A Perfectly Competitive Firm Initially Is Earning Zero Economic Profit

question 380

Multiple Choice

A perfectly competitive firm initially is earning zero economic profit. Then, a decrease in demand for the firm's product occurs. Of the following, in the long run which action listed below is the firm most likely to take?

• A) Increase the quantity it produces.
• B) Increase its advertising to increase the demand for its product.
• C) Exit the market.
• D) Increase the size of its plant.

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Definitions:

Northerners

Individuals from the northern region of a country, especially those from the Northern United States historically opposed to slavery.

Slave System

An economic and social system based on the ownership, purchase, and forced labor of human beings for the benefit of their owners.

Freed Blacks

African American individuals who were emancipated from slavery, especially during and after the Civil War in the United States.

Runaway Slaves

Enslaved people who escaped from their enslavers in an attempt to gain freedom, often facing great risks and seeking safe haven through networks like the Underground Railroad.