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MMLU / If the perfectly competitive price is currently below minimum average total…

Problem

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question

If the perfectly competitive price is currently below minimum average total cost, we can expect which of the following events in the long run?

choices

  1. The price will rise and each firm's output will fall as firms exit the industry.
  2. Market equilibrium quantity will increase as firms exit the industry.
  3. Nothing. The industry is currently in long-run equilibrium.
  4. The price will rise to the breakeven point as firms exit the industry.

subject

high_school_microeconomics

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