost function of firms is the envelope of the short-run marginal cost functions.
8. Which one of the following statements below on a competitive industry with zero entry costs and identical technologies of firms is definitely correct? a) If the competitive price is smaller than the average cost of a firm, the firm shuts down both in the short-run and the long-run. b) The long-run profits of the industry are always strictly positive. c) There will be no entry in the market if the competitive price remains below average cost in the short-run. d) The long-run average cost function of firms is the envelope of the short-run marginal cost functions.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition
Section: Chapter Questions
Problem 6E
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