Assume the firms in a perfectly competitive market are initially incurring economic losses. An increase in supply would cause existing firms' economic losses to decrease.
84) Although an improvement in technology enables perfectly competitive firms to earn a positive economic profit in the short run, entry by new firms will ensure that those profits are eliminated over time.
85) When a perfectly competitive market is in long-run equilibrium, price is equal to marginal cost, the individual firm is operating at the minimum of its short-run and long-run average cost curves, and economic profit equals zero.
86) Because two percent of the largest farms grow half of all of the grain in the United States, the grain industry is technically classified as an oligopoly.
87) The estimated price-cost margin of 11.9 percent in the market for broiler chickens in 1992 suggested that there was a high degree of competition in that industry.
88) There is an inverse relationship between the price-cost margin and the level of competition in a particular industry.
89) The larger firms in the red-meat industry have blunted the effects of competition by relying on product differentiation, which in effect, creates a downward-sloping demand curve for each firm's product.
90) If firms in a perfectly competitive industry produce an undifferentiated product, it is not possible to increase profits of the individual firms in the industry by increasing market demand for the product because of the large number of available substitutes.
91) Between 1999 and 2007, the behavior of firms in the trucking industry closely matched the outcome predicted by the model of perfect competition.
92) High fuel prices and losses by smaller firms have resulted in a considerable amount of consolidation in the trucking industry, which now most closely resembles the oligopoly market structure.
93) Assume the price elasticity of supply for grade wheat has been estimated to be +0.82. This means that when the price of wheat increases by 10 percent, the quantity of wheat supplied to the market increases by 82 percent.
94) When the percentage change in quantity supplied is greater than the percentage change in price, supply is said to be elastic.
95) Because of the large number of firms that operate in the agricultural industry, the supply of agricultural products is inelastic over the entire range of output.
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