The following figure represents the cost curves of two firms operating in different perfectly competitive industries. This economy consists only of industries 1 and 2.
-Refer to the figure above.If the market price in industry 1 is $3 and the market price in industry 2 is $4,we should expect ________ in the long run.
A) firm A to exit industry 1 and enter industry 2
B) firm B to exit industry 2 and enter industry 1
C) firm A to exit industry 1 and not enter industry 2
D) both firms to stay in their respective industries
Correct Answer:
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