Question

When firms in a price-taker market are temporarily able to charge prices that exceed their production costs, Group of answer choices the firms will earn long-run economic profit. additional firms will be attracted into the market until price falls to the level of per-unit production cost. the firms will earn short-run economic profits that will be offset by long-run economic losses. the existing firms must be colluding or rigging the market, otherwise, they would be unable to charge such high prices.

Answer 1

Answer:

additional firms will be attracted into the market until price falls to the level of per-unit production cost

Explanation:

A price taker is a firm or a seller who is not able to set the market price for its goods and services. Instead, the price taker accepts the price set by market forces - forces of demand and supply.

An example of a price taking firm is a firm in a perfect competition

If a firm is able to charge prices above production costs, the firm is earning an economic profit

If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.