There Are 1,000 Identical Firms in a Price-Taker Industry

question 186

Multiple Choice

There are 1,000 identical firms in a price-taker industry. In the short run, total revenues of each firm exceed total costs. What will happen in the long run?

• A) Nothing, because each firm is already maximizing its profits.
• B) Many firms will enter the market and each firm will eventually operate at a loss.
• C) Additional firms will enter the market, and price will be driven down to where each firm will be making just enough to stay in business.
• D) Additional firms will enter the market, but the price will remain the same because the existing firms will not allow price to decrease.

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Definitions:

Prometrium

A brand name for progesterone, a female hormone used in hormone replacement therapy and to prevent overgrowth of the lining of the uterus.

Colposcopy

A medical diagnostic procedure to closely examine the cervix, vagina, and vulva for signs of disease, using a special instrument called a colposcope.

Culdoscopy

A diagnostic medical procedure that examines the female pelvic organs by inserting an endoscope through the vagina into the rectovesical pouch.

Laparoscopy

A minimally invasive surgical procedure using a laparoscope to examine or operate on the interior of the abdominal or pelvic cavities.