A firm in a competitive market has the following cost structure:
Output
Total Cost
0
$5
1
$10
2
$12
3
$15
4
$24
5
$40
If the market price is $16, this firm will
A)produce 4 units of output in the short run and exit in the long run.
B)produce 5 units of output in the short run and exit in the long run.
C)produce 5 units of output in the short run and face competition from new market entrants in the long run.
D)shut down in the short run and exit in the long run.

Question

Quizplus · Accepted Answer

The Answer of A firm in a competitive market has the following cost structure:
Output
Total Cost
0
$5
1
$10
2
$12
3
$15
4
$24
5
$40
If the market price is $16, this firm will
A)produce 4 units of output in the short run and exit in the long run.
B)produce 5 units of output in the short run and exit in the long run.
C)produce 5 units of output in the short run and face competition from new market entrants in the long run.
D)shut down in the short run and exit in the long run.

A Firm in a Competitive Market Has the Following Cost