A Perfectly Competitive Firm in a Constant-Cost Industry Produces 3,000

question 211

Multiple Choice

A perfectly competitive firm in a constant-cost industry produces 3,000 units of a good at a total cost of $36,000.The prevailing market price is $15.What will happen to the number of firms in the industry and to the industry's output in the long run?

• A)The number of firms and the industry's output increase.
• B)The number of firms and the industry's output decrease.
• C)The number of firms remains constant and the industry's output increases.
• D)The number of firms remains constant and the industry's output decreases.

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Definitions:

Total Expenses

The sum of all costs and expenses incurred by a business during a specific period of time.

Cost of Goods Sold

The immediate expenses linked to creating products sold by a business, covering both materials and workforce costs.

Net Method

An accounting method where discounts for prompt payment are assumed in the recorded costs; if the discount is not taken, the expense is recorded later.

Cash Discount

A deduction from the invoice price that a seller allows to a buyer in return for paying the bill early.