Chapter 9. Pure Competition in the Long Run Flashcards
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| 775373662 | In a purely competitive industry there may be economic profits in the _____, but not in the ______. | short run but not in the long run. | 1 | |
| 775373663 | If a purely competitive firm is producing at the MR = MC output level and earning an economic profit, then ____ will ____ the market | new firms will enter the market. | 2 | |
| 775373664 | Long-run competitive equilibrium results in ____ ____ profits. | zero economic profits. | 3 | |
| 775373665 | Economic profits encourage firms to enter an industry and ____ encourages firms to _____. | losses encourage firms to leave. | 4 | |
| 775373666 | Assume a purely competitive increasing-cost industry is initially in long-run equilibrium and that an increase in consumer demand occurs. After all economic adjustments have been completed product price will be: | higher and total output will be larger than originally. | 5 | |
| 775373667 | Assume a purely competitive, increasing-cost industry is in long-run equilibrium. If a decline in demand occurs, firms will ___ and price and output will ____. | leave the industry and price and output will decline. | 6 | |
| 775373668 | When a purely competitive firm is in long-run equilibrium price equals _____ _____. | price equals marginal cost. | 7 | |
| 775373669 | An increasing-cost industry is associated with what an _______ ______ _____ supply curve. | upsloping long-run supply curve. | 8 | |
| 775373670 | Assume a purely competitive firm is maximizing profit at some output at which long-run average total cost is at a minimum then there is ____ ____ for the industry's firms to ____ or ____. | there is no tendency for the industry's firms to expand or contract. | 9 | |
| 775373671 | Assuming that a decline in consumer demand occurs in a purely competitive industry which is initially in long-run equilibrium. We can not compare the ____ and the ___ price without knowing about ______ _______ in the industry. | not compare the original and the new price without knowing about cost conditions in the industry. | 10 | |
| 775373672 | When LCD televisions first came on the market, they sold for at least $1,000, and some for much more. Now many units can be purchased for under $400. These facts imply that: | the LCD television industry is a decreasing-cost industry. | 11 | |
| 775373673 | Suppose that an industry's long-run supply curve is downsloping. This suggests that the this is a ______ _____ industry. | it is a decreasing-cost industry. | 12 | |
| 775373674 | Purely competitive industry X has constant costs and its product is an inferior good. The industry is currently in long-run equilibrium. The economy now goes into a recession and average incomes decline. What will happen to output and price? | an increase in output, but not in the price of the product. | 13 | |
| 775373675 | The MR = MC rule applies in both the ___ ___ and then the ___ ___. | short run and the long run. | 14 | |
| 775373676 | If the long-run supply curve of a purely competitive industry slopes upward, this implies that the prices of relevant resources ____ as the industry _____. | rise as the industry expands. | 15 | |
| 775373677 | A firm is producing an output such that the benefit from one more unit is more than the cost of producing that additional unit. This means the firm is producing ___ ____ then the _____ _____ requires. | less output than allocative efficiency requires. | 16 | |
| 775373678 | The term productive efficiency refers to: | the production of a good at the lowest average total cost. | 17 | |
| 775373679 | The term allocative efficiency refers to: | the production of the product-mix most desired by consumers. | 18 | |
| 775373680 | Under pure competition in the long run both _____ ______ and _____ _____ are achieved. | allocative efficiency and productive efficiency are achieved. | 19 | |
| 775373681 | If a purely competitive firm is producing where price exceeds marginal cost, then the firms will ____ to ____ profit and ____ will be ______ to the product. | the firm will fail to maximize profit and resources will be underallocated to the product. | 20 | |
| 775373682 | Allocative efficiency occurs whenever: | it is impossible to produce a net benefit for society by changing the combination of goods and services produced. | 21 | |
| 775373683 | In long-run equilibrium consumer and producer surplus will be maximized in what market type? | purely competitive market | 22 | |
| 775373684 | Creative destruction is: | the process by which new firms and new products replace existing dominant firms and products. | 23 | |
| 775373685 | The entry of generic drugs into a previously monopolized pharmaceutical market will ______ _____ by ____ ____ ____. | increase efficiency by increasing consumer surplus. | 24 |