Consider a Perfectly Competitive Market Experiencing Good Times

question 5

Multiple Choice

Consider a perfectly competitive market experiencing good times.In the short run,the equilibrium price will ________ and firms will earn a(n) ________.

• A) increase; economic profit as the new price exceeds average total cost
• B) increase; normal profit as the new price exceeds average total cost
• C) decrease; economic loss as new firms enter the industry
• D) decrease; economic profit as firms exit the industry
• E) may increase or decrease; normal profit depending on their costs

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Definitions:

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