19) A perfectly competitive firm\'s short-run supply curve is A) horizontal at t

Question

19) A perfectly competitive firm's short-run supply curve is A) horizontal at the market price. B) its total cost curve above the AVO C) its marginal cost curve below the marginal revenue curve. D) its marginal cost curve above the AVC curve. E) its marginal revenue curve below the ATC curve. 20) In the long run, a perfectly competitive firm eams A) a positive economic profit. B) zero economic profit, that is, a normal profit. C) negative economic profit, that is, an economic loss. D) zero accounting profit. E) either a positive economic profit or a normal profit. 21) The good produced by a monopoly A) has perfect substitutes. B) has no substitutes at all C) has no close substitutes D) can be easily duplicated. E) must be unable to be resold.

Explanation / Answer

19.

D

The marginal cost curve above the AVC level, is treated as SR supply curve in perfect copetition.

20.

B

There is zero economic profit in the long run in the perfect competition. At this level, there is no incentive for the firm to enter and exit the industry.

21.

C

In a monopoly, there is a single firm in the market. There are no close substitutes for the goods produced by this fir in this market. It creates a scope of price discrimination.

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