QUESTION 5 Price 10 97 8- 7+ 6 3 2 MC ATC AVC Pl P2 P3 P4 + + 1 2 3 1 S 6 7 N Quantity At the price level labeled "P2," what happens in the short-run (SR) and long-run (LR) O SR: This firm will have positive economic profit. LR: Firm(s) enter this market and price decreases. SR: This firm will have positive economic profit. LR: Firm(s) enter this market and price remains the same. SR: This firm will have zero economic profit. LR: Firm(s) enter this market and price decreases. SR: This firm will have zero economic profit. LR: Price remains the same. OSR: This firm will operate with negative profit. LR: Firm(s) exit this market and price remains the same. OSR: This firm will operate with negative profit. LR: Firm(s) exit this market and price rises. OSR: This firm will not operate (shutdown). LR: Firm(s) exit this market and price remains the same. OSR: This firm will not operate (shutdown). LR: Firm(s) exit this market and price rises.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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QUESTION 5
Price
10
97
8-
7+
6
3
2
MC
ATC
AVC
Pl
P2
P3
P4
+
+
1
2
3
1
S
6
7
N
Quantity
At the price level labeled "P2," what happens in the short-run (SR) and long-run (LR)
O SR: This firm will have positive economic profit.
LR: Firm(s) enter this market and price decreases.
SR: This firm will have positive economic profit.
LR: Firm(s) enter this market and price remains the same.
SR: This firm will have zero economic profit.
LR: Firm(s) enter this market and price decreases.
SR: This firm will have zero economic profit.
LR: Price remains the same.
OSR: This firm will operate with negative profit.
LR: Firm(s) exit this market and price remains the same.
OSR: This firm will operate with negative profit.
LR: Firm(s) exit this market and price rises.
OSR: This firm will not operate (shutdown).
LR: Firm(s) exit this market and price remains the same.
OSR: This firm will not operate (shutdown).
LR: Firm(s) exit this market and price rises.
Transcribed Image Text:QUESTION 5 Price 10 97 8- 7+ 6 3 2 MC ATC AVC Pl P2 P3 P4 + + 1 2 3 1 S 6 7 N Quantity At the price level labeled "P2," what happens in the short-run (SR) and long-run (LR) O SR: This firm will have positive economic profit. LR: Firm(s) enter this market and price decreases. SR: This firm will have positive economic profit. LR: Firm(s) enter this market and price remains the same. SR: This firm will have zero economic profit. LR: Firm(s) enter this market and price decreases. SR: This firm will have zero economic profit. LR: Price remains the same. OSR: This firm will operate with negative profit. LR: Firm(s) exit this market and price remains the same. OSR: This firm will operate with negative profit. LR: Firm(s) exit this market and price rises. OSR: This firm will not operate (shutdown). LR: Firm(s) exit this market and price remains the same. OSR: This firm will not operate (shutdown). LR: Firm(s) exit this market and price rises.
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