Given that the short-run cost and demand conditions shown in Figure 10-6 for the

Question

Given that the short-run cost and demand conditions shown in Figure 10-6 for the competitive price-searcher firm are representative for all firms in the industry, what will happen in this industry in the long run? Answer a. The firm will see some of its competitors exit from the industry, causing this firm's demand to increase until zero economic profits are restored. b. This industry is in long-run equilibrium and will not experience any new entry or exit of firms. c. The firm will make long-run economic profits. d. The firm will face competition from new entrants into the industry, causing this firm's demand to decline until zero economic profits are restored.

Explanation / Answer

c. The firm will make long-run economic profits.

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