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Practice Questions
Test your understanding with targeted questions related to the topic.
Question 1
Easy
What happens to the equilibrium price when firms can enter freely and earn supernormal profits?
💡 Hint: Consider what motivates firms to enter a market.
Question 2
Easy
Define excess supply.
💡 Hint: Think about prices higher than equilibrium.
Practice 4 more questions and get performance evaluation
Interactive Quizzes
Engage in quick quizzes to reinforce what you've learned and check your comprehension.
Question 1
What is the equilibrium price in a market with free entry and exit?
- Above minimum average cost
- Equal to minimum average cost
- Below minimum average cost
💡 Hint: Recall the conditions for a competitive market.
Question 2
True or False: Shifts in demand affect the equilibrium price under free entry and exit.
- True
- False
💡 Hint: Think about the long-term adjustments in the market.
Solve and get performance evaluation
Challenge Problems
Push your limits with challenges.
Question 1
A new technology reduces production costs for firms in the wheat market. Explain how this impacts equilibrium.
💡 Hint: Think about how changes in cost structure generally impact market dynamics.
Question 2
Given a market with many firms, if one firm begins to innovate and reduces prices, discuss the potential outcomes.
💡 Hint: Consider market dynamics when one player changes strategy.
Challenge and get performance evaluation