Orchid Movers is a price taker in the market for cross-country moving services. The current price to move a two-bedroom house is $1,000, and given the number of homes that it is currently moving, the average cost of providing this service to Orchid Movers is $900. What statement best describes what is likely to happen in the market for moving services?

Question

Quizplus · Accepted Answer

Given that Orchid Movers is making a profit (price of $1,000 is greater than the average cost of $900), it is likely that new firms will enter the market to take advantage of these profit opportunities, which will increase supply and drive down prices.

Orchid Movers Is a Price Taker in the Market for Cross-Country