"In the long run, a perfectly competitive firm's average total cost is always below the market clearing price." Agree or disagree? Why?
What will be an ideal response?
Disagree. In the long run, a perfectly competitive firm produces at an output rate at which the market clearing price equals short-run minimum average total cost and long-run minimum average total cost. If the firm's average total cost is below the market clearing price, its profits will lead to firm entry into the industry. As a result of firm entry, the market clearing price will decline. This process will continue until the market clearing price equals the firm's average total cost.
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In their calculation, concentration ratios take barriers to entry into a market into consideration
Indicate whether the statement is true or false
Suppose Russia's inflation rate is 200% over one year but the inflation rate in Switzerland is only 2%. According to relative PPP, what should happen over the year to the Swiss franc's exchange rate against the Russian ruble?
What will be an ideal response?