Author Question: How would the introduction of legal or technical barriers to entry affect the long-run equilibrium ... (Read 45 times)

mikaylakyoung

  • Hero Member
  • *****
  • Posts: 531
How would the introduction of legal or technical barriers to entry affect the long-run equilibrium in a perfectly competitive market?
 
  What will be an ideal response?

Question 2

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called
 
  A) consumer surplus. B) the income effect.
  C) producer surplus. D) the substitution effect.


Tonny

  • Sr. Member
  • ****
  • Posts: 341
Answer to Question 1

In a perfectly competitive market, the lack of entry barriers ensures that the market price is ultimately driven down to minimum average cost in the long run. However, if there are barriers to entry in a market, new firms will find it difficult to enter, reducing the downward pressure on price. This will allow the existing firms to earn economic profits in the long run. As long as these barriers exist, firms can sell goods at a price that is above average total cost.

Answer to Question 2

A



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

The term bacteria was devised in the 19th century by German biologist Ferdinand Cohn. He based it on the Greek word "bakterion" meaning a small rod or staff. Cohn is considered to be the father of modern bacteriology.

Did you know?

More than one-third of adult Americans are obese. Diseases that kill the largest number of people annually, such as heart disease, cancer, diabetes, stroke, and hypertension, can be attributed to diet.

Did you know?

About 100 new prescription or over-the-counter drugs come into the U.S. market every year.

Did you know?

Street names for barbiturates include reds, red devils, yellow jackets, blue heavens, Christmas trees, and rainbows. They are commonly referred to as downers.

Did you know?

Fewer than 10% of babies are born on their exact due dates, 50% are born within 1 week of the due date, and 90% are born within 2 weeks of the date.

For a complete list of videos, visit our video library