A Firm in a Competitive Market Has the Following Cost

question 21

Multiple Choice

A firm in a competitive market has the following cost structure:
If the market price is $16,this firm will

• A) produce 4 units of output in the short run and exit in the long run.
• B) produce 5 units of output in the short run and exit in the long run.
• C) produce 5 units of output in the short run and face competition from new market entrants in the long run.
• D) shut down in the short run and exit in the long run.

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Definitions:

Selfishness

The act of putting one's own needs and desires above the needs of others.

Self-Interest

The motivation of individuals to pursue their own welfare, benefits, or advantages, often used as a basic assumption in economics about human behavior.

Command Economy

An economic system where the government, rather than the free market, determines what goods should be produced, how much should be produced, and the price at which goods are offered for sale.

Public Interest

The welfare or well-being of the general public, often considered a guiding principle for governmental policy or action.