Refer to the accompanying set of graphs to answer the following questions.
A. D. B. E. C.
-Which graph would result in no firms entering or exiting the perfectly competitive market?
A) A
B) B
C) C
D) D
E) E

Question

Refer to the accompanying set of graphs to answer the following questions.
A.  D.  B.  E.  C. 
-Which graph would result in no firms entering or exiting the perfectly competitive market?
A) A 
B) B 
C) C 
D) D 
E) E

Quizplus · Accepted Answer

In a perfectly competitive market, no firms will enter or exit when they are earning normal profit, which occurs when the price is equal to the average total cost (ATC). Graph C shows the price intersecting the ATC curve at its minimum point, indicating that firms are earning just enough to cover their costs, including a normal profit, but not enough to attract new firms or cause existing firms to exit.

Refer to the Accompanying Set of Graphs to Answer the Following