If the Market Price in a Price-Taking Industry Was Currently

question 95

Multiple Choice

If the market price in a price-taking industry was currently above the average total cost of production for firms in the industry,

• A) firms in the industry would earn short-run economic profits that would be offset by long-run economic losses.
• B) new firms would enter the industry, which would drive price down to the average total cost of production in the long run.
• C) firms in the industry would earn positive economic profits in the long run.
• D) most firms in the industry would shut down in the long run.

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Definitions:

Dependent Variable

A variable in statistical analysis that represents the outcome of interest, whose variation is hypothesized to depend on the manipulation or variation of other variables.

Independent Variable

A variable in a functional relation whose value determines the value or values of other variables.

Coefficient Of Determination

A measure used in statistical analysis that assesses how well data points fit a line or curve, often symbolized as R^2.

Dependent Variable

A variable in a scientific experiment that is affected by another variable, called the independent variable, and is measured or observed.