Suppose One Firm in a Perfectly Competitive Industry Experiences an Increase

question 26

Multiple Choice

Suppose one firm in a perfectly competitive industry experiences an increase in its costs of production. Which of the following best describes the most likely long run adjustment to this situation?

• A)Eventually, all firms in the industry will also experience this same increase in costs.
• B)Eventually, the price of the product will increase, and consumers will pay for the increase in costs.
• C)The firm in question may suffer losses and exit the industry.
• D)none of the above

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