In a perfectly competitive market, if P > ATC in the short run, there is apt to be
A) entry of new firms into the market.
B) an accounting loss for existing firms.
C) an inward shift in the industry supply curve.
D) an upward pressure on price.
Answer: A
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The union representing the bread makers at the Hostess Bread Company went on strike and demanded higher wages than what the firm wanted to pay
I. If the firm is in a competitive labor market the union can only raise wages by decreasing employment. II. If the firm is a monopsony in the labor market the union can only raise wages by decreasing employment. III. If the firm is a monopsony in the labor market the union can both raise wages and increase employment. A) I only B) II only C) I and II D) I and III
If the demand for letters written by Abraham Lincoln is higher than the demand for letters written by John Wilkes Booth, what would have to be true for the market equilibrium prices for these letters to be equal?
A) The supply of Lincoln letters would have to be less than the supply of Booth letters. B) The supply of Lincoln letters and the supply of Booth letters would have to be equal. C) If the demand for Lincoln letters is greater than the demand for Booth letters, the market equilibrium price for Lincoln letters will always be greater than the market equilibrium price for Booth letters. D) The supply of Booth letters would have to be less than the supply of Lincoln letters.