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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