Asked by Ambriel Andrzejewski on Jul 21, 2024
Verified
Refer to Figure 9.2. If MR = $5, then in the long run
A) the firm will increase its price and output.
B) the firm will exit the industry.
C) new firms will enter the industry and the current firms will expand production.
D) firms will increase their output so that their average fixed cost per unit falls.
Long Run
A period in which all factors of production and costs are variable, allowing firms to adjust to meet changes in the market.
Industry Entry
The process of a new competitor or company beginning operations in a specific market or industry.
- Gain insight into the prolonged outcomes of market shifts on business establishment, discontinuation, and production adaptations.
Verified Answer
MC
MumaVeliuos ChilufyaJul 21, 2024
Final Answer :
B
Explanation :
In the long run, if the marginal revenue (MR) is less than the average total cost (ATC), the firm will not be able to cover its costs, leading to an exit from the industry.
Learning Objectives
- Gain insight into the prolonged outcomes of market shifts on business establishment, discontinuation, and production adaptations.
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