-Figure 9-11 Illustrates the Long-Run Average Total Cost Curve for a Perfectly

question 146

Multiple Choice

-Figure 9-11 illustrates the long-run average total cost curve for a perfectly competitive firm and the short-run average total cost curve (ATC*) for the firm's current plant size.In the long run,this

• A)firm's plant size is too large to allow it to earn a normal profit
• B)firm's plant size is too small to allow it to earn a normal profit
• C)firm will be able to stay in operation with the same plant size
• D)firm will suffer an economic loss
• E)firm will earn an economic profit

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Definitions:

Perfect Competitor

A market structure characterized by an infinite number of small firms, identical products, and free entry and exit, ensuring no single firm can influence market prices.

Industry-Wide Supply and Demand

The total quantity of goods and services that are available for purchase across an entire industry, alongside the total quantity that consumers are willing and able to buy within that industry.

Short-Run

A period in economics where at least one factor of production is fixed, and firms can't alter all inputs.

Long-Run

A period in economic theory during which all factors of production and costs are variable, allowing for full adjustment to changes.