Suppose a perfectly competitive, increasing-cost industry is in long-run equilibrium when market demand increases. In the long run, a typical firm _____ a.will stop production as total revenue no long...
Suppose a perfectly competitive, increasing-cost industry is in long-run equilibrium when market demand increases. In the long run, a typical firm _____
a.will stop production as total revenue no longer covers the average variable cost of production.
b.experiences the same equilibrium price but a lower average total cost.
c.experiences a lower average total cost and equilibrium price.
d.experiences the same equilibrium price but a greater average total cost.
e.experiences a higher average total cost and equilibrium price.
Homework Answers
Ans) the correct option is e) experiences a higher average total cost and equilibrium price
Since this is an increasing cost industry, there will be higher average total cost and higher equilibrium price in the long run
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