Author Question: Free exit implies that (Read 31 times)

jwb375 · **on:** Apr 19, 2019

Question 1

If the corn industry is perfectly competitive, ________ for corn is downward sloping and ________ is horizontal.

◦ the market demand curve; an individual corn producer's demand curve
◦ an individual corn producer's demand curve; the marginal revenue curve
◦ the marginal cost curve; the marginal revenue curve
◦ marginal revenue curve; average total cost curve

Question 2

Free exit implies that

◦ a perfectly competitive firm can never earn a profit.
◦ if an industry's existing firms make excessively high losses, firms are likely to exit the industry.
◦ the government regulates the number of firms it allows in an industry.
◦ firms will always earn below normal profit, as firms can exit the industry at any time they like.

AaaA · **Reply #1 on:** Apr 19, 2019

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