If the firms in a perfectly competitive market are continually operating where their total costs exceed their total revenue in the short run, then in the long run
a. the number of firms in the market will remain unchanged
b. the number of firms in the market will increase
c. the number of firms in the market will decrease
d. existing firms will increase their plant sizes
e. existing firms will increase their output
C
You might also like to view...
Unlike a banking crisis, an exchange rate crisis rarely results in a deep recession
Indicate whether the statement is true or false
Which of the following statements is TRUE of external costs?
A) External costs should not be corrected since people will bear the costs whether they are corrected or not. B) There are no good ways to correct for the external costs. C) When external costs exist, the price of the good will be deceptively low leading to an overallocation of resources. D) External costs should only be corrected for if the correction will not increase the market price.