Suppose That There Are 1,000 Firms in a Perfectly Competitive

question 23

Multiple Choice

Suppose that there are 1,000 firms in a perfectly competitive industry, each with a short-run total cost curve given by TC = 800 + 8Q + 0.1Q² and marginal cost curve given by MC = 8 + 0.2Q. Assuming no other factors change, in the long-run we expect this industry to ____.

• A) expand, as firms enter the market
• B) expand, as firms increase their production
• C) contract as firms exit the market
• D) have no change

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Definitions:

Accounting Profit

The net income of a business as calculated by subtracting total expenses from total revenues, according to standard accounting practices.

Savings

Money that is not spent and is set aside for future use, often in a bank account or other financial instrument.

Financial Statements

Official records that detail the financial activities and condition of a business or individual, including the balance sheet, income statement, and cash flow statement.

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A product used to improve the appearance of shoes, typically by increasing shine and providing a degree of protection.