What is the correct answer? In pure competition, if the market price of the product is lower than the minimum average total cost of the firms, then A. some firms will enter the industry and the industry supply will increase B. other firms will exit the industry and the industry supply will decrease C. some firms will exit the industry and the industry supply will increase D. other firms will enter the industry and the industry supply will decrease
Added by Heather H.
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Each firm is a price taker, meaning they have no control over the market price and must accept it as given. If the market price of the product is lower than the minimum average total cost of the firms, it means that the firms are not covering their costs and are Show more…
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