Suppose a Firm Operates in the Short Run at a Price

question 186

Multiple Choice

Suppose a firm operates in the short run at a price above its average total cost of production.In the long run the firm should expect

• A)new firms to enter the market.
• B)the market price to fall.
• C)its profits to fall.
• D)All of the above

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Definitions:

Depository Institutions

Financial institutions that accept deposits from the public, such as banks, credit unions, and savings and loan associations.

Money Supply

The total amount of money—cash, coins, and balances in bank accounts—in circulation within a country's economy at a specific time.

Prime Rate

The interest rate that commercial banks charge their most credit-worthy customers, often used as a reference for setting various interest rates.

Great Recession

A severe global economic downturn that occurred from late 2007 through mid-2009, marked by significant declines in housing prices and increased unemployment rates.