1) Questions 5 through 7 refer to the following graphical representation of a short-run situation faced by a perfectly competitive firm.
Is this a good market for this firm to be in?
Yes the firm should be here in the short run but in the long run it should leave.
Yes the firm should be here in the short run and it should also stay in the long run.
No; the firm should exit immediately.
2) Which of the following describes the firm's situation in the short run?
The firm is breaking even
There is a short run loss
There is a short run profit
The short run profit/loss situation cannot be determined from this graph
3) What do you expect to happen in the long run?
New firms will enter; short-run profits will disappear
New firms will enter; short-run losses will disappear
Some existing firms will leave; short-run profits will disappear
Some existing firms will leave; short-run losses will disappear