Use the figure below to answer the following questions. Figure 11.4.2
-Refer to Figure 11.4.2,which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market.In the long run,market

Question

Use the figure below to answer the following questions.  Figure 11.4.2
-Refer to Figure 11.4.2,which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market.In the long run,market

Quizplus · Accepted Answer

In the long run, firms in a perfectly competitive market will enter or exit the market until economic profits are driven to zero. This means that firms will increase their supply in response to the market demand, driving down the price until they are only making normal profits. Therefore, supply will increase in the long run in a perfectly competitive market. Option A and B are incorrect because the demand is not affected by the cost curves and marginal revenue curve of a single firm in the market. Option D and E are also incorrect because the supply is not affected by the cost curves and marginal revenue curve of a single firm in the market.

Use the Figure Below to Answer the Following Questions