Consider a perfectly competitive market with identical firms. Each firm faces following average variable cost (AVC) function: 1 AVC(Q) = (Q- 40)2 + 25 40 If each firm's marginal revenue is equal to its marginal cost when (Q,P) = (40,20), what should happen to long-run prices? O A. Rise B. Stay the same C. Fall This happens because firms A. are earning positive short-run profit B. are breaking even C. are earning short-run economic loss DOO

Consider a perfectly competitive market with identical firms. Each firm faces following average variable cost (AVC) function: 1 AVC(Q) = (Q- 40)2 + 25 40 If each firm's marginal revenue is equal to its marginal cost when (Q,P) = (40,20), what should happen to long-run prices? O A. Rise B. Stay the same C. Fall This happens because firms A. are earning positive short-run profit B. are breaking even C. are earning short-run economic loss DOO

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Perefect Competition

Section: Chapter Questions

Problem 5SQP

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