Refer to Figure 12.4.3, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market.Firms are
A)making an economic profit, and some firms leave the market. Market supply decreases.
B)making an economic profit, and some firms enter the market. Market supply increases.
C)incurring an economic loss, and some firms leave the market. Market supply decreases.
D)incurring an economic loss, and some firms enter the market. Market supply increases.
E)incurring an economic loss, but since they are covering average variable cost, no one will exit the market in the long run.
If firms exit an market, the
A)market supply curve shifts leftward.
B)price of the good falls.
C)economic profit of the remaining firms decrease.
D)total market output increases.
E)economic profit of the remaining firms stay the same.
When a perfectly competitive market is in long-run equilibrium,
A)at least one firm makes an economic profit.
B)all firms make zero economic profit.
C)firms enter the market if other firms are making an economic profit.
D)firms exit the market if other firms are incurring an economic loss.
E)marginal revenue equals minimum average variable cost.
Long-run equilibrium occurs in a competitive market when
A)economic profit and economic loss have been eliminated.
B)no barriers to entry exist.
C)all firms are operating at their shutdown points.
D)price equals marginal cost.
E)total revenue is maximized.