53. Which of the following is true concerning purely competitive industries?

A. There will be economic losses in the long run because of cut-throat competition.
B. Economic profits will persist in the long run if consumer demand is strong and stable.
C. In the short run, firms may incur economic losses or earn economic profits, but in the long run they earn normal profits.
D. There are economic profits in the long run but not in the short run.

Question

53.   Which of the following is true concerning purely competitive industries?

A. There will be economic losses in the long run because of cut-throat competition.
B. Economic profits will persist in the long run if consumer demand is strong and stable.
C.  In the short run, firms may incur economic losses or earn economic profits, but in the long run they earn normal profits.
D. There are economic profits in the long run but not in the short run.

BlackTom AI · Accepted Answer

Let’s dissect each statement about purely competitive industries and compare them to standard economic theory.
Option A: 'There will be economic losses in the long run because of cut-throat competition.' In perfect competition, firms earn zero economic profit in the long run due to freedom of entry and exit; however, long-run losses do not persist because new firms enter or existing firms exit until profits are driven to zero. Therefore, this claim is incorrect.
Option B: 'Economic profits will persist in the long run if consumer demand is strong and stable.' Even with strong and stable demand, free entry and exit in a purely competitive market erode above-normal profits; in the long run, profits are driven down to zero economic profit (normal profit). Hence this statement is false.
Option C: 'In the short run, firms may incur economic losses or earn economic profits, but in the long run they earn normal profits.' This aligns with the standard analysis: in the short run, existing firms may earn positive, negative, or normal profits due to fixed factors and variable output; but in the long run, entry and exit force profits to normal, i.e., zero economic profit. This statement is consistent with long-run equilibrium in perfect competition.
Option D: 'There are economic profits in the long run but not in the short run.' This is the opposite of the established pattern: long-run profits are not sustained in perfect competition, and short-run profits can occur. This makes the option incorrect.
Overall, the statements are evaluated against the core idea that short-run outcomes can vary, while long-run outcomes in a purely competitive market yield normal profits due to free entry and exit, so the remaining choice captures that behavior.

ECNM1116.32925.202530 Spring 2025 Test 3

查看解析

登录即可查看完整答案

类似问题

In a perfectly competitive market ____________ determines how value created is divided between consumers and producers.

Which of the following will be true if the firm is in a perfectly competitive market and the price is P1 ?

Zucchini is produced in a perfectly competitive market with a downward-sloping demand curve and an upward- sloping supply curve. Dawson Farm is a typical perfectly competitive farm that produces and sells zucchini at the equilibrium price of $1.75 per pound. Which of the following is true?

In the absence of barriers to entry, a typical firm is currently in long-run equilibrium. Assume there is an increase in the market demand for the good that the firm is producing. Which of the following will happen in the long run?

In a perfectly competitive market, the process of entry and exit will end when firms in the market:

The following figure represents the cost curves and the market price for a perfectly competitive firm. Which of the following statements is true about the long run equilibrium in this market?

The following figure represents the cost curves and the market price for a perfectly competitive firm. Which of the following statements is true about the long run equilibrium in this market?

Question18 Which of the following are not needed for market efficiency? Goods are excludable and rival Consumers and producers are price-takers Homogeneous goods Easy access to goods ResetMaximum marks: 1 Flag question undefined

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单