Graph 17-4
-Refer to graph 17-4.Which of the markets depicted in each panel is likely to see a firm enter in the long run?

Question

Graph 17-4 
-Refer to graph 17-4.Which of the markets depicted in each panel is likely to see a firm enter in the long run?

Quizplus · Accepted Answer

In both panels C and D, the market price is above the average total cost curve (ATC), indicating that firms are earning positive economic profit. This creates an incentive for new firms to enter the market in the long run, leading to an increase in market supply and eventually driving down the market price to the minimum of the ATC curve. In panels A and B, the market price is below the ATC curve, indicating that firms are incurring losses and there is no incentive for new firms to enter the market.

Graph 17-4 -Refer to Graph 17-4.Which of the Markets Depicted in Each