3 Long-Run Entry, Exit, and Equilibrium Online Quiz Questions

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It chooses output where price equals average cost.

It chooses output where price equals marginal cost.

It chooses output where price equals total cost.

It chooses output where price is below marginal cost.

Owners receive no return on their resources.

The firm earns accounting profit but does not cover its explicit costs.

The firm covers all costs, including the normal return on owners' resources.

The firm must leave the industry.

Entry increases industry supply, putting downward pressure on price and reducing existing firms' profits.

Entry decreases industry supply, putting upward pressure on price and increasing existing firms' profits.

Entry leaves industry supply unchanged, so market price is unaffected.

Entry increases industry supply, putting upward pressure on price and increasing existing firms' profits.

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In a constant-cost industry, long-run supply is horizontal.

In an increasing-cost industry, long-run supply slopes upward.

In a decreasing-cost industry, long-run supply slopes downward.

In every industry, long-run supply slopes upward.

The long-run price rises and industry output returns to its original level.

The long-run price returns to its original level and industry output is higher.

Both the long-run price and industry output return to their original levels.

The long-run price falls and industry output is lower.

A firm may keep producing in the short run while losing money overall if it covers its variable costs.

A firm experiencing a loss must always stop producing immediately, even in the short run.

In the long run, exit reduces industry supply.

By leaving in the long run, a firm can avoid costs that are no longer fixed once it exits.

Greater output can be sustained only at a lower price.

A higher price is needed to sustain greater output.

The price required to sustain output remains unchanged.

Industry output must fall whenever input prices rise.

It shows how a single firm changes its output when market price changes.

It shows the relationship between one firm's costs and its accounting profit.

It shows how equilibrium price changes with total industry output after firms have adjusted and entered or exited.

It shows how consumer demand changes when a firm's capacity changes.

Economic profit subtracts explicit expenses only, while accounting profit includes opportunity costs.

Economic profit includes opportunity costs, while accounting profit generally subtracts only explicit expenses.

Economic profit excludes the owners' normal return, while accounting profit includes it.

Economic and accounting profit differ only when a firm earns a loss.

Choose output where price equals average cost, whether or not producing is worthwhile.

Choose output where price is below marginal cost to minimize revenue.

Choose output where price equals marginal cost, provided producing is worthwhile.

Produce at maximum capacity whenever the market price is given.

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