The Following Table Gives the Average Cost of Production for Three

question 50

Multiple Choice

The following table gives the average cost of production for three different categories of firms producing the same product.

$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Type of } \\\text { firme }\end{array} & \begin{array} { c } \text { No. of } \\\text { firms }\end{array} & \begin{array} { c } \text { Awerane } \\\text { sostper } \\\text { unit }\end{array} & \begin{array} { c } \text { Equilibrium } \\\text { output }\end{array} \\\hline \hline \text { A } & 350 & \$ 3 & 10 \text { units } \\\text { B } & 400 & \$ 5 & 10 \text { units } \\\text { C } & 550 & \$ 10 & 10 \text { units } \\\hline\end{array}$$
-Refer to Table .Suppose the price of the commodity increases to $8 per unit.Which of the following situations will be observed in the market?

• A)Type C firms will enter the market and drive up the price level to $10 per unit.
• B)Type B firms will enter the market and drive down the price level to $6 per unit.
• C)Type A firms will continue to supply the entire output earning supernormal profit.
• D)Type A firms will leave the market while Type B firms will take their place.

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