In an Industry with Free Entry and Exit, Positive Economic

question 135

Multiple Choice

In an industry with free entry and exit, positive economic profit:

• A)indicates a market failure.
• B)can never occur.
• C)cannot be sustained indefinitely.
• D)can be sustained indefinitely.

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Definitions:

Total Cost Function

An equation that expresses the total cost of producing a given quantity of output, considering both fixed and variable costs.

Average Total Cost

The total cost of production divided by the number of units produced, signifying the cost per unit of output.

Average Fixed Cost

The total fixed costs of production divided by the number of units produced, showing the fixed cost per unit.

Fixed Factor

An input in the production of goods and services that cannot be easily increased or decreased in the short run.