Suppose the price is set by the market at $8 per unit. If the Average Total...

Suppose the price is set by the market at $8 per unit. If the Average Total Cost for the average perfectly competitive firm in the market is $10,

Is the average firm showing a profit, loss, or breaking even?
Given your response in part A., are more firms likely to enter the market, or are firms likely to exit the market? Why?
Thus, what happens to the market price? What is the long-run scenario in a perfectly competitive market?

Expert Solution

Rahul Sunny answered 1 year ago

Suppose that the output market is in perfect competition with the price of $10 per unit...

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