Suppose a Typical Firm in a Competitive Industry Has the Following

question 125

Multiple Choice

Suppose a typical firm in a competitive industry has the following data in the short run: price = $5000; output = 100 000 units; ATC = $4600; AVC =$ 4300.What will likely happen in the long run?

• A)In the long run the industry will expand because firms are earning economic profits.
• B)In the long run the industry will contract because firms are suffering losses.
• C)The size of the industry will remain the same in the long run.
• D)The typical firm would shut down,until the remaining firms have a higher price.
• E)There is not enough information to formulate an answer.

Develop strategies to achieve desired profit levels, including price adjustments and cost management.

Utilize cost analysis methods like the high-low method to estimate cost structures and make financial decisions.

Recognize various forms of opportunity costs in decision-making processes.

Understand the importance and components of a reward system within an organization.

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A close business corporation that has most of the attributes of a corporation, including limited liability, but qualifies under the Internal Revenue Code to be taxed as a partnership.