Refer to the above figure. If the price is $6 in the short run, what will happen in the long run?

a.

Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.

b.

Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.

c.

Because the price is below the firm's average variable costs, the firms will shut down.

d.

Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry.

Question

Refer to the above figure. If the price is $6 in the short run, what will happen in the long run?



a.

Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.



b.

Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.



c.

Because the price is below the firm's average variable costs, the firms will shut down.



d.

Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry.

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a.	Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.
b.	Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.
c.	Because the price is below the firm's average variable costs, the firms will shut down.
d.	Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry.