Author Question: Suppose your trucking firm in a perfectly competitive industry is making zero economic profits in ... (Read 69 times)

bvyeehaw · **on:** Oct 12, 2022

Question 1

Suppose a perfectly competitive firm is producing a level of output such that its average revenue is less than its lowest average variable cost. The firm should
◦ not change its output.
◦ increase the market price.
◦ expand its output.
◦ reduce its output.
◦ produce zero output.

Question 2

Suppose your trucking firm in a perfectly competitive industry is making zero economic profits in the short run. The federal government imposes a new safety regulation that affects all firms, thus shifting the marginal cost curve upward. As a result your firm's profit maximizing, short-run output will
◦ remain the same since the new regulation does not affect ATC.
◦ increase as firms will leave the industry at the higher costs, thus driving up the market price.
◦ increase as price rises in the long run.
◦ remain the same because you will pass on the extra costs to the consumers.
◦ decrease because the new MC curve will intersect the horizontal demand curve at a lower rate of output.

aublw · **Reply #1 on:** Oct 12, 2022

A FREE account is required to view all solutions!

Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.

Answer Preview

Only 50% of students answer this correctly