-The Above Figure Shows Three Possible Average Total Cost Curves

question 127

Multiple Choice

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC?,each produces 40 units,and the market price of the good is $20 per unit,then

• A) the firms incur an economic loss of $12 per unit.
• B) firms will enter the industry and the number of firms increases.
• C) the firms' ATC curves will eventually shift to become the same as ATC?.
• D) firms will exit the industry and the number of firms decreases.
• E) Both answers A and D are correct.

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Definitions:

Outcome

The result or effect of an action, situation, or event.

Insulin

Insulin is a hormone produced by the pancreas that regulates blood glucose levels by promoting the absorption of glucose into liver, fat, and skeletal muscle cells.

Glucose

A simple sugar that is an important energy source in living organisms and is a component of many carbohydrates.

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Substances obtained from food that are essential for maintaining bodily functions and growth, including vitamins, minerals, carbohydrates, proteins, and fats.