Figure 14-13 Suppose a Firm in a Competitive Industry Has the Following

question 84

Multiple Choice

Figure 14-13
Suppose a firm in a competitive industry has the following cost curves:

-Refer to Figure 14-13.If the price is P3 in the short run,what will happen in the long run?

• A) Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry.
• B) Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.
• C) Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.
• D) Because the price is below the firm's average variable costs, the firms will shut down.

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Definitions:

Salafis

Followers of a conservative movement within Sunni Islam that advocates a return to the practices of the first three generations of Islamic practitioners.

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale.

Culture Change

Refers to the dynamic process through which the customs, beliefs, art, and institutions of a society transform over time.

Male Dominance

A social, economic, and cultural pattern in which males hold primary power and predominate in roles of political leadership, moral authority, and control of property.