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3 Written questions

2 Multiple choice questions

  1. • In the long-run, if there's a profit to be made, firms will enter the market
    • In the long-run, if firms are operating at a loss, they'll shut down
    • Therefore, at the long-run competitive equilibrium, all firms will be earning zero economic profits
  2. • In the long-run, firms can enter/exit the market if operating at a loss or profit
    o Know how these supply shifts affect the individual firm

2 True/False questions

  1. Perfectly Competitive MarketsThis means perfectly competitive firms are price takers
    • This means the individual firm faces perfectly elastic demand
    • Be able to calculate the profit maximizing output and quantity from a table (MR = MC)
    • Know how to recognize the profit maximizing point on a graph
    o Is the firm making a profit? Operating at a loss? Breaking even?


  2. Break-even pointis minimum of ATC curve


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