In pure competition, if the market price of the product is higher than the minimum average cost of the firms, then
A)some firms will exit the industry and the industry supply will decrease.
B)other firms will enter the industry and the industry supply will increase.
C)some firms will exit the industry and the industry supply will increase.
D)other firms will enter the industry and the industry supply will decrease.

Question

Quizplus · Accepted Answer

When the market price is higher than the minimum average cost, firms are making a profit, which attracts new firms to enter the industry, increasing the industry supply.

In Pure Competition, If the Market Price of the Product