Author Question: Initially, a perfectly competitive industry that has 1,000 firms is in long-run equilibrium. Then ... (Read 55 times)

cmoore54 · **on:** Jun 29, 2018

Initially, a perfectly competitive industry that has 1,000 firms is in long-run equilibrium. Then 100 firms in the industry adopt a new technology that reduces the average cost of producing the good.

In the short run, the price ________, firms with the new technology make ________ economic profit, and firms with the old technology ________. A) remains the same; zero; incur economic losses
B) falls; positive; incur economic losses
C) remains the same; positive; make normal profit
D) remains the same; positive; incur economic losses

Question 2

The above figure shows the market for labor. The employer is a monopsony. The firm will not hire 800 hours of labor because at that point

A) VMP > MCL.
B) VMP = MCL.
C) VMP < MCL.
D) VMP = W.