If a Perfectly Competitive Market Is in a Short-Run Equilibrium

question 138

Multiple Choice

If a perfectly competitive market is in a short-run equilibrium and each firm has P > SRATC,then

• A)individual firms in the industry will increase their output.
• B)new firms will enter the market because existing firms are earning economic profits.
• C)the market supply curve will become less elastic.
• D)existing firms will continue to earn economic profits in the long run.
• E)price will fall in the short run as it is too high and firms are making economic profits.

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