When Firms in a Price-Taker Market Are Temporarily Able to Charge

question 112

Multiple Choice

When firms in a price-taker market are temporarily able to charge prices that exceed their production costs,

• A) the firms will earn long-run economic profit.
• B) additional firms will be attracted into the market until price falls to the level of per-unit production cost.
• C) the firms will earn short-run economic profits that will be offset by long-run economic losses.
• D) the existing firms must be colluding or rigging the market, otherwise, they would be unable to charge such high prices.

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