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Author Question: Suppose a firm is a natural monopoly. Then, until the long-run average cost curve crosses the demand ... (Read 115 times)

shenderson6

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on: Jun 29, 2018
Suppose a firm is a natural monopoly. Then, until the long-run average cost curve crosses the demand curve, as the quantity increases the long-run average costs
 
  A) increase.
  B) decrease.
  C) decrease and then increase.
  D) increase and then decrease.

Question 2

If the market price faced by a perfectly competitive firm increases, in the short run how does the firm respond?
 
  What will be an ideal response?


zogaridan

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Reply #1 on: Jun 29, 2018
Answer to Question 1

B

Answer to Question 2

If the market price rises, a perfectly competitive firm increases its output. The firm moves upward along its marginal cost curve, thereby increasing the quantity the firm will supply.


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