Suppose a Firm Operates in the Short Run at a Price

question 208

Multiple Choice

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

• A)new firms to enter the market.
• B)the market price to fall.
• C)its profits to fall.
• D)All of the above are correct.

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Definitions:

Producer Surplus

The difference between the amount that producers are willing to accept for a good or service and the actual amount they receive.

Costly Negotiations

Negotiation processes that involve significant expenses, time, or resources, which can affect the willingness of parties to reach an agreement.

High-value

Refers to goods or services that have a substantial value in monetary terms or significant importance to a particular process or situation.

Expected Revenue

The amount of money a business anticipates receiving from its activities or sales within a specific period.