Suppose a Firm Operates in the Short Run at a Price

question 208

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 fall.
• C)its profits to fall.
• D)All of the above are correct.

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Definitions:

Magma Chamber

A large underground pool of liquid rock found beneath the surface of the Earth.

Molten Rock

Rock that has been heated to a temperature where it becomes liquid, known as magma beneath the Earth's surface and lava when it erupts.

Underground Body

A mass of geologic material beneath the Earth's surface, such as rock formations, ore bodies, or aquifers.

Continental Settings

The environmental and geological conditions found on the continents, as opposed to oceanic settings.