If, at the equilibrium level of output, a typical competitive firm's price is greater than its ATC, the firm
A)should raise the price.
B)should lower the price.
C)should decrease output.
D)finds that new firms are attracted to this industry.
E)should increase output.

Question

Quizplus · Accepted Answer

When a firm's price is greater than its average total cost (ATC) at the equilibrium level of output, it means the firm is making a profit. This profitability attracts new firms to the industry, seeking to earn similar profits.

If, at the Equilibrium Level of Output, a Typical Competitive