The Following Figure Shows the Marginal Cost Curve and the Average

question 164

Multiple Choice

The following figure shows the marginal cost curve and the average total cost curve of a firm operating in a perfectly competitive market. All of the other firms in this market have a cost structure similar to this firm's.

-Refer to the figure above.Suppose the price in this market is $2.50.We expect ________.

• A) the firms to start exiting this market
• B) the firms start entering this market
• C) no entry or exit in this market
• D) exit from this market, followed by entry of firms into this market

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