Assume That All Firms in This Industry Have Identical Cost

question 118

Multiple Choice

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. If the market supply curve is given by S3, then we would expect firms to:

• A)exit the market in the long run.
• B)enter the market in the long run.
• C)neither exit nor enter the market in the long run.
• D)shut down in the short run.

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Definitions:

Premises

Statements or propositions from which a conclusion is drawn in an argument, assumed to be true.

False

Not true or correct; erroneous or misleading.

Modus Tollens

A logical argument form that concludes the inverse of an antecedent from the denial of the consequent, typically structured as "If P, then Q. Not Q, therefore not P."

Affirming The Consequent

A logical fallacy where a conclusion is incorrectly drawn from the premise that if P then Q, and Q is true, therefore P must be true.