Figure: Profit Maximization 6 At any price above $60 in this diagram, firms already in this market will be making an economic: A) profit (P A C), causing other firms to enter the industry in the long run. B) loss (P A C), causing other firms to enter the industry in the short run. D) loss (P

Question

Figure: Profit Maximization 6 At any price above $60 in this diagram, firms already in this market will be making an economic: A) profit (P > A C), causing other firms to enter the industry in the long run. B) loss (P < A C) and will exit the industry in the short run. C) profit (P > A C), causing other firms to enter the industry in the short run. D) loss (P < A C) and will exit the industry in the long run.

Quizplus · Accepted Answer

At any price above $60, firms in this market will be making an economic profit (P > AC). This will attract other firms to enter the industry in the long run, increasing competition and eventually driving down profits.

Figure: Profit Maximization 6 at Any Price Above $60