Purchase Solution

Long run equilibrium of a perfectly competitive industry

Not what you're looking for?

Ask Custom Question

1- characterize the long run equilibrium of a perfectly competitive industry in which average costs are U-shaped as output increases, under both restricted and free entry.

2-Discuss the senses in which a perfectly-discriminating monopolist is efficient or inefficient.

Purchase this Solution

Solution Summary

This solution discusses the long run equilibrium of a perfectly competitive industry in which average costs are U-shaped as output increases, under both restricted and free entry. It discusses also the senses in which a perfectly-discriminating monopolist is efficient or inefficient.

Solution Preview

1- characterize the long run equilibrium of a perfectly competitive industry in
which average costs are U-shaped as output increases, under both restricted and
free entry.

Answer:
U-shaped curve shows how average costs vary with the amount of output. As output increases, so average costs fall, then they start to rise again because marginal costs increase as output increases. This gives a typical curve in the shape of a U.

In the long run, the market price is determined solely by cost considerations, P = min(ATC).

If we have P > min(ATC), there are profit opportunities, new firms ...

Purchase this Solution


Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.