-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC1,each produce 30 units,and the market price of the good is $16 per unit,then the firms
A)make zero economic profit and firms neither enter nor exit the industry.
B)make zero economic profit and so some firms exit the industry.
C)incur an economic loss and so some firms exit the industry.
D)incur an economic loss and so new firms enter the industry.
E)make an economic profit and new firms enter the industry.

Question

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC1,each produce 30 units,and the market price of the good is $16 per unit,then the firms
A)make zero economic profit and firms neither enter nor exit the industry. 
B)make zero economic profit and so some firms exit the industry. 
C)incur an economic loss and so some firms exit the industry. 
D)incur an economic loss and so new firms enter the industry. 
E)make an economic profit and new firms enter the industry.

Quizplus · Accepted Answer

If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC1, each produce 30 units, and the market price of the good is $16 per unit, then the firms make zero economic profit and firms neither enter nor exit the industry.

-The Above Figure Shows Three Possible Average Total Cost Curves