A Perfectly Competitive Firm in a Constant-Cost Industry Produces 1,000

question 218

Multiple Choice

A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000.The prevailing market price is $48.Assuming that this firm continues to produce in the long run, what happens to output level in the long run?

• A)The firm's output falls.
• B)The firm's output increases.
• C)The firm produces the same output level.
• D)There is insufficient information to answer the question.

---

Definitions:

Cirque

An open-sided, bowl-shaped depression formed in a mountain, commonly at the head of a glacial valley; produced by erosion of a glacier.

Depression

A geological formation resulting from the sinking of the Earth's surface, forming a bowl-like or flat area lower than the surrounding ground.

Valley

An elongated lowland between ranges of mountains or hills, often having a river or stream running along the bottom.

Ridge

On a weather map, an elongated area of high atmospheric pressure.