Suppose that there are 1,000 firms in a perfectly competitive industry, each with a short-run total cost curve given by TC = 800 + 8Q + 0.1Q² and marginal cost curve given by MC = 8 + 0.2Q. Assuming no other factors change, in the long-run we expect this industry to ____.

Question

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In the long-run, firms in a perfectly competitive market will exit if they are making losses. The given cost structure suggests that firms may not be covering their average total costs, leading to a contraction as firms exit.

Suppose That There Are 1,000 Firms in a Perfectly Competitive