Use the Figure to Answer the Following Question(s)

question 149

Multiple Choice

Use the figure to answer the following question(s) .
Figure 10-5
-Given that the short-run cost and demand conditions shown in Figure 10-5 for the competitive price-searcher firm are representative for all firms in the industry, what will happen in this industry in the long run?

• A) The firm will make long-run economic profits.
• B) The firm will face competition from new entrants into the industry, causing this firm's demand to decline until zero economic profits are restored.
• C) The firm will face competition from new entrants into the industry, but since lower prices will increase total sales, profit will stay the same as that shown in the figure.
• D) The firm will see some of its competitors exit from the industry, causing this firm's demand to increase until zero economic profits are restored.

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IN

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