Asked by Morgan Brunk on Jul 26, 2024
Verified
In the long run, when price is greater than average total cost, some firms in a competitive market will choose to enter the market.
Average Total Cost
The total cost of production divided by the number of units produced, indicating the average cost per unit of output.
Competitive Market
An economic scenario where numerous producers and consumers interact, ensuring prices are determined by supply and demand forces without significant influence by any single participant.
- Learn about the interplay between entry and exit in a competitive market and its significance for maintaining equilibrium.
Verified Answer
YS
Yaren SaracogluJul 29, 2024
Final Answer :
True
Explanation :
When price is greater than average total cost, firms in a competitive market can make a profit, attracting new firms to enter the market to capture some of that profit.
Learning Objectives
- Learn about the interplay between entry and exit in a competitive market and its significance for maintaining equilibrium.