Mapa Sapling Learning The graph to the right shows the Marginal Cost (MC) Averag
ID: 1108294 • Letter: M
Question
Mapa Sapling Learning The graph to the right shows the Marginal Cost (MC) Average Total Cost (ATC), and Marginal Revenüe (MR) curves for a perfectly (or purely) competitive firm. Note that the Demand (D) curve is the same as the MR curve for such a MRIMC () firm. Assume that the cost curves here are representative of other firms in the industry TC Given the current price, this firm will: O eam a negative profit. O eam zero economic profit. O eam a positive profit D=MR MC In the long run, this market will: Quantity O experience exit by some firms o experience entry of additional What is going to happen to the price of this firms. product O It will decline. O Previous O check Answe Next ,Explanation / Answer
Ans)
earn a negative profit
This is because the price is below the average total cost curve
experience exit by some firms
Some firms will make losses and exit the market until price is equal to ATC.
It will increase.
In the long run the firms will just break even