Asked by Maria Arias on Jul 23, 2024
Verified
In the long run for a purely competitive market, firms may enter or exit the industry, but the firms that stay in the industry will maintain their initial plant sizes.
Initial Plant Sizes
The original capacity or scale of a facility when it first begins operations.
Purely Competitive
Characterizes a theoretical market structure emphasizing perfect competition, where numerous small firms face no barriers to entering or exiting the market.
Long Run
A period in which all inputs, including capital, are variable, allowing firms to adjust all factors of production.
- Examine the strategic choices companies undertake about growing, ceasing operations, or initiating new ventures, with a focus on scale economies and cost factors.
- Determine the features and outcomes of long-run equilibrium within competitive markets, especially considering the importance of normal profits.
Verified Answer
JY
James YetmanJul 28, 2024
Final Answer :
False
Explanation :
In the long run for a purely competitive market, firms can adjust their plant sizes and the number of plants they operate to achieve economies of scale and adapt to changes in market demand, leading to potential changes in their initial plant sizes.
Learning Objectives
- Examine the strategic choices companies undertake about growing, ceasing operations, or initiating new ventures, with a focus on scale economies and cost factors.
- Determine the features and outcomes of long-run equilibrium within competitive markets, especially considering the importance of normal profits.