1. Because industry X is characterized by perfect competition, every firm in the industry is earning zero economic profit. If the product price falls, no firm can survive. Do you agree or disagree? Discuss.
2. An increase in the demand for video films also increases the salaries of actors and actresses. Is the long-run supply curve for films likely to be horizontal or upward sloping? Explain.
3. True or false: A firm should always produce at an output at which long-run average cost is minimized. Explain.