Figure 9-9 -Refer to Figure 9-9.Suppose the Prevailing Price Is P₁ and Is

question 63

Multiple Choice

Figure 9-9
-Refer to Figure 9-9.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimizing quantity.In the long-run equilibrium,

• A)there will be fewer firms in the industry and total industry output decreases.
• B)there will be more firms in the industry and total industry output increases.
• C)there will be fewer firms in the industry but total industry output increases.
• D)there will be more firms in the industry and total industry output remains constant.

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Definitions:

Creative Destruction

A process whereby old, outdated industries and technologies are destroyed and replaced by new, innovative ones, driving economic growth.

Minimum AVC

The lowest point on the average variable cost curve, indicating the most efficient scale of production for minimizing variable costs per unit of output.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, perfect information, and easy market entry and exit, ensuring no individual firm can influence the market price.

ATC

Average Total Cost, which refers to the total cost of production divided by the quantity of output produced, encompassing both fixed and variable costs.