In a Competitive Market the Current Price Is $5

question 511

Multiple Choice

In a competitive market the current price is $5. The typical firm in the market has ATC = $5.50 and AVC = $4.50.

• A)In the short run firms will shut down, and in the long run firms will leave the market.
• B)In the short run firms will continue to operate, but in the long run firms will leave the market.
• C)New firms will likely enter this market to capture any remaining economic profits.
• D)The firm will earn zero profits in both the short run and long run.

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Definitions:

American Revolution

The period of political and military action (1775-1783) during which the thirteen American colonies won independence from Great Britain, leading to the establishment of the United States of America.

Labor

The work performed by individuals that contributes to the production of goods and services, typically rewarded with wages.

Capital

Financial assets or the financial value of assets, such as cash and securities, or fixed assets like machinery and buildings, used in producing goods and services.

American Economy

The economic system of the United States characterized by a mixture of private and public enterprises, a high level of technological innovation, and a relatively high GDP per capita.