If, in a perfectly competitive industry, the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost, then
A)firms are breaking even.
B)new firms are attracted to the industry.
C)existing firms will exit the industry.
D)market supply will remain constant.

Question

Quizplus · Accepted Answer

When the market price is above the average total cost, firms are making a profit, which attracts new firms to enter the industry.

If, in a Perfectly Competitive Industry, the Market Price Facing