Suppose That the Market in Which Bakeries Compete Is a Perfectly
Suppose that the market in which bakeries compete is a perfectly competitive market.Which one of the following reasons does not explain why it is difficult for a bakery to make an economic profit in the long run?
A)All bakeries are price takers.
B)All bakeries are able to set the market price.
C)The threat of entry by potential bakeries.
D)The demand facing each bakery is perfectly elastic.
E)All bakeries produce identical goods.
Refer to Table 12.4.1.The top table shows the market demand schedule for paper.The market is perfectly competitive and there are 1,000 firms that produce paper.Each firm has the costs shown in the bottom table when it uses its least-cost plant.The market price in the long run is ________ a box and the equilibrium quantity produced in the long run is ________ boxes a week.
B)$7.00; a little less than 400,000
D)$6.40; a little more than 400,000
Refer to Figure 12.4.4, which shows the cost curves for a perfectly competitive firm.If all firms in the market have the same cost curves and the price is $16 per unit,
A)the market is in long-run equilibrium.
B)in the long run, firms will leave this market.
C)in the long run, the price will fall as new firms enter the market.
D)the firm is making zero economic profit.
E)none of the above
Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year.Homer's total revenue from the sale of donuts is $12,000 a year.Homer's costs are $16,000 in annual rental payments for its five-year lease on its store and $5,000 for ingredients.Should Homer's exit the market in the long run?
A)Yes, because Homer's is incurring an economic loss.
B)Yes, because all costs are fixed in the long run.
C)No, because Homer's is covering its variable costs.
D)No, because Homer's is covering its fixed costs.
E)No, because all costs are variable in the long run.