Figure 12-17 The graphs in Figure 12-17 represent the perfectly competitive market demand and supply curves for the apple industry and demand and cost curves for a typical firm in the industry.
-Refer to Figure 12-17. The graphs depicts a short-run equilibrium. How will this differ from the long-run equilibrium? (Assume this is a constant-cost industry.)
A) Fewer firms will be in the market in the long run than in the short run.
B) The price will be higher in the long run than in the short run.
C) The market supply curve will be further to the left in the long run than in the short run.
D) The firm's profit will be lower in the long run than in the short run.

Question

Figure 12-17  The graphs in Figure 12-17 represent the perfectly competitive market demand and supply curves for the apple industry and demand and cost curves for a typical firm in the industry.
-Refer to Figure 12-17. The graphs depicts a short-run equilibrium. How will this differ from the long-run equilibrium? (Assume this is a constant-cost industry.)
A) Fewer firms will be in the market in the long run than in the short run. 
B) The price will be higher in the long run than in the short run. 
C) The market supply curve will be further to the left in the long run than in the short run. 
D) The firm's profit will be lower in the long run than in the short run.

Quizplus · Accepted Answer

In a constant-cost industry, firms earn normal profit in the long run. If firms are making economic profits in the short run, new firms will enter the market, increasing supply and driving down prices until only normal profits are earned.

Figure 12-17 the Graphs in Figure 12-17 Represent the Perfectly