Author Question: Based on the above scenario, is the industry in the long run equilibrium? a. yes, because all firms ... (Read 17 times)

yoooooman · **on:** Jul 1, 2018

Based on the above scenario, is the industry in the long run equilibrium?
a. yes, because all firms are producing at P=MR=MC
b. no, because the price is still greater than the minimum average total cost.
c. cannot answer because need information on MR
d. cannot answer unless we see that the market lets some firms enter and/or some firms exit.

Question 2

Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because
a. out-of-pocket costs of production decline
b. free trade areas protect infant industries
c. economies of scale are present
d. manufacturers face diminishing returns
e. more goods are available for consumption