Figure 10-6 Given That the Short-Run Cost and Demand Conditions Shown in Conditions

question 145

Multiple Choice

Figure 10-6
Given that the short-run cost and demand conditions shown in Figure 10-6 for the competitive price-searcher firm are representative for all firms in the industry, what will happen in this industry in the long run?

• A) The firm will make long-run economic profits.
• B) The firm will face competition from new entrants into the industry, causing this firm's demand to decline until zero economic profits are restored.
• C) The firm will see some of its competitors exit from the industry, causing this firm's demand to increase until zero economic profits are restored.
• D) This industry is in long-run equilibrium and will not experience any new entry or exit of firms.

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