The figure to the right represents the cost structure for a perfectly competitive firm with its average total cost (ATC) curve, average variable (AVC) curve, and marginal cost (MC) curve. MC Suppose the market price is $17.00 per unit. Will firms enter or exit the industry in the long run? 17.00 ATC If market price is $17.00, then firms will the market in the long run. AVC What effect will firms entering have on the market price? When firms enter, A. market demand will decrease, decreasing price. B. the marginal cost of production will increase, increasing price. O C. the average total cost of production will increase, increasing price. D. market supply will increase, decreasing price. Quantity Price and cost
The figure to the right represents the cost structure for a perfectly competitive firm with its average total cost (ATC) curve, average variable (AVC) curve, and marginal cost (MC) curve. MC Suppose the market price is $17.00 per unit. Will firms enter or exit the industry in the long run? 17.00 ATC If market price is $17.00, then firms will the market in the long run. AVC What effect will firms entering have on the market price? When firms enter, A. market demand will decrease, decreasing price. B. the marginal cost of production will increase, increasing price. O C. the average total cost of production will increase, increasing price. D. market supply will increase, decreasing price. Quantity Price and cost
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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