Use the figure below to answer the following questions.

Figure 12.4.1
-Refer to Figure 12.4.1, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run, market

Question

Use the figure below to answer the following questions.
  
Figure 12.4.1
-Refer to Figure 12.4.1, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run, market

Quizplus · Accepted Answer

In the long run, firms in a perfectly competitive market will enter or exit until economic profit is zero. As shown in the figure, the firm is currently making a positive economic profit. Therefore, other firms will enter the market, increasing the overall supply and driving down the market price. This means that the firm's demand will decrease and its supply will increase. Therefore, the correct choice is D.

Use the Figure Below to Answer the Following Questions