If a Purely Competitive Firm Is Facing a Situation Where

question 49

Multiple Choice

If a purely competitive firm is facing a situation where the price of its product is lower than the average cost, then all of the following apply, except

• A) the firm is suffering losses, and if things are not expected to improve, the firm will leave the industry.
• B) the firm may be earning some accounting profits, but less than what it could earn elsewhere.
• C) other firms will want to enter the industry because of the positive economic profits.
• D) the firm may earn economic profits in the long run if it expands its plant in order to exploit economies of scale.

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Definitions:

Teacher's Discretion

The faculty of teachers to make decisions based on their professional judgment in situations that may not be explicitly addressed by rules or policies.

Report

A formal account or statement describing the findings, conclusions, or recommendations on a given topic, often based on investigation or analysis.

Friendships

Relationships rooted in mutual affection, trust, and support between non-family members.

Stable

A condition or state that is not easily changed or likely to change, indicating reliability, constancy, or lack of volatility.