The Figure Depicts a Firm in a Price-Taker Market

question 409

Multiple Choice

The figure depicts a firm in a price-taker market. Use this figure to answer the following question(s) .
Figure 9-19

Refer to Figure 9-19. Given the current market conditions, in the long run,

• A) new firms will enter the industry and market price will fall.
• B) firms will exit the industry and market price will rise.
• C) firms will neither enter nor exit because the market is in long-run equilibrium.
• D) firms will continue to suffer economic losses.

---

Definitions:

Shirt

A shirt is a piece of clothing for the upper body, usually with sleeves and a collar.

Normal Good

A good for which demand increases as the consumer's income rises and decreases as the consumer's income falls.

Giffen Good

A product that people consume more of as the price rises and vice versa, violating the basic law of demand in economics.

Equally Happy

A state or condition where individuals have the same level of happiness or satisfaction, often considered in discussions of equity and fairness.