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Yuki888 [10]
3 years ago
12

If the market price is $16, this firm will a. produce 4 units of output in the short run and exit in the long run. b. produce 5

units of output in the short run and exit in the long run. c. shut down in the short run and exit in the long run. d. produce 5 units of output in the short run and face competition from new market entrants in the long run
Business
1 answer:
Salsk061 [2.6K]3 years ago
4 0

This question is incomplete, I got the complete one from google as:

Output         Total cost

 0                       5

 1                        10

 2                       12

 3                       15

 4                       24

 5                       40

If the market price is $16, this firm will a. produce 4 units of output in the short run and exit in the long run. b. produce 5 units of output in the short run and exit in the long run. c. shut down in the short run and exit in the long run. d. produce 5 units of output in the short run and face competition from new market entrants in the long run

Answer:

Option D is correct- If the market price is $16, this firm will produce 5 units of output in the short run and face competition from new market entrants in the long run.

Explanation:

The fixed cost is $5, this indicates that when the market price is $16, the marginal cost is also $16.

When the 5th unit is produced, the total revenue received will be $80 while the total cost will be $40. This indicates that there will be a positive economic profit which will bring new firms in the long run.

Hence, option D is the correct answer - If the market price is $16, this firm will produce 5 units of output in the short run and face competition from new market entrants in the long run.

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