Figure 10-7

-In the long run, the perfectly competitive firm in Figure 10-8 will leave the industry if the price falls below

Question

Figure 10-7
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-In the long run, the perfectly competitive firm in Figure 10-8 will leave the industry if the price falls below

Quizplus · Accepted Answer

In the long run, a perfectly competitive firm will exit the industry if price falls below minimum of average total cost (ATC) curve. In Figure 10-8, the minimum point of the ATC curve is $9. Thus, if the price falls below $9, the firm will not be able to cover its costs and will exit the industry. The correct choice is B.

Figure 10-7 ​

Figure 10-7