Asked by Jackson O'Brien on Jul 24, 2024
Verified
Refer to Figure 14-3. In the short run, if the market price is higher than P4 but less than P6, individual firms in a competitive industry will earn
A) positive profits.
B) zero profits.
C) losses but will remain in business.
D) losses and will shut down.
Competitive Industry
An industry characterized by many sellers and buyers, where no single entity has the market power to influence prices significantly.
Short Run
A period in economics during which the quantity and quality of one or more production factors remain unchanged.
Market Price
The ongoing price for buying or selling a service or asset.
- Define the conditions that result in organizations obtaining zero, positive, or negative economic earnings.
Verified Answer
WZ
William Zamora RamosJul 29, 2024
Final Answer :
A
Explanation :
If the market price is higher than the average variable cost (P4) but less than the average total cost (P6), firms cover their variable costs and part of their fixed costs, leading to positive profits but not enough to cover all costs fully.
Learning Objectives
- Define the conditions that result in organizations obtaining zero, positive, or negative economic earnings.