In the long run,each firm in a perfectly competitive industry will:

A) earn only enough to cover the opportunity costs of all resources used in production.
B) produce where MR is greater than MC.
C) differentiate its goods.
D) increase its price.

Question

Steven Nguyen · Accepted Answer

Final Answer : A, Explanation :  In a perfectly competitive industry, the firms are price takers and cannot influence the market price. Therefore, each firm will earn only enough to cover the opportunity costs of all resources used in production. If a firm tries to increase its price, it will lose all its customers to other firms selling at the market price. Similarly, if a firm tries to produce where MR is greater than MC, it may end up producing at a higher cost than the market price, which will result in losses in the long run. Finally, firms in a perfectly competitive industry cannot differentiate their goods as they are selling homogeneous goods.

In the long run,each firm in a perfectly competitive industry will:

A) earn only enough to cover the opportunity costs of all resources used in production.
B) produce where MR is greater than MC.
C) differentiate its goods.
D) increase its price.

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Learning Objectives

Related questions

In the long run,each firm in a perfectly competitive industry will:A) earn only enough to cover the opportunity costs of all resources used in production.B) produce where MR is greater than MC.C) differentiate its goods.D) increase its price.

Definitions

Learning Objectives

Learning Objectives

Related questions

In the long run,each firm in a perfectly competitive industry will:

A) earn only enough to cover the opportunity costs of all resources used in production.
B) produce where MR is greater than MC.
C) differentiate its goods.
D) increase its price.