Chapter 9 Homework

Which of the following is characteristic of a perfectly competitive market?

Zero economic profit in the long run.

For a competitive market in the long run,

Economic profits induce firms to enter until profits are normal.

If economic profits are earned in a competitive market, then over time

Additional firms will enter the market.

If long-run economic losses are being experienced in a competitive market,

Equilibrium price will rise as firms exit.

The entry of firms into a market

Reduces the profits of existing firms in the market.

The exit of firms from a market, ceteris paribus,

Increases the equilibrium price in the market.

$5.

Produce with an economic loss.