If the Typical Firm in a Perfectly Competitive Market Was

question 42

Multiple Choice

If the typical firm in a perfectly competitive market was depicted in the graph below,what would be most likely to occur?

• A) New firms would be likely to enter, increasing the market price.
• B) New firms would be likely to enter, decreasing the market price.
• C) Existing firms would be likely to exit, increasing the market price.
• D) Existing firms would be likely to exit, decreasing the market price.

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Definitions:

Economic Growth Rate

The rate at which the gross domestic product (GDP) of an economy increases over a specific period, indicating the health and prosperity of the economy.

Industry Growth

The increase in the size and output of an industry over time, typically measured in terms of revenue, employment, or output.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business.

Raw Materials

Basic goods used in the production of final products.