Assume That All Firms in This Industry Have Identical Cost

question 119

Multiple Choice

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.  If the market supply curve is given by S3, then in the long run firms will:

• A)exit the market, leading the market supply curve to shift back to S2.
• B)exit the market, leading the market supply curve to shift back to S1.
• C)enter the market, leading the market supply curve to shift back to S2.
• D)neither enter nor exit the market, so the market supply curve will remain at S3.

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Definitions:

Computer Software

Programs and operating information used by a computer to perform specific tasks.

Technical Support

A service provided to help users solve technical problems or issues related to products such as computers, software, or electronics.

Caveat Emptor

A principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.

Buyer Beware

A principle stating that the buyer assumes the risk for the quality and condition of goods purchased without explicit warranties, known as "caveat emptor."