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:

State Regulations

Laws and rules established by state government authorities that regulate various aspects of business and personal conduct.

Administrative Agency

A federal or state government agency created by the legislature to perform a specific function, such as to make and enforce rules pertaining to the environment.

Specific Function

A distinct task or role performed by someone or something, especially referring to machines or parts of a system.

Federal Statute

A law enacted by the national government.