If the Market Price in a Price-Taking Industry Was Currently

question 95

Multiple Choice

If the market price in a price-taking industry was currently above the average total cost of production for firms in the industry,

• A) firms in the industry would earn short-run economic profits that would be offset by long-run economic losses.
• B) new firms would enter the industry, which would drive price down to the average total cost of production in the long run.
• C) firms in the industry would earn positive economic profits in the long run.
• D) most firms in the industry would shut down in the long run.

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Definitions:

Mutually Exclusive

Events that cannot occur at the same time; the occurrence of one event excludes the possibility of the other event(s).

Intersection

The set of elements common to two or more sets.

Conditional

Pertaining to expressions, statements, or functions that involve conditions where outcomes depend on fulfilling specified criteria.

Experimental Outcomes

Refers to the various results that could potentially occur as a result of a scientific experiment.