In a competitive market the current price is $5 . The typical firm in the market has ATC = $5.00 and AVC = $4.50

a. In the short run firms will shut down, and in the long run firms will leave the market.
b. In the short run firms will continue to operate, but in the long run firms will leave the market.
c. New firms will likely enter this market to capture any remaining economic profits.
d. The firm will earn zero profits in both the short run and long run.


d

Economics

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