Suppose a Firm Operates in the Short Run at a Price

question 32

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 rise.
• C)its profits to rise.
• D)Both b and c are correct.

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Definitions:

Compound Interest

Calculation of interest on both the principal amount initially provided or borrowed, plus the interest that has accumulated over earlier periods.

Compound Interest

The addition of interest to the principal sum of a loan or deposit, where the interest that has been added also earns interest from that point on.

Compound Interest

The process where interest is calculated not just on the original principal but also on the interest that has accumulated over previous periods.

Compound Interest

This involves calculating interest by adding the initial amount of money deposited or borrowed to the interest that has accumulated over time.