-The Above Figure Shows Three Possible Average Total Cost Curves

question 221

Multiple Choice

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC?,each produces 20 units,and the market price of the good is $16 per unit,then

• A) the firms make an economic profit of $8 per unit.
• B) firms will enter the industry and the number of firms increases.
• C) the firms' ATC curves will eventually shift to become the same as ATC?.
• D) firms will exit the industry and the number of firms decreases.
• E) Both answers A and B are correct.