When Market Conditions in a Competitive Industry Are Such That

question 235

Multiple Choice

When market conditions in a competitive industry are such that firms cannot cover their total production costs, then

• A)the firms will suffer long-run economic losses.
• B)the firms will suffer short-run economic losses that will be exactly offset by long-run economic profits.
• C)some firms will exit the market, causing prices to rise until the remaining firms can cover their total production costs.
• D)all firms will go out of business, since consumers will not pay prices that enable firms to cover their total production costs.

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