Answer the following & state your reasoning. (1) The assumption of a fixed number of firms is
Question:
Answer the following & state your reasoning.
(1) The assumption of a fixed number of firms is appropriate foranalysis of
A the short run but not the long run.
B the long run but not the short run.
C both the short run and the long run.
D neither the short run nor the long run.
(2) A purely competitive seller’s demand curve for itsproduct is perfectly horizontal because:
A there is no nonprice competition.
B the market is difficult to enter and exit.
C there are other sellers in the firm’s market.
D the firm has no control over the price it receives for itsproduct.
(3) If a competitive firm is selling 500 units of itsproduct at a price of $8 per unit and earning a positive profit,then
A its average revenue is greater than $8.
B its marginal revenue is less than $8.
C its total cost is less than $4,000.
D All of the above are correct.
Expert Answer:
