A perfectly competitive firm in a constantminuscost industry produces 3,000 units of a good at a total cost of $36,000. The prevailing market price is $15. What will happen to the number of firms in the industry and to the industry's output in the long run?

Question

Jenna Nolan

Business

23 May, 16:43

A perfectly competitive firm in a constantminuscost industry produces 3,000 units of a good at a total cost of $36,000. The prevailing market price is $15. What will happen to the number of firms in the industry and to the industry's output in the long run?

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Answers (1)

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Amber Nolan · Answer 1

The number of firms and the industry's output will increase.

Explanation:

profits = 15*3000 - 36000

= 9000

so here the industry is in profits and as there is free entry and exit the firms will start entering because of the profits thus as more firms enter supply will increase thus prices will fall and firm will break even in lomg run.