Asked by Vaden Mangler on Jun 11, 2024
Verified
In the long run,firms will leave an industry if the market price is consistently less than their break-even price.
Break-even Price
The price level at which a business does not make a profit or a loss.
Long Run
In economics, the period in which all inputs can be adjusted, with no fixed costs, allowing for full adjustment to changes in the market.
- Recognize the scenarios in which businesses should initiate or cease operations within the industry.
Verified Answer
BI
Brianne IngramJun 17, 2024
Final Answer :
True
Explanation :
A firm will only continue to operate if it can cover its variable and fixed costs, which is its break-even price. If the market price is consistently lower than its break-even price, the firm will face losses and may eventually exit the industry.
Learning Objectives
- Recognize the scenarios in which businesses should initiate or cease operations within the industry.
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