Figure 14-13 Suppose a Firm in a Competitive Industry Has the Following

question 369

Multiple Choice

Figure 14-13
Suppose a firm in a competitive industry has the following cost curves:
-Refer to Figure 14-13. If the price is $6 in the short run, what will happen in the long run?

• A)Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry.
• B)Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.
• C)Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.
• D)Because the price is below the firm's average variable costs, the firms will shut down.

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Definitions:

Vendors

Companies or individuals providing goods or services to other entities, usually within a commercial or professional context.

Selection Decision

The process of choosing the best candidate from a pool of applicants or identifying the best option among alternatives.

Spreadsheet Software

Computer programs used to create, edit, and manage data arranged in rows and columns, enabling calculation, graphing tools, and data analysis.

Low Complexity

Describes a situation, project, or system that involves minimal complicating factors, making it simpler to manage or understand.