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Consider a Competitive Firm with a TC = 50

Question 2

Multiple Choice

Consider a competitive firm with a TC = 50 + 2q2 + q.If price is $21, which statement is true?


A) The firm produces 5 units of output and is making an economic loss; the firm will exit the industry in the long run.
B) The firm produces 10 units of output and this is the long-run equilibrium.
C) The firm produces 5 units of output, and is making a positive economic profit; this is the long-run equilibrium.
D) The firm produces 5 units of output and this is the long-run equilibrium.
E) The firm shuts down in the short run and produces zero output; the firm will leave the industry in the long run.

Correct Answer:

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