Question

Refer to the diagrams, which pertain to a purely competitive firm producing output q and the industry in which it operates. In the long run we should expect

Answer 1

Based on the fact that the purely competitive firm is producing at point q, in the long run we should expect firms to leave the industry and market supply to fall so that product price rises.

What will happen in the long run?

At point Q, the firm is making losses as total costs are more then price. Firms will therefore leave the market to avoid making losses.

This decrease in production will lead to reduced supply which will push the prices back up to a $0 profit level.

Find out more on pure competitions in the long term at brainly.com/question/3291231

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