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Author Question: Which of the following statements regarding the long-term equilibrium is TRUE? A) As new firms ... (Read 41 times)

lak

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on: Jun 29, 2018
Which of the following statements regarding the long-term equilibrium is TRUE?
 
  A) As new firms enter a market, each existing firm increases the quantity it produces.
  B) Firms leave a market if they are making zero economic profit.
  C) Entry and exit stop when firms are making an economic profit.
  D) Entry and exit stop when firms make zero economic profit.

Question 2

If Mexico is currently operating at a point beyond its production possibilities frontier, then there are unemployed resources in Mexico. Is this statement true or false? Briefly explain your answer.
 
  What will be an ideal response?


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Perkypinki

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

D

Answer to Question 2

The statement is false. It is false on two counts. First, production points beyond the production possibilities frontier are unattainable, so it is not possible for Mexico to be producing at such a point. Second, points within not beyond the production possibilities frontier have unemployed resources.


lak

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Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

lcapri7

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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