Question
C $5€ D $25 2. A perfectly competitive firm’s supply curve is its A ATC curve above its minimum ATC B MC curve above minimum AVC C MC curve above minimum ATC D AVC curve above its minimum AVC 3. In long-run equilibrium in perfect competition each firm is A making a positive economic profit B incurring an economic loss C just covering total variable cost D making zero economic profit 4. Because of product differentiation a firm in monopolistic competition faces demand curve for the good it produces. A a vertical B an upward-sloping C a downward-sloping D a horizontal 5. Monopoly is a market in which one firm sells a good or service that has substitutes and blocks the entry of new firms. A no close, a barrier B close, a barrier C no close, no barrier D close, no barrier
Answer
Ques 2-
Ans2- A perfectly competitive firm’s supply curve is its MC curve above the minimum AVC i.e option B is correct.The MC curve is the perfectly competitive firm’s supply curve.
Ans3-In long-run equilibrium in perfect competition each firm is making zero economic profits i.e option D is correct.The long run equilibrium occurs when the demand curve and MC curve intersect and at the minimum point of the Average variable cost(AVC) curve.Firms under perfect competition only earn normal profits.
Ans4-Because of product differentiation a firm in monopolistic competition faces a downward-sloping demand curve for the good it produces i.e option C is correct.This is because a firm under monopolistic competition can sell more of it’s output only by reducing it’s prices.
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