In the long-run competitive equilibrium:
There is tendency for firms to enter but not leave the industry
Firms have no tendency either to enter or to leave the industry
Some firms may enter while the others may leave the market even after the equilibrium of the industry
Entry or exit of the firms cannot be predicted
Correct Answer :
C. Some firms may enter while the others may leave the market even after the equilibrium of the industry
In perfect competition, new firms will be tempted to enter the market if some of the existing firms in the market are earning positive economic profits. Alternatively, existing firms may choose to leave the market if they are earning losses. For these reasons, the number of firms in a perfectly competitive market is unlikely to remain unchanged in the long-run.}
Related Questions
Who wrote Mathematical Analysis for Economists?
J.P.Lewis
R.G.D.Allen
Paul A.Samuelson
E.D.Domar
If a straight line supply curve makes an intercept on the Y-axis, elasticity of supply is:
Equal to unity
Less than unity
More than unity
Zero
Increasing returns is not caused by:
Specialization of labor
Technological advancement
Marketing economics
Varying factor proportions
Which of the following is assumed to be constant when a supply curve is drawn:
Technology
Number of buyers in the market
Consumer income
Household tastes
Elasticity of supply means change in supply due to change in:
Price of the commodity
Conditions of supply
Taste of the consumer
Demand for the commodity
The largest possible loss that a firm will make in the short run is:
Zero
Its total fixed cost
Its total variable cost
Equal to one
The Modern and Neo-Keynsian Theory of Interestwas presented by:
Gunner Myrdal
A.C.Pigou
J.M.Keynes
J.R.Hicks
Capital Saving Technological Progress can be defined as:
Technological progress that causes to raise the marginal product of capital and labor in the same proportion
Technological progress that causes the marginal product of capital to increase relative to the marginal product of labor
Technological progress that causes the marginal product of labor to increase relative to the marginal product of capital
None of the above
A monopolist:
Can not influence the market
Can influence the market
Is a price taker
None of the above
If the price of Pepsi Cola goes down, you would predict:
An increase in supply of coca cola
A decrease in supply of coca cola
An increase in demand for coca cola
A decrease in demand for coca cola
In monopoly, when average revenue curve falls:
MR constant
MR rises
MR falls
MR is zero
In modern theory of costs, a firm normally utilizes:
2/3 of capacity of its plants
3/4 of capacity of its plants
1/3 of capacity of its plants
1/2 of capacity of its plants
If the commodity is inferior then Income Effect (I.E) is:
Negative
Positive
Zero
Infinite
If both demand and supply were to increase then:
Quantity exchanged would fall and price would rise
Quantity exchanged and price would both fall
Quantity exchanged would rise and price might rise or fall
Quantity exchanged and price would both rise
External economies are witnessed in:
A rising supply curve
A rising demand curve
A falling supply curve
A falling demand curve
If production increases under increasing returns to scale, the cost will:
Increase at decreasing rate
Increase at constant rate
Decrease at increasing rate
Increase at increasing rate
In repeated game, the Prisoners Dillemma can have a:
Non-cooperative outcome
Cooperative outcome
Dominant behavior
Recessive behavior
Cournot equilibrium is attained where two reaction curves:
Repel each other
Represent each other
Intersect each other
None of the above
If the commodities X and Y are perfect substitutes then:
>
None of the above
Micro economics is concerned with:
Product markets
Factor markets
Supply and demand
a, b and c
In context of oligopoly, the kinky demand curve (kinked demand curve) hypothesis is designed to explain:
Price and output determination
Price rigidity (price stickness)
Price leadership
Collusion among rivals
Each firm in cournot model can:
not ignor the activities of the rival
ignor the activities of the rival
both a and b
none of the above
Which of the following is not characteristic of perfect competition?
Freedom of entry and exit
Each seller is a price taker
Perfect information about prices
Heterogeneous products
Total profits are maximized at the point where:
TR equals TC
The TR curve and the TC curve intersect such that TR and TC lie at the same point
The TR curve and the TC curve are parallel and TC exceeds TR
The TR curve and the TC curve are parallel and TR exceeds TC
Demand for a commodity is elastic when it has
Only one use
Many uses
Uses which cannot be postponed
Uses very essential for the consumer
In monopolistic competition, the individual demand curve is also known as:
Planned products curve
Planned material curve
Planned costs curve
Planned sales curve
For a few products such as insulin for diabetics,:
The demand curve can be upward sloping
The price elasticity of demand could be zero
The price elasticity of demand could be greater than one
None of the above
With elasticity of demand, the:
Negative sign is ignored
Positive sign is ignored
None of them
Both of them
Who developed the concept of Representative Firm?
A.C.Pigou
Alfred Marshal
J.M.Keynes
D.H.Robertson
Which form of market structure is characterized by interdependence in decision-making as between the different competing firms?
Oligopoly
Perfect competition
Imperfect competition
None of the above