If, in a Perfectly Competitive Industry, the Market Price Facing

question 253

Multiple Choice

If, in a perfectly competitive industry, the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost, then

• A)firms are breaking even.
• B)new firms are attracted to the industry.
• C)existing firms will exit the industry.
• D)market supply will remain constant.

---

Definitions:

Marginal Benefit

The incremental benefit or pleasure derived from consuming one more unit of a good or service.

Efficient Level

The level of output where a firm or economy is maximizing its productivity and minimizing waste within its resources.

Tax

An obligatory financial contribution or different kind of levy enforced on an individual or entity by a government agency for the purpose of funding government activities and diverse public costs.

Total Damage

The cumulative harm or loss resulting from an event or series of events, often used in the contexts of legal claims or environmental impacts.