Refer to the information provided in Figure 9.2 below to answer the question(s) that follow. Figure 9.2
-Refer to Figure 9.2. If MR = $5, then in the long run
A) the firm will increase its price and output.
B) the firm will exit the industry.
C) new firms will enter the industry and the current firms will expand production.
D) firms will increase their output so that their average fixed cost per unit falls.

Question

Refer to the information provided in Figure 9.2 below to answer the question(s) that follow.  Figure 9.2
-Refer to Figure 9.2. If MR = $5, then in the long run
A) the firm will increase its price and output. 
B) the firm will exit the industry. 
C) new firms will enter the industry and the current firms will expand production. 
D) firms will increase their output so that their average fixed cost per unit falls.

Quizplus · Accepted Answer

In the long run, if the marginal revenue (MR) is less than the average total cost (ATC), the firm will not be able to cover its costs, leading to an exit from the industry.

Refer to the Information Provided in Figure 9