The Figure Below Shows the Supply and the Demand for a Good

question 32

Multiple Choice

The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right) . Assume that all firms in this market, including the potential entrants, have identical cost curves. Initially, the market is in equilibrium at point A.

-Refer to the figure above.At the equilibrium A,each firm in the market earns ________ and there will be ________.

• A) positive economic profit; entries of new firms
• B) negative economic profit; exit of existing firms
• C) zero economic profit; both entry and exit of firms
• D) zero accounting profit; entries of new firms