A Firm Will Exit a Competitive Market When

question 27

Multiple Choice

A firm will exit a competitive market when

• A)costs force the marginal cost curve to shift to the left.
• B)the long-run profit would be negative.
• C)it can earn only earn a zero long-run profit.
• D)Both B and C.

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Definitions:

Nonexcludable Problem

An issue characteristic of public goods, where it is not possible to prevent individuals who do not pay from consuming a good or service.

Optimal Level

The most favorable or efficient level of output or activity under given conditions, maximizing benefits or minimizing costs.

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be used by everyone and one person's use does not diminish another's.

Free-rider Problem

A situation where individuals consume a good without contributing to its cost, typically in the context of public goods.