In the long run, competitive firms want to exit industries in which: A) P = MC. B) P MC. C) P AC. D) P

Question

In the long run, competitive firms want to exit industries in which:
A) P = MC.
B) P > MC.
C) P > AC.
D) P < AC.

Quizplus · Accepted Answer

In the long run, competitive firms want to exit industries in which the price (P) is less than the average cost (AC). This suggests that the firm is not able to cover its costs with the revenue it generates, making it unprofitable to remain in the industry. As such, firms will leave such industries in search of better opportunities for profitability.

In the Long Run, Competitive Firms Want to Exit Industries