If P AC in a given industry, then:
A) there are too many resources in that industry.
B) there are too few resources in that industry.
C) the industry has the optimal amount of resources.
D) it is not possible to know whether the industry has the optimal amount of resources.

Question

If P > AC in a given industry, then:
A) there are too many resources in that industry.
B) there are too few resources in that industry.
C) the industry has the optimal amount of resources.
D) it is not possible to know whether the industry has the optimal amount of resources.

Quizplus · Accepted Answer

If P (price) is greater than AC (average cost), it indicates that the industry is making a profit, suggesting that there are too few resources in the industry as more firms could enter to take advantage of the profit opportunity.

If P > AC in a Given Industry, Then