Question 1
In long-run equilibrium for a perfectly competitive industry, firms earn ________ economic profits and produce ________.
◦ zero; efficiently
◦ zero; inefficiently
◦ positive; efficiently
◦ positive; inefficiently
Question 2
Assume the market for beef is perfectly competitive. Beef producers are currently earning a zero economic profit. If consumers switch from beef to chicken, which of the following is most likely to occur?
◦ Beef producers will now incur economic losses in both the short run and the long run.
◦ Beef producers will incur economic losses in the short run. Some producers will exit the industry until those remaining are earning a zero economic profit.
◦ Beef producers will incur economic losses in the short run. Some producers will exit the industry until those remaining are earning an economic profit.
◦ Beef producers will now earn economic profits in the short run, and there will be no additional adjustments in the long run.
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