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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Definitions:

Nonfreehold Estates

Interests in real estate that do not involve ownership of the property, typically including leases or rentals.

Real Property

Land and anything permanently attached to it, such as buildings or structures, including the rights associated with ownership.

Lease

A contractual arrangement in which one party agrees to rent property owned by another party for a specified period of time in exchange for payment.

Eminent Domain

The right of a government to expropriate private property for public use, with compensation provided to the owner.