Consider the Textile Industry,which We Assume to Be a Competitive

question 26

Multiple Choice

Consider the textile industry,which we assume to be a competitive industry,and which experiences continuous cost-reducing technological change.Which of the following statements best describes this industry?

• A)High-cost textile mills will co-exist with low-cost mills as long as the revenue for the high-cost mills is covering their variable costs.
• B)The price of the product is determined by the minimum ATC of the lowest-cost plants.
• C)All textile mills in the industry will be earning zero economic profits or losses.
• D)Both A and B
• E)Both B and C

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Definitions:

Lifestyles

The characteristic ways in which individuals or groups live, including patterns of social relations, consumption, entertainment, and dress, often associated with particular communities, periods, or locations.

Earnings

The amount of money that an individual or business receives in exchange for labor, products, or investments, typically measured over a certain period of time.

Sociologists

Experts who study society and social behavior by examining the groups, cultures, organizations, social institutions, and processes that people develop.

Culture of Poverty

A concept suggesting that poverty is not just a result of economic insufficiency but is also shaped by values and behaviors passed down within impoverished communities that hinder their members from escaping poverty.