A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000.If the prevailing market price is $48, the number of firms and the industry's output will decrease in the long run.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, if the price is below the average total cost, firms incur losses, leading some to exit the market, reducing the number of firms and industry output in the long run.

A Perfectly Competitive Firm in a Constant-Cost Industry Produces 1,000