f a purely competitive firm is facing a situation where the price of its product is lower than the average cost, then all of the following apply, except Multiple Choice A) the firm is suffering losses, and if things are not expected to improve, the firm will leave the industry. B) the firm may be earning some accounting profits, but less than what it could earn elsewhere. C) other firms will want to enter the industry because of the positive economic profits. D) the firm may earn economic profits in the long run if it expands its plant in order to exploit economies of scale.
f a purely competitive firm is facing a situation where the price of its product is lower than the average cost, then all of the following apply, except Multiple Choice A) the firm is suffering losses, and if things are not expected to improve, the firm will leave the industry. B) the firm may be earning some accounting profits, but less than what it could earn elsewhere. C) other firms will want to enter the industry because of the positive economic profits. D) the firm may earn economic profits in the long run if it expands its plant in order to exploit economies of scale.
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter9: Market Structure And Long-run Equilibrium
Section: Chapter Questions
Problem 1MC
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If a purely competitive firm is facing a situation where the price of its product is lower than the average cost, then all of the following apply, except Multiple Choice A) the firm is suffering losses, and if things are not expected to improve, the firm will leave the industry. B) the firm may be earning some accounting profits, but less than what it could earn elsewhere. C) other firms will want to enter the industry because of the positive economic profits. D) the firm may earn economic profits in the long run if it expands its plant in order to exploit economies of scale.
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