Suppose a Firm Operates in the Short Run at a Price

question 32

Multiple Choice

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

• A)new firms to enter the market.
• B)the market price to rise.
• C)its profits to rise.
• D)Both b and c are correct.

---

Definitions:

Profit Sharing

A company policy of distributing a portion of its profits to its employees.

Management Theories

Conceptual frameworks that aim to explain and guide the practice of management in organizations.

Bureaucracy

An administrative framework marked by rigid rules, methods, and a clear chain of command, typically found in sizable institutions or governmental bodies.

Reliability and Stringency

Concepts relating to the consistency of a measure (reliability) and the strictness or rigor of procedures or criteria (stringency).