Costs and revenues C р 0 ATC Qe MC Most firms will shut down. D = AR = MR Output Given the situation in the market, what will happen in this market in the long run? Firms will enter the industry and the ATC curve will shift downwards due to economies of scale. Firms will leave the industry until supply of goods falls and zero economic profits are made. Firms will leave the industry and the industry will collapse.
Costs and revenues C р 0 ATC Qe MC Most firms will shut down. D = AR = MR Output Given the situation in the market, what will happen in this market in the long run? Firms will enter the industry and the ATC curve will shift downwards due to economies of scale. Firms will leave the industry until supply of goods falls and zero economic profits are made. Firms will leave the industry and the industry will collapse.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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