1) The minimum feasible long-run average cost for firms in a perfectly cempetitive industry is $58 per unit. IF every firm in the industry currently is producing an output consistent with a long-run equilibrium, calculate the marginal cost incurred by each firm and the market price.
Marginal cost is $___ and market price is $___ .
How I calculate this?
2) A perfectly competitive increasing cost industry is in long-run equilibrium. Due to a change in tastes and preferences, there is a decrease in demand. Which of the following best describes the effect on the industry?
The price will
A) decrease, firms will produce more, profits will decrease, and more firms will enter until profit returns to zero.
B) decrease, firms will produce less, profits will increase, and more firms will enter until profit returns to zero.
C) decrease, firms will produce less, profits will be below zero, and firms will exit until profit returns to zero.
D) increase, firms will produce more, profits will increase, and more firms will enter until profit returns to zero.