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Market Structure Concepts
Indicate whether each of the following statements is true or false, and explain why.
A. In long-run equilibrium, every firm in a perfectly competitive industry earns zero profit. Thus, if price falls, none of these firms will be able to survive.
B. Perfect competition exists in a market when all firms are price takers as opposed to price makers.
C. A natural monopoly results when the profit-maximizing output level occurs at a point where long-run average costs are declining.
D. Downward-sloping industry demand curves characterize both perfectly competitive and monopoly markets.
E. A decrease in the price elasticity of demand would follow an increase in monopoly power.
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What is the meaning of systematic and rational allocation?
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