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Central New Mexico Community College (CNM) Mr. Simpson

For a purely competitive firm in long-run equilibrium

MR = MC = minimum ATC

Assume that the market for wheat is purely competitive. Currently, firms growing wheat are experiencing economic losses. In the long run, we can expect this market's

supply curve to decrease

Increasing-cost industries find that their costs rise as a consequence of an increased demand for their product because of

higher resource prices

The elimination of the market positions of firms and their products by new firms with new products and innovative ways of doing business would be most closely associated with the concept of

creative destruction

An economy is producing the goods most wanted by society when, for each and every good, its

price and marginal cost are equal

The long-run supply curve in a constant-cost industry will be

perfectly elastic

If there is an increase in demand for a product in a purely competitive industry, it results in a dynamic adjustment in which there is an industry

expansion that will end when the price of the product is equal to its marginal cost

The long-run supply curve under pure competition will be

horizontal in a constant-cost industry and up-sloping in an increasing-cost industry

The idea of the "invisible hand" operating in the competitive market system means that

there is a unity of private and social interests that promotes efficiency

When a purely competitive industry is in long-run equilibrium, which statement is true?

Firms in the industry are earning normal profits.

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