If Price Is Above the Average Variable Cost but Below

question 24

Multiple Choice

If price is above the average variable cost but below the average total cost of a representative firm in a competitive industry:

• A) there will be entry to the industry over time.
• B) there will be exit from the industry over time.
• C) the firms in the industry are just earning a normal rate of return.
• D) the firms in the industry are earning a supranormal rate of return.
• E) the industry is in long-run equilibrium.

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Definitions:

Cluster Sampling

A sampling technique where the population is divided into groups, or clusters, and a random sample of these groups is selected for study.

Grocery Store

A retail store that primarily sells food, including fresh produce, meats, dairy, and pantry items, often along with household goods.

Sampling Error

The error that occurs due to the selection of a sample from a population that is not perfectly representative, potentially leading to inaccurate results.

Sample Variance

A measure of the dispersion or variability of a data set, calculated from a sample of the population.