The Diagram Below Shows the Short- Run Cost Curves for 3

question 54

Multiple Choice

The diagram below shows the short- run cost curves for 3 perfectly competitive firms in the same industry. FIGURE 9- 6
-Refer to Figure 9- 6. If Firms A, B and C are in the same industry, is this industry in long- run equilibrium?

• A) Yes, because P = MC = MR for each of the 3 firms.
• B) Yes, because each of the 3 firms is operating at its minimum efficient scale.
• C) No, because if the industry were in equilibrium, all 3 firms would be earning zero economic profits.
• D) No, because Firm A is not producing at a profit- maximizing level of output.
• E) Yes, because all 3 firms are producing at their minimum average total cost.

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