Use the figure below to answer the following questions.

Figure 12.4.2
-Refer to Figure 12.4.2, 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 12.4.2
-Refer to Figure 12.4.2, 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 the market until the market price is equal to the minimum of the average total cost curve, which is shown as point E in the figure. At this point, the firm is producing at the efficient scale and earning zero economic profit. As more firms enter the market, the supply curve shifts to the right and market supply increases, causing the market price to fall. Therefore, the correct choice is C, supply will increase.

Use the Figure Below to Answer the Following Questions