-Suppose the Cost Curves in the Above Figure Apply to All

question 220

Multiple Choice

-Suppose the cost curves in the above figure apply to all firms in the market. If the initial price is P₁, firms are ________ and some firms will ________ the industry.

• A) making an economic profit; leave
• B) making an economic profit; enter
• C) incurring an economic loss; leave
• D) incurring an economic loss; enter

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Definitions:

Cost of Materials

The total expense incurred from acquiring raw materials and components needed for the production of goods or services.

Fs Cost

Fs Cost, assuming it refers to Fixed Cost, is the set of expenses that do not change with the level of production or sales over a certain period.

Time-Phased Product Structure

An arrangement that shows how a product is built over a specific timeframe, detailing the sequence and duration of each component's assembly.

Bill of Material

A thorough compilation of necessary raw resources, constituents, and blueprints to develop, manufacture, or rehabilitate a product or service.