When Market Conditions in a Price-Taker Market Are Such That

question 17

Multiple Choice

When market conditions in a price-taker market are such that firms cannot cover their production costs,

• A) the firms will suffer long-run economic losses.
• B) the firms will suffer short-run economic losses that will be exactly offset by long-run economic profits.
• C) some firms will go out of business, causing prices to rise until the remaining firms can cover their production costs.
• D) all firms will go out of business, since consumers will not pay prices that enable firms to cover their production costs.