As Existing Firms Exit a Decreasing-Cost Industry

question 39

Multiple Choice

As existing firms exit a decreasing-cost industry

• A) the LRAC curve shifts down.
• B) the LRAC curve shifts up.
• C) the position of the LRAC curve doesn't change, but firms move down their LRAC curve.
• D) the position of the LRAC curve doesn't change, but firms move up their LRAC curve.

---

Definitions:

Commodity Futures Market

A financial exchange where people can trade commodity futures contracts, which are agreements to buy or sell a specified amount of a commodity at a set price at a future date.

Flood Control System

Infrastructure designed to manage or prevent the adverse effects of floods.

Annual Premium

The amount of money that must be paid per year to maintain an insurance policy or similar financial products.

Coastal Town

A settlement located along or near a coast, often characterized by a maritime economy and culture.