P₁ MC ATC Figure 11.4.2 MR Quantity Refer to Figure 11.4.2, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run O firms will exit the market. O firms that remain in the market will expand production. O market supply will decrease. O firms that remain in the market will decrease production. O market demand will increase.

Suppose a firm is in a perfectly competitive market. 10 Price 9- 8 4.5³ 3.5 MC ATC AVC 123 4 5 6 7 8 Quantity Suppose currently price is $6, what will happen in the long run? O Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry. O Individual firms will earn positive economic profits for now, which will entice other firms to enter the industry in the long run. O Individual firms will earn negative economic profits for now, which will cause some firms to exit the industry in the long run. O Because the price is below the firm's average variable costs, the firms will shut down.

MC АТС $25.00 AVC $19.50 $15.00 $12.50- 30 40 50 60 Output (Q) The Short Run Supply Curve for the firm shown in the diagram above is its MC curve for any price greater than $12.50 $25.00 $15.00 $19.50

Please help me