Which of the following is false of perfectly competitive firms? ...

[lilldybug07]

Which of the following is false of perfectly competitive firms?
 a. As new firms enter an industry where sellers are earning economic profits, the result will include a reduction in the equilibrium price.
  b. In a constant-cost industry, the industry does not use inputs in sufficient quantities to affect input prices.
 c. In a constant-cost competitive industry, the long-run effect of an increase in demand is an increase in industry output but no change in the industry price.
  d. All are true.

Question 2

Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. Which of the following statements is true?
 a. Brazil has a comparative advantage in producing coffee.
  b. Brazil has a comparative advantage in producing both coffee and sugar.
  c. Chile has a comparative advantage in producing both coffee and sugar.
  d. Neither Chile nor Brazil has a comparative advantage in producing coffee.
  e. Brazil has a comparative advantage in producing sugar.

[miss.ashley]

Answer to Question 1

d

Answer to Question 2

e

[lilldybug07]

Correct answers!

[miss.ashley]

Great! Please up vote