In a Competitive Market the Current Price Is $5

question 511

Multiple Choice

In a competitive market the current price is $5. The typical firm in the market has ATC = $5.50 and AVC = $4.50.

• A)In the short run firms will shut down, and in the long run firms will leave the market.
• B)In the short run firms will continue to operate, but in the long run firms will leave the market.
• C)New firms will likely enter this market to capture any remaining economic profits.
• D)The firm will earn zero profits in both the short run and long run.

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Definitions:

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