Figure 9-7
-Refer to Figure 9-7.Suppose the prevailing price is $20 and the firm is currently producing 1,350 units.In the long-run equilibrium,

Question

Figure 9-7 
-Refer to Figure 9-7.Suppose the prevailing price is $20 and the firm is currently producing 1,350 units.In the long-run equilibrium,

Quizplus · Accepted Answer

In the long-run equilibrium, firms will enter the industry if there are economic profits and exit the industry if there are economic losses. At a prevailing price of $20, the firm in question is earning economic profits. This will attract new firms into the industry, increasing the number of firms, and total industry output will increase as a result of the increased competition. Therefore, the correct choice is B.

Figure 9-7 -Refer to Figure 9-7.Suppose the Prevailing Price Is $20 and Is